Book Review: comparing two different microcredit programs

The Grameen Bank set the model for microlending. As microcredit banks began in other countries, some have changed the model as they see fit, or to better fit the values of the country the bank will operate in.

Oxford University Press has published a book that compares the models between the Grameen Bank in Bangladesh to the Kashf Bank in Pakistan. Padmini Swaminathan of The Hindu writes this review of Nabiha Syed's work Replicating Dreams.

The book begins on a very promising note by mapping the contours and elements of what constitutes the famed Grameen Solidarity Group Lending Model and its adaptation by Pakistan’s Kashf Foundation. Following the Grameen model, Kashf requires five women to form a peer group in order to obtain a loan. These groups are entirely self-selected, as in the Grameen system, and all five women must live in close proximity to one another and must not be blood relations.

In a notable deviation from the Grameen example, all Kashf borrowers must be married. “The rationale is that unmarried women are prone to moving out of a geographical location after marriage, and moving implicitly indicates loan default.” But, as the author notes, the exclusion of unmarried women means denial of opportunity for single women to build up enough capital and acquire self-sufficiency that could give them a certain amount of economic bargaining power while entering into a marriage contract.

Further, given the conditions within which a bulk of the women in Pakistan have to function, Kashf specifically permits women to obtain loans on behalf of their husbands. “This approach was designed to overcome possible objections to the economic activities and advancement of potential participants.” A little later, the author explicates this point in a different way: “… a chauvinistic society will not tolerate a programme promoting financial independence of women on any other terms but its own.”

Kashf claims that in allowing women to borrow on behalf of men the entire family unit is enabled to get strengthened because the process entails joint family decision-making. Moreover, and this is a striking observation, micro-credit programmes require significant time commitments on a weekly basis and that, in turn, impinge on time that can be accorded to household labour. If the ‘double-bottom’ line of micro-credit, namely women’s empowerment and financial advancement, is to be ensured then, according to Kashf, men need to be included in the process to allay apprehensions of female takeover of hitherto male-dominated space.

Kashf’s own internal audit of its lending programme in 2001 revealed high attrition rates,with much of the attrition resulting from “client expulsion for poor performance rather than from them opting to leave”. An examination of the reasons for differential performance of the programme in Bangladesh and Pakistan brought out, among other things, the fact that institutional differences accounted for much of the disparity in success levels. For example, the author notes, the areas in which Kashf operates are still heavily under feudal control, which militates against any attempt (such as individual entrepreneurship or financial independence) that is even remotely perceived as a threat to its system of organised subordination and hierarchy. “The entry of an institution which encourages individual economic growth, self-empowerment and self-employment and at the same time denies landlords income derived from informal credit offerings would obviously not be welcomed by the feudals.”