Successful Previous Models Are Available; Why Divi Neguma?
By Charitha Ratwatte -February 11, 2013
Charitha Ratwatte
The Divi Neguma Act is law. There were reported to be a number of amendments made on the floor of the House at the debate. The final product is not yet, at the time of writing, in the public domain.
The Ministry of Economic Development, (wasn’t there to be a Divi NegumaDepartment?) has advertised for inputs from the ‘venerable clergy, professionals, retired Government officials… young leaders to ‘provide input’ to ‘achieve the goals and objectives of the Divi Neguma Development Campaign’ – one of which is ‘to provide micro financial facilities for the purpose of promoting livelihood development’. It seems that Samurdhi institutions are to be relabelled as Divi Neguma.
Role of microfinance
The role of microfinance as a developmental tool and a resource for poverty alleviation has always had its promoters and detractors. Three recent publications have brought the controversy into sharper focus.
Hugh Sinclair in ‘Confessions of a Microfinance Heretic’ provides a genuine spectrum of analysis of what the purposes of microfinance is, what positive outcomes it leads to, and what can be done to make it work better.
On the other hand Milford Bateman in ‘Why Doesn’t Microfinance Work’ argues that ‘microfinance not only fails to improve people’s lives’ and that it is ‘inherently flawed and its foundations on half truths make it a barrier to development’.
David Roodman in ‘Due Diligence’ argues that ‘microfinance is only now being subjected to genuine vigour in its analysis of outcomes, there is little evidence that microcredit has a poverty alleviation effect, but that there are foundations to be built upon’.
Critics have described Sinclair’s ‘Confessions’ as a part whistleblower, part autobiography, describing the author’s decades of work in the microfinance sector, working with MFIs in Mozambique, Mexico, Nigeria and Mongolia. Sinclair also worked with the Dutch-based microfinance fund manager Triple Jump and several other high profile funding organisations. Sinclair is also thought to be the anonymous source of the New York Times exposé on corruption within the microfinance industry.
‘Confessions’ is written with the evident frustration and disappointment of a man who has seen his faith in the industry and its lofty ideals shattered by the firsthand view point of the disconnect between what microfinance is supposed to be doing, in a sustainable manner, financial services to the poor and marginalised to help alleviate poverty and the incompetence the author claims to have experienced at the front line of the microfinance industry.
‘Confessions’ has as its opening premise the allegation that the microfinance industry has adopted some of the characteristics of a cult, the idolatry, the dogma, the intolerance and resistance to criticism. The opening chapter is entitled ‘Thou shall not Criticise Microfinance’! It speaks of a cabal of theorists and analysts, wedded to the orthodoxy of Microcredit turning destitute women into burgeoning micro entrepreneurs, for whom the questioning of the orthodoxy amounts to heresy.
Bateman in ‘Why Doesn’t Microfinance Work’ argues that microfinance by its very nature supports only the simplest, least productive and lowest growth potential activities. Most loans are in fact simply used for consumption, which he argues, the World Bank’s Consultative Group on Poverty (CGAP) recognises implicitly in its attempts to redefine microfinance in terms of financial inclusion, ignoring the issue of the micro loans sustainability.
Bateman in ‘Why Doesn’t Microfinance Work’ argues that microfinance by its very nature supports only the simplest, least productive and lowest growth potential activities. Most loans are in fact simply used for consumption, which he argues, the World Bank’s Consultative Group on Poverty (CGAP) recognises implicitly in its attempts to redefine microfinance in terms of financial inclusion, ignoring the issue of the micro loans sustainability.
This is linked in turn to the danger of over-borrowing and over-indebtedness, which was brought in stark terms in Andhra Pradesh, by the farmer suicides, which resulted in politicians and administrators going overboard in attempting to control microfinance institutions. This resulted in negative consequences for the microfinance industry and the Reserve Bank of India presenting a draft Microfinance Bill to the next session of the Indian Parliament.
Jacques Toureille, General Manager of the Aga Khan Foundation, a broad private network of development agencies founded some 50 years ago in Asia by Prince Aga Khan, says ‘since the 1990s micro-financing of small businesses has started to become big business… these social funding institutions are established as microfinance banks… they’ve been making a lot of money over a short period of time, getting extremely high returns and making a very large margin.’
Sri Lanka
Tuesday , 12 February 2013
Don't write whatever by listening to the foolish politicians. They are operating according to their personal agenda. Write what is useful to the society.
This statement was made by Jaffna district Military Commander Major General Mahinda Hathurusinghe at the press conference held at the Jaffna Civil Administration office.
He said, “I am looking after my duties. My duty is to protect this people. I did not at any time do politics. I will not come to politics. Some fear that I will divide and take the votes of politicians here. But I will not at all enter politics”.
“Politicians will do anything for positions. After they take over positions, what they are doing, only God knows. Because they are politicians, they think that they can do anything. This is a serious matter”.
“Politicians consider military is confiscating lands. Actually we have released many lands belonging to people. We have constructed about 1,800 houses and handed over”.
“Due to this, those families are living peacefully. What did these politicians do? Please don't write in your papers what this foolish politicians narrate was said by him.
