Jan

7

Tough times for Microfinance. Daniel Ortega et al. and the "Movimiento No Pago":

Microcredit is losing its halo in many developing countries:

Microcredit was once extolled by world leaders like Bill Clinton and Tony Blair as a powerful tool that could help eliminate poverty, through loans as small as $50 to cowherds, basket weavers and other poor people for starting or expanding businesses. But now microloans have sparked political hostility in Bangladesh, India, Nicaragua and other developing countries.

In December, the prime minister of Bangladesh, Sheikh Hasina Wazed, who had championed microloans alongside Clinton at talks in Washington in 1997, turned her back on them. She said microlenders were "sucking blood from the poor in the name of poverty alleviation," and she ordered an investigation into Grameen Bank, which had pioneered microcredit and along with its founder was awarded the Nobel Peace Prize in 2006.

Here in India, until recently home to the world's fastest-growing microcredit businesses, lending has slowed sharply since the state with the most microloans adopted a strict law restricting lending. In Nicaragua, Pakistan and Bolivia, activists and politicians have urged borrowers not to repay their loans.'

"Even as the results for borrowers have been mixed, some lenders have minted profits that might make Wall Street bankers envious. For instance, investors in India's largest microcredit firm, SKS Microfinance, sold shares last year for as much as 95 times what they paid for them a few years earlier.

And things are not going too well for Muhammad Yunus, Nobel Peace Prize winner and microfinance pioneer:

….Finally, a court has ordered Yunus to appear on Jan. 18 to face charges of defamation, apparently for saying in 2007 that politicians pursue only money. He could be arrested and tossed in prison for that. And given the timing, it sure looks as if this is an orchestrated campaign to take him out, and seize the bank for the government. If this is a concerted campaign, then presumably it could happen only with the approval of Prime Minister Sheikh Hasina. And she does seem to have changed her pitch: a former supporter of microfinance, she recently denounced it as "sucking blood from the poor in the name of poverty alleviation."


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