retread| Exploit Women and Win a Nobel!

Retreads are quality posts from yesterweeks that are given a second run on Saturdays. This piece was originally posted by VARANGALI on 18 Oct 2006.

Given the opportunity to fight against poverty and hunger women turn out to be natural and better fighters than men.
Muhammad Yunus, Grameen Bank founder and recipient of the Nobel Peace Prize, 2006

The Grameen Bank has been heralded for what many considered a pipe dream: earning profit by alleviating poverty. Having loaned $5.7 bn over 30 years to poor villagers at a loan recovery rate of 99%, many have asked “where is the magic?” Unfortunately, it lies in exploiting the very same women Grameen Bank claims to liberate.

Grameen Bank, since it cannot demand physical collateral in case the poor default, ensures repayment by loaning money to 6-person collectives instead of individuals. When any person’s payment is overdue, the access to loans for all is suspended. As such, each individual in the collective exerts pressure on the others to maintain their payments.

In rural Bangladesh, social pressure on men is fairly negligible. At its founding in 1976, Grameen Bank lent almost solely to men. But by 1987 women accounted for 75% of loans, and today they form 97% of all loan recipients. Despite official rhetoric, this shift was due to the inability to force men to make their payments. As one bank officer notes in Aminur Rahman’s 1999 study on Grameen Bank:

[Men] do not come to meetings, they are arrogant, they argue with bank workers and sometimes even threaten and scare bank workers. It is good that our superior officers have decided not to recruit new male members, although we do not have any written instruction about it.

Women in Bangladeshi rural society are more susceptible to social pressures. As Vanu, a Grameen Bank client, noted to Rahman:

When a woman fails to make her installments on time, she experiences humiliation through verbal aggression from peers and bank workers in the loan center… In an extreme case, peers may take the defaulter to the bank office. For a man, if he is locked inside the bank building for several days, it would mean almost nothing to other people in the village. But if this happens to a woman, then it will bring durnam (shame) to her household, lineage, and village.

To illustrate her point, Vanu recounted a story from a neighboring village: a woman who had failed to pay her loan installments was locked in the village’s bank office. Humiliated, she hung herself from the ceiling fan with her own sari.

Men remain front and center in the process. Rahman found that 72% of women taking loans had originally been asked to do so by their husbands or another male relative. Similarly, a 1996 World Development study confirmed that only 37% of women had full or even significant control over the enterprises formed from their credit. Furthermore, a 1995 World Bank study found that Grameen Bank had had no significant impact on women’s wages, but had increased the wages of men and children.

Grameen Bank has exploited the positional vulnerability of women in rural Bangladeshi society, and after eight years of borrowing, 55% of Grameen households still aren’t able to meet their basic nutritional needs. With interest rates at nearly 20%, Grameen clients have too often entered a cycle of poverty endemic to victims of usury. Or, in journalist Gina Neff’s words:

Under the banner of liberation, Grameen ironically reinforces women’s traditional roles; while capitalizing household activities, women are kept out of waged work – which, whatever its limitations, can offer women some degree of independence. As Goetz and Gupta put it, using women as “conduits for credit for the family” keeps women as the “policers of recalcitrant men,” dubious progress in gender relations.