More than 200 poor, debt-ridden residents of Andhra Pradesh killed themselves in late 2010, according to media reports compiled by the government of the south Indian state. The state blamed microfinance companies — which give small loans intended to lift up the very poor — for fueling a frenzy of overindebtedness and then pressuring borrowers so relentlessly that some took their own lives. The companies, including market leader SKS Microfinance, denied it.
[…] One woman drank pesticide and died a day after an SKS loan agent told her to prostitute her daughters to pay off her debt. She had been given 150,000 rupees ($3,000) in loans but only made 600 rupees ($12) a week.
Another SKS debt collector told a delinquent borrower to drown herself in a pond if she wanted her loan waived. The next day, she did. She left behind four children.
One agent blocked a woman from bringing her young son, weak with diarrhea, to the hospital, demanding payment first. Other borrowers, who could not get any new loans until she paid, told her that if she wanted to die, they would bring her pesticide. An SKS staff member was there when she drank the poison. She survived.
An 18-year-old girl, pressured until she handed over 150 rupees ($3) — meant for a school examination fee — also drank pesticide. She left a suicide note: “Work hard and earn money. Do not take loans.” More here.
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The microfinance delusion: who really wins?
Jason Hickel: The failure of microfinance is recognised at even the highest levels, and yet for some reason it retains its staying power, like a zombie that refuses to die. Why is microfinance such a resilient idea? Because it promises an elegant, win-win solution to the problem of poverty. It assures us that we – the rich world – can eradicate poverty in the global South without any cost to us, and without any threat to existing arrangements of political and economic power. In other words, it promises revolution without the messiness of class struggle. And, what is more, it promises that we can help save the poor while making money from it. It’s an irresistible tale.
It’s also a very effective tool of political control. Milford Bateman, one of the most compelling critics of microfinance, points out that the movement had its roots in the US government’s “containment strategy” in Latin America. The idea was to prevent people from subscribing to leftist movements by reframing poverty not as a political problem, but as a private problem. Microfinance became a powerful way of casting the poor as responsible for bootstrapping themselves out of poverty: all you need is a bit of gumption and some credit, and you should do just fine – if you fail, you have no one to blame but yourself.
It’s the neoliberal development strategy par excellence. Forget about colonialism, structural adjustment, austerity, financial crises, land grabs, tax evasion, and climate change. Forget about challenging the concentration of power and wealth. And, above all, forget about collective mobilisation. Bankers shall be our new heroes and debt our salvation. Debt, incidentally, is a great way to keep people docile.