Neo-Liberalism

1. Neo-Liberalism Considering the Evolution of Microcredit Loans

2. Microcredit Loans • Very small loans provided to very poor people to subsidize home-based businesses • Basket-making, jewelry-making, quilt-making, etc. • Small, home-based farms? • Others?

3. Traditional Image of Microcredit Loans

4. Initial Goals of Microcredit Loans • Increased economy autonomy for women • “Empowerment” • Foster social connectivity and solidarity between poor women • Greater sense of well-being • Increased productivity • Alleviate Poverty in “Third World Countries”– Aid to “Development” • Increased social inclusion of women into formal economy.

5. Early Microcredit Structures • Created and managed by Non-Governmental Organizations (NGO’s) • Subsidized by private foundations and/or government grants. • Interest was used to create loan opportunities for other women, and to promote social responsibility (giving back). • Developed and implemented by small organizations that worked in specific local communities • Driven mostly by intangible benefits, not profit-making

6. Feminist Economic Development Model • 1970-1980’s –Women’s Rights as Human Rights Paradigm • Access to credit was defined as a human right, that many women were denied due to patriarchal family structure • Established Women’s World Baking Networks • Increase of NGO’s offering Micro-credit Loans

7. Global Marketization(Globalization) of Microcredit Loans • Growth of organization dedicated only to Microfinancing all over the world. • Promoted microcredits as a “best-practice” to foundation and policy-makers. • Increased involvement of IGO (International Government Organizations like World Bank, U.S. Agency for International Development) promoting microfinance model to NGO’s. • Increase of NGO’s offering micro-credit using “best practice models” in different part of the world.

8. The Neoliberalizationof Micro-credit Loans • Microcredit Loans >>>>>Micro-financing Institutions (MFIs) • Growth of MFI’s—found everywhere on the globe • Increased government support and IGO support for MFI’s • Focuses on profit-making through granting a very large number of very small loans • Success is defined by number of women’s reached not by decline in poverty • Success defined by repayment rates not by alleviating poverty

9. Neo-liberalism • Microcrediting is commodified, transformed into a product or service rather than a social project. • Increased focused on creating and “tapping into” new markets, not on alleviating inequality. • Government involvement is viewed as a hindrance—privatization is viewed as “cost-effective” • Policies created to ease entry for private banking institutions not to redistribute wealth in society. • New model of “Financial Services for the Poor”

10. Impact on NGO’s • NGO’s pressured to convert into commercial banks. • Now lending private money to make marginal profits • Governments and Foundations eager to fund microcredit lenders rather than actual non-profit organizations. • Funding profit making organization rather than social justice organizations.

11. Globalization • Global neo-liberalism characterized by: • Increasing concentration of wealth to a small number of elites • Growing global economic interdependence that supersedes the power/interests of individual states (de-territorialization) • Global dissemination of capitalism (both its economic model and underlying cultural values • World-wide global inequality • Compression of time/space through technological innovation—especially the movement and flow of information and credit.