ananya roy's poverty capital is interesting - http://v1.cepa.lk/content_images/publications/documents/1001-S-Roy-Poverty%20Capital.%20Microfinance%20and%20the%20Making.pdf
here are some of the mentions made of fazle abed - they show innovation context of a system developing contextually over 50 years of rural women building a nation
In 1972, Bangladesh achieved
independence from Pakistan, having been placed in this geopolitical
configuration by British colonial rulers as they departed the Indian subcontinent
in 1947. The war for independence exacted a heavy toll of death,
suffering, and sacrifice. It is in this context that BRAC emerged as a relief
organization, led by Fazle Abed with a small founding core of “young,
nationalistic youth” working to resettle refugees in the remote northeastern
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reach of Bangladesh. After a while, Abed and his team “came to realize that
reconstruction was only a stop-gap and that new approaches were needed
to help poor villagers on a permanent basis” (Lovell 1992: 23; see also Chen
1983). Abed recounts the transformation as one dictated by the need to
address poverty: “Poor people are poor because they are powerless.” Relief
work, he felt, did not address such powerlessness or challenge the distribution
of wealth (Armstrong 2008). BRAC thus went from being “an
almost entirely donor-funded, small-scale relief and rehabilitation project”
to “an independent, virtually self-financed paradigm in sustainable human
development . . . one of the largest Southern development organizations”
(http://www.brac.net/, accessed July 10, 2008).==========
The “credit as a human right” framework is often identified with the
models of microfinance that are practiced in Bangladesh. But I will later
argue in this book that the story of development and poverty alleviation in
Bangladesh is more complex. Indeed, “credit as a human right” can be
understood to be a “public transcript,” obscuring a less visible “hidden transcript”
of social protection programs and human development
infrastructure. Here, the work of BRAC, which is perhaps the world’s largest
NGO, is crucial. Like the Grameen Bank, BRAC also uses microfinance as
a key instrument of poverty alleviation. However, it embeds microfinance
in a vast array of development services. While Yunus, in an interview (August
2004), impatiently noted that “there is no point waiting for the state,” Fazle
Abed, founder and chairman of BRAC, states that his main goal is to “align
government policy to meet the needs and aspirations of the poor”
(Covington 2009: 24).
=======================
But social
capital, specifically “good” social capital, can also be converted into economic
capital (Fine 2000: 62). The interlocutors of millennial development,
such as Francis Fukuyama, thus turn to “culture” and “premodern”
traditions and norms (Fine 2000). Bundled together as social capital, such
traditions and norms are unmatched in their capacity to perform “double
duty”—“as a counterweight to the unfettered individualism of the market
and, simultaneously as a means to gain advantages in it” (Portes and
Landolt 2000). Thus BRAC, one of Bangladesh’s largest development NGOs,
emphasizes “process capital”: “the greatest power of microfinance lies in the
process through which it is provided” (Abed and Matin 2007: 4). Such views
present a challenge to CGAP’s market minimalism, for they indicate that
institutional innovations are as significant as financial innovations; that
“development finance must also be defined as building social capital”
(Capital Plus 2004: 5).=================
At the 2005 Boulder Institute, various key
figures in the CGAP circuit talked about how if microfinance were to receive the
Nobel Prize, then the prize should go to BRAC. “If I were in charge of Nobel Prizes,”
declared Marguerite Robinson, World Bank consultant, “then I would give it to Fazle
Abed and his extraordinary institution, BRAC.” These declarations anticipated the
inevitable: that Yunus and the Grameen Bank were the public face of global
microfinance, and that a Nobel Prize would undoubtedly be conferred upon them.
BRAC, while much more favored by the Washington consensus, did not enjoy the
same global recognition. BRAC was not—as one of the Italian attendees at Boulder
had put it so elegantly—as beloved and well-known as is parsley in Italy.
======
Muhammad Yunus and Fazle Abed (2004) jointly wrote a letter titled
“Poverty matters.” Never published by the New York Times, it appeared on the
Microfinance Gateway. Yunus and Abed make note of the “three decades of
innovation” in Bangladesh that have made microfinance a “powerful tool” to help
the very poor and that were overlooked by the article. In an interview (December
2005), Yunus registered his outrage that the letter was never published by the New
York Times. He saw this as evidence of how his ideas were being marginalized and
superseded by the authoritative knowledge produced by CGAP.=========
Yunus and Abed (2004): “Without incentives, the free
market doesn’t cater to the world’s poorest people. Instead they are the first
to be left behind.” Their argument rehearses familiar themes of millennial
development: of market failure, of persistent poverty as a severe form of such
market failure, and of the role of development interventions in mitigating
market failures. But it also rehearses a geographical imagination that
challenges the Washington consensus on poverty:
If the experts in New York and Washington lived in Bangladesh, as we have
done for more than 50 years, and were confronted with the same stark realities
and intimate knowledge that only experience provides, perhaps they too would
see what is possible and needed in the lives of the very poor.
(Yunus and Abed 2004)=============
the Grameen Bank is recognized primarily
for its “outreach,” in other words for the millions of borrowers that
it serves, but it is rarely presented as a model of innovative microfinance.
Instead, such praise is reserved for BRAC, whose innovations have been
circulated by CGAP and its experts. BRAC’s founder Fazle Abed has received
substantial global recognition—from the Conrad N. Hilton Foundation
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99
Humanitarian Prize to the first Global Citizen Award of the Clinton Global
Initiative. In presenting BRAC with the Gates Award for Global Health, Bill
Gates noted that “BRAC has done what few others have—they have achieved
success on a massive scale, bringing lifesaving health programs to millions
of the world’s poorest people” (Covington 2009). A recent book on BRAC
makes note of its “remarkable success,” a message endorsed by the who’s
who of millennial development: from Bill Clinton to George Soros to James
Wolfensohn (Smillie 2009).
Since its modest inception as a small-scale relief rehabilitation project
in 1972, BRAC has grown into one of the world’s largest non-profit
organizations with over 40,000 full-time staff and over 160,000 paraprofessionals,
72 percent of whom are women. BRAC’s annual budget is over
$430 million, 78 percent of which is self-financed. BRAC’s microfinance
program, with 6 million borrowers, has cumulatively disbursed $4 billion.
More than 1.5 million children are currently enrolled in 52,000 BRAC
schools and over 3 million have already graduated. BRAC’s health program
reaches over 100 million people in Bangladesh with basic healthcare services
and programs for tuberculosis, malaria, and HIV/AIDS (http://www.brac.
net/, accessed August 3, 2008)==========
In a visit to Bangladesh in November 2007, during which time he met
with Yunus, World Bank president, Robert Zoellick acknowledged that
“Bangladesh has made significant economic and social gains since the
1990s. Its human development achievements have been remarkable in
reaching a number of the Millennium Development Goals.” World Bank
statistics show sharp drops in poverty (from 70 percent in 1971 to 40 percent
in 2005); as well as significant increases in secondary school enrollment,
childhood immunization, food security, and drops in infant and child
mortality and fertility. World Bank reports now forecast that Bangladesh
could join the list of “middle income” countries in ten years (http://www.
worldbank.org.bd/WBSITE/EXTERNAL/COUNTRIES/SOUTHASIAEXT/
BANGLADESHEXTN/0,,contentMDK:20195502~menuPK:295767~pageP
K:141137~piPK:141127~theSitePK:295760,00.html, accessed May 17, 2008).
Such human development impacts are a matter of pride in the development
community in Bangladesh. In an interview (December 2004), Fazle
Abed noted the decline of maternal mortality as one of the most important
achievements of Bangladesh in recent years. As described by Covington
(2009), Abed has a personal tie to such an issue, with his first wife having
died in childbirth in 1981: “I thought at the time, ‘My God, if my wife can
die in a Dhaka hospital, it must be so much riskier for the poorest women
having difficult childbirths in rural areas without any hospitals, without
any support.’” But it is also a story about institutions: BRAC’s maternal
mortality program currently reaches 30 million people and is set to “scale
up to cover the entire country” (Covington 2009). The interest in such
indicators also marks the Bangladesh consensus as ineluctably different
from the Washington consensus on poverty. While the latter gives place of
prominence to financial indicators, the former is focused on human
development and the inter-generational transmission of poverty=====
The Bangladesh model is also an experiment in social development.
While the Washington consensus valorizes a minimalist model of microfinance,
the Bangladesh model is best understood, in the words of Fazle
Abed, founder of BRAC, as “microfinance multiplied” (Microfinance
Gateway 2008). Of the many innovations, let me highlight three: “opportunity
ladders” for the ultra-poor; social enterprises and value chains; and
building economic and political assets.=================
include social and political power.
Fazle Abed and Imran Matin (2007: 4) argue that the “greatest power of
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115
microfinance lies in the process through which it is provided” and how it
thus creates “new forms of engagements, relations, and capacities” through
“social intermediation.” They call this “process capital.” BRAC’s village
organizations, each with 30–40 women members, are a key institutional
arena for the creation and circulation of such process capital. Established
by BRAC, the village organizations are federations of the poor that achieve
autonomy and that manage various aspects of development—from loan
repayment to what Matin, in an interview (December 2005), described as
“pressing claims at the local level for resources.” The village organizations
are both an institution that facilitates “one of the world’s largest
nongovernmental financial intermediation programs” as well as a way of
organizing the poor through practices of conscientization (Lovell 1992: 1).
As in the case of its ultra-poor programs, BRAC is acutely reflexive about
its village organizations. In an interview (December 2005), Matin speculated
on whether they serve as pathways for poor women to enter into the public
life of the village and even political life beyond. Others in BRAC seek to
understand whether such village organizations can be relied upon to ensure
that the benefits of development reach the ultra-poor and thereby resist the
“elite capture” of such benefits (Hossain and Matin 2004: 7). These are
radical considerations that speak directly to structures of power.======
BRAC’s international success poses interesting questions about the
globalization of microfinance. Unlike the Grameen Trust replications that
adhere, in seemingly strict fashion, to a formula—first the Grameen Bank
model and now Grameen II—BRAC’s international programs seem more
fluid. Thus, Fazle Abed notes that in Afghanistan, BRAC had to start with
community infrastructure projects rather than with microfinance:
“Organizing women into microcredit groups began as a follow-on service
to tailoring centers and quickly gained acceptance.” Similarly, in Africa,
BRAC adjusted its lending practices: “Trading activities are more common
among our African clients, so we responded to their demand for shorter
duration loans” (Microfinance Gateway 2008). Will BRAC be able to hold
on to this philosophy, articulated by Imran Matin in an interview (June
2004), that while it is possible to learn from its work in Bangladesh, it is
impossible to replicate this work in any formulaic fashion? Will the influx
of development capital—$15 million from the Gates Foundation to replicate
BRAC’s microfinance, agriculture, and health programs in Tanzania and $1
million from Nike to establish designated centers for teenage girls in
Tanzania—transform BRAC into a “best practices” institution?
Recently, BRAC has established “non-profit resource mobilization
organizations,” one in London and one in New York, to “support BRAC’s
global expansion.”=================
the Bangladesh consensus on
placing priority on human development (rather than simply loan repayment
or income generation). They also reinforce the argument made repeatedly by
Bangladesh institutions—that what matters most is not the decrease in
income poverty for microfinance borrowers but rather the impacts on their
children, as noted by Fazle Abed in an interview (December 2004):
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124
In BRAC we constantly ask how we can create the maximum impact on the
next generation, especially girl children . . . There have been great improvements
in Bangladesh in infant mortality and other human development indicators.
I never thought I would see them in my lifetime.==============
the striking trend
of microfinance securitizations. The first of these, launched in 2006,
provided BRAC with 12.6 billion taka or approximately $180 million of
financing. Structured by RSA Capital, Citigroup, FMO (Netherlands
Development Finance Company), and KfW development bank, the deal
“involves a securitisation of receivables arising from the microcredits
extended by BRAC . . . and the creation of a special purpose trust which
purchases the receivables from BRAC and issues certificates to investors
representing beneficial interest in such receivables.” Fazle Abed, founder and
chairman of BRAC, celebrated the securitization as “a landmark for the
microfinance industry . . . We have brought the global financial markets
to the doorsteps of nearly 1.2 million households in Bangladesh”
(http://www.brac.net/, accessed December 17, 2006).
Securitizations can be seen as a new strategy of the Bangladesh consensus.
In 2008, ASA International, ASA’s global network, with operations
in China, Cambodia, Ghana, India, Indonesia, Nigeria, Pakistan, the
Philippines, and Sri Lanka, secured an equity capital commitment of $125
million from Catalyst Microfinance Investors, a private equity investment
fund managed by ASA and Sequoia, a corporate investment firm (Business
Wire 2008). These securitizations are meant to create access to cheap capital
for microfinance institutions, thereby, as BRAC argues, “reducing dependency
on volatile donor financing.” They seek to recalibrate the asymmetries
of global–local transactions by conferring financial power on microfinance
institutions. For example, in the case of the BRAC securitization, the “entire
currency risk for the transaction is borne by global investors” (http://
www.brac.net/, accessed December 17, 2006). Indeed, like microfinance
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itself, securitizations place their faith in access to capital as the key to
development.========
Abed, F. and Matin, I. (2007) “Beyond lending: how microfinance creates new forms of capital
to fight poverty,” Innovations, Winter and Spring, 3–17.
Covington, R. (2009) “Bangladesh’s audacity of hope,” Aramco World. Online. Available HTTP:
http://www.saudiaramcoworld.com/issue/200903/bangladesh.s.audacity.of.hope.htm
(accessed June 10, 2009).
Microfinance Gateway (2008) “Microfinance multiplied: an interview with Fazle Abed.”
Online. Available HTTP: http://www.microfinancegateway.org/p/site/m/template.rc/
1.26.9120/ (accessed August 16, 2008).
Yunus, M. and Abed, F. (2004) “Poverty matters,” unpublished letter to the New York Times.
Online. Available HTTP: http://www.microfinancegateway.org/p/site/m/template.rc/
1.26.9075/ (accessed September 1, 2004).
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