Microlending's Unexpected Role in Haiti's Recovery

[Are_grits_groceries]

In the aftermath of the earthquake in Haiti, microbanking is proving to be useful in unexpected ways. Haiti has a microlending bank called Fonkoze. It's a branch of Muhammad Yunus's Grameen Bank, in fact. It has been working in Haiti for 15 years, giving tiny loans to poor Haitian women.

After the earthquake, Haitians working abroad were desperate to get money to their relatives, and the banking infrastructure set up by Fonkoze—which, unlike that of other banks, reached deep into the city's rural and poor areas—was the best distribution network available.

Over the weekend of January 23, Fonkoze worked with the State Department, the Pentagon, and JP Morgan to quickly collect and deliver $2 million in cash to Haiti's most vulnerable earthquake victims.
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Jennifer Harris, a member of the policy staff of Secretary of State Hillary Clinton, in a memo to Pentagon officials released by Fonkoze, spelled out the implications of the combined State-Defense operation.

“Fonkoze has by far the deepest reach into the country’s rural poor, a remittance network that would take years to recreate from scratch. As people continue to migrate from Port-au-Prince, Fonkoze’s branch network will become even more essential,” she said. “Perhaps most important, unlike the commercial banks, Fonkoze has re-opened many of its branches and has continued to pay out remittances using its cash on hand.”
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There are still some open questions about the extent to which microcredit creates real entrepreneurs, but it's clear that the distribution networks a good microbank establishes can help vulnerable communities more resilient in all sorts of ways.
http://www.good.is/post/microlending-s-unexpected-role-in-haiti-s-recovery/

This is good news. Hopefully, it will reach even more people.

[Hannah Bell]

1. tell me again why putting poor people in rural haiti in debt during a disaster

is a good idea?

[Are_grits_groceries]

2. Here's a start about how it works:

http://www.grameen-info.org/index.php?option=com_content&task=view&id=388&Itemid=

[Hannah Bell]

3. i know how the grameen bank works. that's not what i asked.

here's some reading for you:

"The literature on Grameen is an echo chamber of hurrahs. Even the Nobel Committee didn't bother looking more deeply. Its press release is 5 paragraphs of puff. Its link to other resources includes only one source: The Grameen Bank.

The uncritical attitude is especially strange given the extent to which pawn shops and payday lending — which, unlike Grameen, are genuine market institutions — in poor areas of the United States are hounded by the anticapitalist Left. Why is giving high-interest loans to the inner-city poor considered exploitative in the United States but wonderful and compassion in Bangladesh?

The best fallout from the prize, then, will be a continued rethinking of the core assumptions behind microcredit of the Grameen model.

Sudhirendar Sharma of New Delhi writes that the effect of the Grameen strategy has not been to reduce poverty but only to create a debt trap for borrowers, who are being charged very high rates of interest relative to conventional banks."

http://mises.org/story/2375


it's mises, but their analysis in this case is on the money.

[Are_grits_groceries]

4. Thanks for the link.

I'll look into it more.(Not sarcasm!)

[Hannah Bell]

5. thanks for your civility. imo, grameen (which obama's mom's research for the

ford foundation, btw, provided some of the intellectual underpinnings for) & similar operations are part of a multi-pronged strategy to "marketize" the last remaining bastions of traditional & barter economies on the planet.

i.e. to pull in peasants & tribal people who still make a good deal of their living outside the global cash economy so they can bleed them too.

gates foundation is also into this stuff.