Microloans, Haiti and Planet Money

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Permalink Reply by Anna McDonnell on March 9, 2010 at 12:59pm

Thanks so much for posting this, AnnaB. I actually thinks this elucidates some significant problems in the way we Americans are apt to give. We're passionate, good-hearted and generous. But we are also give impulsively, overly influenced by the media and often give in ways that are not grounded in any kind of intellectual rigor, much less a clear understanding about how the small communities in faraway places actually work.

We hear a sad story, we're moved, we send money. For the woman profiled in the story, this was essentially the equivalent of winning a lottery. What about the rest of her community? I would much rather have seen the $3500 go to a woman's group that would collectively decide what was its best use in their community.

"She then told me that it is very strange for a white man to visit a tent and they are worried because all the neighbors will now wonder: Why is that white man visiting? Did they get something special? She said everyone will be so jealous."

This is exactly why loans to individuals in communities can often cause more trouble than good. Microfinance is not a panacea. Not by a long shot.

When we were in India, we met with a group that had received a grant from the Global Fund for Women. The organization helped women in rural villages create self-help groups. When the groups first form, they often choose as their first activity to begin to save money as a group. Then, when they have enough money, their second activity is often to begin to loan money to the individuals in their group. One benefit of this is that the men in their lives, who are often wary of the women being in a group to begin with, see that it can have concrete benefits for them. Even more important, the microfinance is embedded in the cultural context of the community which supports the efforts of both the individuals and the group itself.

It's a crucial difference, I think.

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Permalink Reply by AnnaB on March 9, 2010 at 1:52pm

You are so right. And I was glad the radio folk included that detail about the guys going into their house. They kind of get it because they're economists but we all get pulled along at the tug of the heartstring. At the same time, here's one woman who -- for $3500 -- can get along. Not a hell of a lot of money.

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