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Politically Speaking: The patriarchy of microfinance Published in the Thursday, January 29, 2009 Edition of Published in the Thursday, January 29, 2009 Edition of By [|Kara Kaminski] Marketplace Editor Muhammad Yunus's founding of microfinance with the Grameen Bank of Bangladesh was recognized by the Nobel Peace Prize in 2006. While the lending practice is creative and capitalizes on the social dynamic of the target communities, the reality of negative unintended consequences prevails. The target group for these loans is women of impoverished communities. The goal is to mitigate poverty in the third world by empowering women into business opportunities. Yunus's basis for lending requires a borrower to have five co-signers. The loan requires no tangible collateral. The social fabric which ties borrowers and potential borrowers/co-signers together is used in place of traditional collateral. The co-signers are not liable if the borrower defaults, but if a default occurs, neither the borrower nor the co-signers are able to take out future loans. Similar systems are employed by other microfinance programs. The reality is that the majority of women receiving these loans are actually forced to forfeit the proceeds to their husbands to utilize themselves. An unintended but frequent result of this dynamic is the promotion of violence within the family of the borrowing women. The question that needs to be addressed is whether or not these societies have the societal structure requisite to support this type of female empowerment.
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In the globalized state of our world, it is in the best interests of all nations to promote sustainable development in third world nations. There is a specific level of global interconnection that only increases as time goes on. Microloans using social capital as a means of collateral are disseminated across the globe to alleviate poverty in third world nations and foster sustainable development. Systems identical to Yunus' Grameen Bank are common in developing nations in Africa and Southeast Asia through organizations like Oxfam, APMAS, CARE, and Opportunity International.

A yard stick for his success and the reason Muhammad Yunus received the Nobel Prize was based on supposed economic empowerment of women and subsequent alleviation of world poverty. Women account for 98 percent of borrowers in Asia, as well as about two-thirds in Africa, Latin America, and the Middle East for all forms of microlending. Microloan success rates are based on the high level of repayment by the women borrowers. But these statistics are not a measure of economic empowerment. High repayment and the fact that lenders are making a substantial profit only demonstrate the credibility of social capital in the target areas. It gives no evidence to the sustainable alleviation of poverty. To know this we need a more intuitive gage. This institution demands a closer look at the dynamics taking place behind the raw financial data. Thursday, February 5, 2009 Edition Grameen bank extends 93.3 percent of its loans to women; the Bangladesh Rural Advancement Committee has 74 percent female membership; 77.2 percent of these of these arrangements are women not allowed full responsibility of their loan. For women who take out loans from the Grameen Bank, 75 percent were sent by a man in their household for his own purposes. These statistics prove a great oversight that not only stymies empowerment of women (it tends to perpetuate the current patriarchal system). Women frequently serve as fronts for male borrowers and thus get these loans without having any fiscal control. If marital status is taken into account, still only 60 percent of widowed, separated, or divorced women are allowed full responsibility of their loans. The fact that even these seemingly single women have no control over their funds shows how fragile the rights are for women in these societies.

Traditional microlending practices are flawed. To adjust the practices, two realizations must be embraced. First, is the misleading measure of business success. Second, is the oppressive norm of third world patriarchal social structure. The goal of microlending is to empower women and alleviate poverty. But, the system is geared toward repayment statistics and profit. Behind the scenes, this has fueled violence against women. Successful economics must take into account social norms. Western gender views and business models must be set aside and not imposed on dissimilar societies. They must be replaced with more intuitive models that monitor the effect of microlending on villages. The quick fix and fast profit will not apply here. It will be a slow and arduous task of moving a society's mindsets while establishing its economy. But while the course is sluggish, the payoff is great and long-term. [| Continued...] Thursday, February 5, 2009 Edition [|News] [|Sports] [|The Scene] [|Marketplace] [|Opinions] [|Editorial] [|Blogs][|Classifieds] [|Ad Rates][|Letter to the Editor] [|Contact Information] [|Search] [|Archives] [|Message Board] [|General Information] [|Register] [|Login] [|My Account] [|Syndication] [|Heights Alumni][|Home] > [|Marketplace] Politically Speaking: The patriarchy of microfinance Published in the Thursday, January 29, 2009 Edition of By [|Kara Kaminski] Marketplace Editor
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