Moving beyond microcredit

The phrase ‘leaving no one behind’ signifies the key objective of inclusive and sustainable development as enshrined in the United Nations’ Sustainable Development Agenda 2030.

This inclusive sustainable development vision, inter alia, provides key policy ingredients of gender equality and women’s economic empowerment. Nonetheless, it stops short of providing alternative pathways of empowerment for women living in the global South. Although, this development agenda moves beyond the traditional approaches of empowerment by broadening the recipe of policy choices for governments, it does not question the fundamental systemic issues of disempowerment, disenfranchisement and poverty.

The Sustainable Development Goals (SDGs) are broader and much more holistic than their predecessors, the Millennium Development Goals (MDGs), in their treatment and appreciation of poverty as an integrated phenomenon. These goals provide a wide range of indictors to measure the overarching objective of improving the quality of life on a sustainable basis. The factors of sustainable development – ranging from poverty, nutrition, affordable energy, climate action, gender equity, life below water, sustainable cities to reduced inequality through well-governed institutions – are included in this 15-years’ development agenda.

Nonetheless, transnational factors of global instability, war, conflicts, inequality and economic distribution have not been included fully as causes of poverty. There is no binding principle or legal instrument to enforce inclusive development policy doctrines in a world defined by unequal economic and political transactions.

The critics of contemporary international development assert that the SDGs are not adequate to address the systemic causes of underdevelopment. For them, the SDGs are only an imposition on the weaker governments of the global South if the strong economies of the world do not concede part of their transnational interests for a larger goal of sustainable development at the global level. From climate action to global trade, the world is divided along transnational economic and political interests to serve the national objectives of the powerful global North.

Sustainable development is not possible without protecting the industrial and economic base of the poorer countries. Free trade has had disastrous impacts on the poor of the developing world because it has uprooted the organic economic life of the poor without offering them a viable alternative. A poor farmer in rural Sindh or an industrial worker of Faisalabad is the losing party in unidirectional trade liberalisation where wealth flows from poor countries to the rich ones. The free flight of capital across national borders, and restriction on labour movement, is the biggest hindrance to creating an equal world.

The neoliberal economic order provides fanciful, project-oriented and ad-hoc solutions for the deep-rooted and systemic problems of underdevelopment and disempowerment. The proponents of economic growth argue that financial inclusion brings benefits to individuals and economies. For individuals, it means access to credit for emergencies or social needs and purchases, a path to savings and an opportunity to expand a business and manage risk. For the larger economy, financial inclusion increases savings, expands and reduces the price of credit for investment and entrepreneurship and helps to allocate labour and capital more efficiently, thereby promoting faster economic growth.

However, this is a questionably reductive approach of financial inclusion and access that shapes an econometric argument of empowerment. The accelerated pace of prosperity is short-lived only if it does not provide some integrated solution to the state of poverty. Being un-bankable does not matter much if there is no macroeconomic environment for small and medium enterprises to flourish. Allowing the un-bankable poor access to financial resources will not serve as a means of empowerment if there are no viable entrepreneurial opportunities for the poor to invest the loan. This will only increase the indebtedness and vulnerabilities of a poor household.

Economic liberalisation has taken a heavy toll on those poor people who are adversely incorporated into the global economic system, which tends to promote inequality and underdevelopment. Women in low-income countries are the most vulnerable segment of the global poverty in that the most of their domestic labour remains unaccounted for. Women’s empowerment is not only about economic autonomy, but has political, social and cultural dimensions which must be considered in the policy dialogue of women empowerment. At times women become even more vulnerable when their economic activities become an additional burden to their domestic labour which is unaccounted for.

In a nutshell, empowerment is a broad notion which is rooted in the political, cultural and economic structures of a society. Empowerment is not about one’s gender or sexual orientation but more about the masculinity of power that continues to shape socio-political relationships.

We must explore the causes to ascertain why recent evaluations of the empowerment potential of credit programmes for rural women in Bangladesh have arrived at very conflicting conclusions. Although these evaluations use somewhat different methodologies and have been carried out at different points of time, one can argue that the primary source of the conflict lies in the very different understandings of intra-household power relations which these studies draw on. It supports this argument through a comparative analysis with the findings of a participatory evaluation of a rather different credit programme in Bangladesh in which the impact of loans was evaluated by women loanees themselves. With all methodological variances, one thing is universally common across the spatial and temporal spread – that women borrowers themselves are not convinced of the ability of credit as an instrument of poverty alleviation.

There is increasingly visible evidence to show a clear correlation between an integrated approach to women’s empowerment in development projects and poverty reduction. The integrated programme approach has multiplying effects, making the contribution to overall poverty reduction more sustainable than the standalone credit programmes.

There have been many credit plus approaches to improve the likelihood of progress out of poverty. Credit plus approaches include addressing the issues of accountability, governance, access to and quality of basic social services. This calls for three levels of responses to poverty, which are way above the credit reductionism.

First, the macroeconomic policy has to be poverty sensitive – that is, it must have prioritised the indigenous economic growth, and should protect the national industry. Trade liberalisation policy without building national competitiveness creates a consumerist bubble economy that bursts when capital flight takes place. Second, there must be a strong meso-level response to help the government bridge the gap between service delivery – ie the supply of basic services and social demand. Third, there must be a formidable network of grassroots level institutions of citizens to help create an accountable system of social security.

One must not attribute poverty alleviation to a single factor as it requires a multi-layered approach in that public, private and third sector are governed by the principle of putting the people first.

The writer is a freelance columnist based in Islamabad.

Email: ahnihal@yahoo.com