Only few recent ideas have generated as much enthusiasm for poverty alleviation in countries of the southern hemisphere as the idea of microfinance. It promises both the provision of costeffective banking services to poor households and lifting people out of poverty through microenterprise development and self employment (Murdoch, 1998). Success stories, such as the granting of the Nobel Peace Prize to Muhammad Yunus and the Grameen Bank in 2006, are being broadcasted around the world. Although evidence for the role of microfinance in poverty alleviation remains highly contested, especially due to recent media coverage about suicides among borrowers (Biswas, 2010), advocates of these programs
still insist on its continuation. Marguerite Robinson, author of The Microfinance Revolution, states that, despite ups and downs and some setbacks, “it seems like the idea of sustainable finance for the poor is here to stay” (MCS, 2001, p. 5). By having successfully established the key tenet that an estimated 2.7 billion poor people worldwide are in need of access to formal financial services (World Bank, 2011), the industry’s practices are almost exclusively
criticized by positivist approaches without questioning its underlying assumptions. Due to its hegemonic appearance, it is reasonable to state that “microfinance is everywhere” (Roy, 2010,
p. 22). This essay aims to question the concept of microfinance itself as being common sense.
By adopting a poststructuralist attitude, it is possible to uncover and expose these reigning assumptions (Agarwal, 1996). In this sense, this analysis attempts to reveal this example of “establishment of truth” (Foucault, 1975, p. 184) because we not only govern others and ourselves according to these powerful truths but truth is also produced through the way we govern others and ourselves (Dean, 2010). The first section provides a brief overview of the extent to which microfinance has entered the global stage and afterwards, it tries to contextualize this idea within the emergence of advanced liberal government and millennial
development. The subsequent section aims to show the hegemonic features of microfinance, especially through the control of knowledge through the CGAP initiative, before continuing
with an in-depth study of different contradictions of empowerment as a major feature of microfinance. The final part summarizes the results by highlighting the mechanisms through which microfinance governs its recipients.
Table of Contents
1. Introduction
2. Microfinance as the ‘panacea of choice’
3. The colonization of microfinance
4. Microfinance as empowerment?
5. Concluding remarks
Research Objectives and Core Themes
This essay aims to critically analyze the hegemonic status of microfinance within global development. By adopting a poststructuralist perspective, the research interrogates the underlying assumptions of the microfinance industry, arguing that it functions as a mechanism of advanced liberal government that responsibilizes the poor rather than dismantling structural inequalities.
- Genealogy of microfinance as a global development tool
- The institutionalization of knowledge through the CGAP initiative
- Critique of the ‘empowerment’ narrative in gender-targeted lending
- The role of microfinance in governing conduct and shaping self-perception
Excerpt from the Book
Microfinance as the ‘panacea of choice’
It is hard to find any other single practice in the field of development studies that has received that much attention and admiration over a comparable period of time. Since its emergence in the 1970s, commentators have tried to outdo each other in terms of its potential solutions to global problems. While some went as far to say that “microfinance is one of the most important economic phenomena since the advent of capitalism and Adam Smith” (Khosla as cited in Roy, 2010, p. 1), most commentators, such as Jeffrey Sachs (Kiva, 2011) and Paul Wolfowitz (Ilcan & Lacey, 2011), claim that it is a wonderful tool to reduce poverty and empower poor people.
The broad consensus on microfinance as an accepted practice to meet the poor’s need for financial services reaches across comletely different political camps. It has become an everybody‘s darling for Western development practitioners, international NGOs, the Western banking industry, aid icon figures (Gates, Bono, Sachs), and authors highly critical of development aid, such as Dambisa Moyo and William Easterly (Roy, 2010). Before it is possible to grasp the hegemonic status of microfinance by examining its ‘genealogy’ (Dean, 2010), it is necessary to define the concept itself.
Summary of Chapters
1. Introduction: The introduction outlines the rapid rise of microfinance as a perceived solution to global poverty and defines the essay's intent to use poststructuralist theory to question its status as common sense.
2. Microfinance as the ‘panacea of choice’: This chapter explores the broad consensus surrounding microfinance, examines its definition as a financial service for those lacking banking access, and contextualizes its emergence within neoliberal governance.
3. The colonization of microfinance: This section investigates how the Consultative Group to Assist the Poor (CGAP) standardized microfinance knowledge to establish a global consensus and consolidate power.
4. Microfinance as empowerment?: This chapter critically analyzes the claim that microfinance empowers women, arguing instead that group-lending mechanisms primarily serve to enforce repayment and privatize social responsibilities.
5. Concluding remarks: The conclusion synthesizes the argument that microfinance functions as an instrument of 'ethopolitics' that shifts the burden of development onto the poor while reinforcing existing power structures.
Keywords
Microfinance, Development, Hegemony, Empowerment, Advanced Liberal Government, CGAP, Poverty Alleviation, Financial Inclusion, Grameen Bank, Neoliberalism, Ethopolitics, Poststructuralism, Governance, Global South, Economic Growth.
Frequently Asked Questions
What is the primary focus of this essay?
The essay explores how microfinance has achieved a hegemonic status in development practice, positioning it as an unquestioned "truth" that shapes global policies.
What are the central themes of the work?
Key themes include the critique of neoliberal development, the institutional control of knowledge, the concept of "empowerment" in gender-focused banking, and the governance of individual conduct.
What is the main research question or goal?
The goal is to move beyond the positivist praise of microfinance and expose the underlying power mechanisms that make it a pervasive tool for governing the poor.
Which theoretical framework is applied?
The author adopts a poststructuralist approach, drawing heavily on Michel Foucault’s concepts of governmentality and truth production, as well as Gramscian ideas of hegemony.
What is covered in the main body?
The body analyzes the history of microfinance, the role of institutions like the World Bank and CGAP in defining "best practices," and the critical assessment of micro-credit's impact on women.
Which keywords best characterize the paper?
Essential keywords include microfinance, hegemony, ethopolitics, empowerment, and neoliberalism.
How does the author define the role of the CGAP?
The author views CGAP as a "knowledge bank" that exerts power by standardizing microfinance models and establishing what is considered common-sense development practice.
Does the author believe microfinance leads to female empowerment?
No, the author argues that the focus on women in group-lending is primarily a strategy to ensure high repayment rates through social and local pressure, rather than a genuine effort to address gender inequality.
- Arbeit zitieren
- Ronny Röwert (Autor:in), 2011, Microfinance: Held to Account, München, GRIN Verlag, https://www.hausarbeiten.de/document/184469
