02 June 2009 ~ 0 Comments

Micro-Credit and open discussions

I added my thoughts to this very heated discussion on micro-credit


my post copied below:

Wow… so sorry Tori, in my opinion, you do not deserve an attack, questions and dialogue and criticism of course, which is what I think you were looking to spark when you started this, but not an attack. If and where your facts are wrong, I think it is important for people to point those out, but I applaud you for taking this project on and providing a critical eye on development with a goal of sparking debate. I think one of the best features of your site is that you encourage discussion and comments after each piece.
If the “You did that.” were even valid at all, I will take the blame for putting your piece up on twitter in the first place. I put it up, and other pieces critical to industries I work in that I see, not because I necessarily agree with all of it, or in some cases any of it, but because I think that the act of THINKING about the other side of opinions we have is important.

I’d encourage people to read “White Man’s Burden”, but then go out and read Sach’s too…. and Collier while we’re are at it. Read “Dead Aid” and then read the responses from people who think she is dead wrong. Then we can make your OWN opinion, based on lessons we have learned in our own lives and the opinions we have read.

I also think it’s important to recognize that the opinions of all those authors listed above, all those who comment here, Tori, myself, and anyone with either a positive or negative opinion on micro-credit are making their opinions only based on what they are exposed to, as we all do. One of our Cambodian staff members comes from an island in the river near Phnom Penh. He talks of how there are micro-credit agencies walking down the dirt roads handing out cash, each family taking on debt from a new micro-lender when they can’t afford to pay back the previous loan. This is in Cambodia, where there is no credit agency and nothing to stop people from taking on more debt in a spiral. His opinions on micro-credit, based on his experience, are quite valid in their negativity.

On the other hand, I have seen people here who did have plans, and did know how the wanted to make money off of their loans and were able to pay them back and improve their lives, little by little. They didn’t take out micro-loans to buy TVs (as some do here perhaps not understanding that, when using it in your home, a TV doesn’t usually help you pay itself back!). For those who have found success, their opinions of micro-credit being a huge positive change agent in their lives is indeed valid as well.

Perhaps one of the problems is that people assume that Kiva, legally a non-profit organization, only partner with other NPOs. This is of course not the case – they partner with both commercial and non-commercial banks. Not all are in the business of educating, making sure people don’t take on loans without a solid plan, etc and are not claiming to be. In the same vein, Kiva is open on their website about how their system works: they are basically giving MFIs interest-free loans from which to give more loans (Kiva isn’t actually giving money to individuals in any way). This and that they partner with commercial MFIs is on their site, but perhaps the general public doesn’t get that, hence the confusion when they find out.

As Kiva is indeed an NGO, and works directly with many groups, both fabulous ones doing education as pointed out above and ones doing little more than trying to sell loans, perhaps the best question is not whether or not “Kiva” is good, but what partnerships do they have that are having the BEST impacts and how can THOSE be maximized and the least effective or perhaps negative ones be dropped? If Kiva is in effect giving MFIs free money, then it is in Kiva’s best interest to give that money to groups who will not abuse that privileged, and they surely look to do that.

Tori pointed out that, in some cases where she visited, loan officers are stretched too thin. Once again, this is likely the case in some places and not in others. In the areas where it is, or in areas like Cambodia where there seems to be a new micro-credit organization or bank on every street corner, the speed at which the industry is growing seems to far outweigh the ability to monitor it. Areas where credit agencies exist likely have a better time preventing people from getting a micro loan from each bank on the street before going into substantial debt, but some areas, like here in Cambodia where I live, that is not the case.

I recently heard the CEO of Grameen Bank for Asia talk about her work and impressions of micro-finance. She expressed the same concerns I have, that if the impact on the individual and family level is not looked at, we could be causing harm and not know it. She stressed how important follow up was and how knowing and surveying and understanding the realities for the end users of these types of grants and loans is so important for us to understand in order to improve systems to be more effective.

By providing a forum for people who have seen and experienced both the pros and cons of development to share their ideas and lessons learned, I think you are doing a huge service, Tori. The negative views need to be heard so that we can improve the way we operate and so that we can better form our arguments against those whose opinions we disagree with. Thank you for providing a platform through which we can do so.

I do not think that Tori is advocating for all NGOs or micro-credit to stop working by putting these blogs/videos out. I think she is asking US to think, question, learn, and then VOTE RESPONSIBLY with our money. WE, the donors of the world who are reading this, are the ones who have a responsibility to put our money into areas/people/organizations we believe in. The more we know about organizations and the realities of development, the better we can make educated votes with our money. For me, I am more likely to donate to a group where I can say “what are you doing differently now than you were 2 years ago and what mistakes did you make that led to that change” and get an honest answer. “No mistakes” = no trust from me. If groups like Kiva, or any NGOs or businesses as well, are open about the realities of the very complicated systems in which we all work, which is very rarely black and white, open to talk about both the negative and positive impacts of their actions and the areas they are looking to improve, what more can we ask? Perhaps some will argue Tori’s videos/blogs are too simple, and I agree they take something very complicated and try to make it black and white, which is impossible. What they DO do though, is get us to think and discuss, and I appreciate that.

I hope this can open up to a point where people who have the loans themselves and have lived both the positive and negative side of micro-credit can air their opinions rather than us observers. In the meantime, we should talk to THEM and ask and learn. By doing so we can improve what we do.

Learn to talk with them
For it you do not talk with them
You will not understand them
You will fear them
And what one fears
One destroys
– Chief Dan George

Tori – YOU got us talking. You got people thinking about this, which hopefully leads them to asking more questions and giving money to groups they have more understanding about. You are inspiring a lot of people to learn more. YOU did that. And you should be proud.