Neoliberal approaches focus on market-oriented policies and practice to encourage growth in development countries, including access to financial services for individuals previously considered un-bankable. The Women’s Development Businesses (WDB) in South Africa, a Grameen Bank microfinance replicator, provides an empirical case to provide insight on the basic question: does microfinance fuel neoliberal economic growth through female microentrepreneurs. I will examine two ancillary questions that frame the debate: 1) does microcredit empower or exploit the poor, 2) does gender matter in women’s access to credit and related financial services. I will explore the debate in scholarly literature on the effectiveness of neoliberal microfinance programs in the cultural context of Africa, and South Africa in particular.
The South African WBD Group is an instance of microfinance that offers insight into the scholarly debate about neoliberal market-based poverty remediation practices. I hypothesize that microfinance, when provided ethically and judiciously to rural South African women microentrepreneurs, can provide a useful building block for economic development. The WDB case demonstrates that microfinance cannot be administered effectively to impoverished and often illiterate rural women without a social support infrastructure that includes business training and skills development, as well as the opportunity for the women to graduate from microloans to larger loans. This paper will examine the scholarly debate about microcredit programs as tools of empowerment or exploitation, specifically in terms of gender-based access to microfinance.
Poverty is an intransigent issue that refuses to budge, though many development sticks poke at it from all sides. Development solutions have been debated by scholars through the decades based on the motivations and intended outcomes for aid – whether for diplomatic, humanitarian, developmental, commercial, cultural, educational, or religious reasons. Among many purposes, aid served as a means to promote economic and social transition, democracy and conflict mitigation. Domestic politics often shape the conduct of foreign aid by donor-dependent worldviews, beliefs and norms; as well as the types of legislative institutions, prevailing domestic public opinion, and organizational framework for how development aid is disbursed (Lancaster 2006).
No matter how development aid has been structured, poverty still exists. The continent of Africa has profited least from development, with sub-Saharan Africa ranking the poorest. “50 percent of the world’s poor” exist on $1 per day (Moyo 2009: 5). Though the region can boast a modest 5 percent growth rate in recent years, it still falls below the 7 percent rate projected by 2007 African Progress Panel required to reduce poverty (Moyo 2009). South Africa, though classified as an emerging economy, is considered by its people to be a First World Country with Third World problems, based on my own personal conversations with South African citizens. My daughter spent a year in South Africa providing trauma counseling to AIDS orphans. We’ve both visited the poorest of the poor in townships and shacklands around Johannesburg – many of which are within sight of upper class gated communities, or lavish retail shopping malls and casinos. Miles and miles of tin shacks line the major highways, housing marginal sections of society who live without floors, electricity, plumbing, or water in spaces smaller than an office cubicle in the United States. They survive, but without much hope of thriving.
Zanele Mbeki, founder of South Africa’s WDB microfinance institution mirrors Dambisa Moyo’s argument that grants and charity don’t work. She believes that ”ordinary people today continue to suffer intolerable humiliations and indignity because they are denied the opportunity to take control of their own lies and to provide for themselves and for their families, thus being reduced to objects of aid and charity when they would rather be subjects of their own creation. Poverty is not caused by the poor. It is a result of the macroeconomic development frameworks, policies, institutions, legal and regulatory instruments, human development approaches, resource allocations and overall strategies that we adopt and thet exclude the poor. Current global inequalities are clear evidence of this exclusion” (Westol 2010: 110).
Moyo rebukes aid as a solution for poverty in Africa. She argues that “aid has helped make the poor poorer, and growth slower” and scoffs at the myth that “aid can alleviate systemic poverty” (Moyo 2009: xix). She believes development assistance throughout Africa creates “aid-dependency” Moyo 2009: xv). She advocates an “aid-free solution to development” (Moyo 2009: xx). “At the end of it all, it is virtually impossible to draw on Africa’s aid-led development experience and argue that aid has worked. The broadest consequences of the aid model have been ruinous” (Moyo 2009: 27). Mbeki’s WDB microfinance operation, however, provides an empirical case that market-driven development aid, when applied thoughtfully, culturally, ethically, and transparently, can be effective in breaking the cycle of poverty in rural areas of South Africa. Her success shows that women microentrepreneurs can provide fuel for the neoliberal growth engine.
The question of whether or not microfinance is an appropriate vehicle to alleviate poverty is a subset of the larger scholarly debate on neoliberal development aid practices. Proponents embrace microfinance as a market-oriented development tool to provide access to financial services for the un-lendable in developing countries. Critics view microcredit as the trade in debt, rewarding the creditor at the expense of the poor.
Neoliberal development policies rely on private sector engagement to jumpstart and sustain the growth process – in part through lending practices facilitated by the World Bank and International Finance Corporation. Access to financial services is part of a market-driven development strategy, yet more than half the global population, approximately 2.7 billion working age adults, have no access to formal financial services, according to the World Bank Global Financial Inclusion Database (Ehrbeck 2012). An estimated 90 percent of the world’s financially excluded live in developing countries. “Financial transactions – payments, savings, borrowing, and insurance – are the basis of most of our daily activities, whether we are rich or poor. If anything, the evidence from studies in developing countries shows that the poor actually depend on financial transactions more than rich” (GPFI 2012 website). Microfinance, along with retail microlending, are tools in the market-oriented development toolkit. Microfinance institutions serve small, informal sector microenterprises that enable “hundreds of millions of disadvantaged people” – mostly lower-income women – an opportunity to “raise incomes by building businesses, but also keep their pace of purchases stable, finance major expenses, and cope with sudden downturns (IFC Women 2011: 42). Deborah James indicts this trend in the neoliberal economy as the freedom to consume and spend through open market engagement, leading to unsustainable indebtedness. “Neoliberal means serve to ensure the ever-wider spread of redistribution, but with the apparent result, ultimately, of concentrating resources in the hands of fewer” (James 2012: 37).
Microfinance is not a new phenomenon. Savings clubs and money-sharing groups have existed for centuries, providing communal access to capital among those without collateral, credit history, or steady employment. Muhammad Yunus’s vision for using microcredit to improve the lives of poor female entrepreneurs and eliminate poverty is the twist that earned him recognition by the Nobel Committee who acknowledged microcredit as a major player in the fight against poverty. As of 2006, Yunus’ Grameen Bank had 98.9 percent recovery rate on nearly $6 billion in loans (Krieger 2006). Since the 1960s and 1970s, microfinance institutions have increased around the world, offering options beyond the local loan shark. Most often, they offer small loans of working capital to micro-entrepreneurs in the informal economy, based on social collateral.
Microfinance, according to the WDB and Grameen Bank model, is “highly labor-intensive and completely people-oriented” (Westoll 2010: 56). More than a banking process, microfinance is a business practice rooted in relationships – “training trainers and borrowers, social cohesion, business assessment and advice, business and literacy training, repayment arrangements, even savings components” (Westoll 2010: 56). Ananya Roy argues that microfinance was retooled by the World Bank in the 1990s to be a global “poverty panacea” with the potential to be valuable investment asset – an “exotic instrument” “at the risk margins of money markets (Roy 2012: 132). Microfinance from a critical perspective is a “highly popular poverty intervention” tool that integrates the bottom billion, who exist in extreme poverty, into “global circulations of finance capital” (Roy 2012: 132).
The 2011 United Nations Report on Microfinance in Africa describes the role played by microfinance at all levels of the financial system – micro, meso, and macro. At the micro level, microfinance institutions (MFIs) play a predominant role as financial service providers, with savings handled by banks and membership credit unions retaining popularity. Support service suppliers at the meso level help coordinate activities of the MFIs. At the macro level, market-based approaches orient policy, regulatory, and supervisory frameworks under which the MFIs operate. Structural flaws are evident at all levels with uneven application and quality control, as well as weak governance, human resources, portfolios management, and internal controls. With strengthened public-private partnerships between the MFIs, the governments, and development donors, microfinance is seen to play a valuable role in sustainable investment and development growth (UN 2011).
World Bank reports show that microfinance was “one of the most profitable global asset classes of the opening decade of the new millennium” (Roy 2012: 135). Critics, however, point out flaws in microfinance policies, such as the shift from social services to microcredit by the International Monetary Fund and World Bank. Others argue that microloans are misapplied for basic needs rather than entrepreneurial opportunities, and bottom tier individuals and communities remain excluded due to unacceptable risk to microcreditors (Krieger 2006). For clients who are creditors, this new avenue for credit may look “beneficial and liberating” to the people who were previously financially excluded, yet the “indebtedness is more likely to be seen as burdensome and imprisoning for the debtor” (Peebles 2010: 226). James views the evolution from microfinance to retail credit microlending under the neoliberal economy as the freedom to consume, which “looks like a very definite unfreedom: massive levels of consumer indebtedness” (James 2012: 20). Anthropologists critique access to microfinance for disempowered in light of “predatory lending” practices, where “debts are pushed on debtors by excited creditors.” In the case of consumer microcredit, “debtors are not necessarily needy; rather, new needs are created to promote the need for new debts” (Peebles 2010: 227). Finance and indebtedness amplifies the “underlying conditions of uneven and combined development” of neoliberal policies in South Africa (Bond 2012: 2).
The use of terms, however, can create confusion in the literature. To clarify, microlending is different from microfinance, though they both deal in microcredit. Microlending targets individuals who have paychecks, considered by the banks to be lendable because they can earn money to pay back the loan. Microfinance is based on social assets, like trust within the community. WDB’s Mbeki argues that microfinance – lending to the poorest of the poor who have no assets – is an instrument of economic development. Though, she argues against microcredit as a “money spinner,” used for the purposes of turning a quick profit (Westoll 2010: 59). She agrees with Moyo that microfinance is “better than giving grants in perpetuity – even in areas where you might count only on 80 percent recovery rates (Westoll 2010: 59). Grants offer no recovery rate at all, and the poor have no opportunity to “graduate out of poverty” as they can with the WDB lending program (Westoll 2010: 59). Tilman Ehrbeck, the CEO of Consultative Group to Assist the Poor (CGAP), an independent financial policy and research center housed at the World Bank, applauds “hidden champions of broad-based, low-income retail banking in developing countries” that have evolved from traditional microfinance institutions into “regulated deposit-taking banks” catering to low income populations (Ehrbeck 2006 Web). Microcredit in South Africa, however, is viewed by critics as a “discredited” development strategy; citing the “power, vulnerability and destructiveness of markets that have spiraled out of control” with the South African Reserve Bank setting the highest interest rates in two decades, rendering “unpayable levels of unsecured consumer debt” (Bond 2012: 1).
Financial inclusion through microfinance introduces the burden of debt to those already impoverished. “Debts are pushed on debtors by excited creditors” (Peebles 2010: 227). Microfinance makes possible the “financialization and thus capitalization of the social relations of the poor” (Roy 2012: 142). Microfinance is based on the assumption that “the poor always pay back” (Roy 2012: 142). Ananya Roy describes this process as “poverty capital” – the “conversion of the social world of the poor into monetized, profitable finance” (Roy 2012: 142). Debt is the commodity “produced, traded, and valued” in microfinance based on a “calculation about the social habits of the poor and how they can be capitalized” (Roy 2012: 142). In South Africa, “the momentum of financialization has been sufficiently strong as to push the economy into such a payments deficit…that The Economist rated South Africa the riskiest of 17 peer emerging economies by early 2009” (Bond 2012: 1). And yet, WDB flourishes, as well as the women who enter the program. WDB founder believes that “lending can’t stand on its own. Development is the spine on which we grow. The groups borrowing from WDB become like a captive classroom for other topics like nutrition, agriculture, and financial services. Lending means nothing if it is without training, education, and skills transfer” (Westoll 2010: 59).
Social justice activists are attempting to reclaim the “microfinance space from seemingly rapacious commercialization” in an effort to curtail debt-trade practices among the most vulnerable (Roy 2012: 133). Mbeki bemoans the fact that WDB and other microfinance NGO practitioners are “witnessing their development mission for changing lives being high-jacked successfully by the for-profit motive of commercial lenders” – the money-spinners (Westoll 2010: 13). Roy rebukes the diversion of microfinance from a successful “remedy for financial exclusion” into microlending by predatory loan sharks or mashonisas that “undermined the social mission” of poverty reduction (Roy 2012: 131). More than an ethical issue of predatory lending practices that include poor governance, high interest rates, unethical collections, and illegal practices, microfinance faces a “crisis of trade in debt” that threatens its resilience (Roy 2012: 136).
In South Africa alone, the 30-40 poverty-targeting microfinance NGOs are barely breaking even, collapsing under the “strain of expensive loan funds, low sector skills, high operations costs, and a hostile operating environment” regulated by commercial providers (Westoll 2010: 15). The neoliberal dimension of microfinance encourages free engagement with the market by the un-bankable – the credit-starved, blighted, savings-drained, disinvested poor (Bond 2012). “If this is neoliberalism at work, then following Jamie Peck, what must be traced is the mongrel character of such neoliberalism, its fragile construction, it’s contradictions” (Roy 2012: 132). Muhammad Yunus, however, offers a different perspective. He describes the World Bank’s mission to alleviate poverty, and believes that the “Bank should provide increased funds for microfinance and make sure that half of those funds go to families living below $1 a day. If the Bank doesn’t do it, who else will? It’s the right thing to do” (Microcredit Summit Advocacy webpage 2009).
In order to fully understand the how microfinance enables female microentrepreneurship as fuel for the development engine, I look at the question of financial inclusion for women. The question is whether or not gender matters in poor women’s ability to access financial services, specifically microcredit. The literature shows that scholars may debate specific gender-based approaches to development; but few question the need to close the gap between women and men in financial accessibility.
The World Bank makes the case that increased financial access for women helps increase development outcomes (World Bank 2012). The UN Millennium Development Goal 3 addresses gender equality and empowerment of women (IFC Access 2011). World Bank Group literature tells us that access to finance, combined management training and skills development, offers women entrepreneurs a better chance to succeed and create jobs for others in their communities (IFC 2011: 19, 20).
Women in emerging markets represent full or partial ownership of 8-10 million SMEs – 31-38 percent, but female entrepreneurs is primarily focus small business, often in the informal micro-markets. Terms of borrowing, for the women who have access to financial services, tend to be less favorable with higher interest rates, shorter term loans and higher share tied to collateral. Nonfinancial barriers include adverse legal and regulatory requirements, less education and experience, cultural constraints, and lack of infrastructure. Investors are reluctant to lend to women entrepreneurs, who are perceived to be “riskier, higher cost, and/or lower return” than their male counterparts (IFC Access 2011: 9). Microfinance helps compensate for the lack of access to formal finance, yet women entrepreneurs need to move beyond microcredit in order to grow their business. As “microfinance institutions diversify and into banks,” service to women declines – causing a growth gap beyond microentrepreneurship (IFC Access 2011: 13). As By 2013, IFC plans to reach the global women’s market by providing global financial institutions with $3.1 million in assets specifically for loans to SMEs – one fourth of which are owned by women. The reason IFC places on focus on women “because gender focus is good for business, good for development” (IFC Women 2011: 3).
The financial landscape for women in South Africa mirrors much of what female entrepreneurs face around the world. In South Africa, studies sponsored by the International Finance Corporation point to unequal access to finance, defined by race and gender. Black African women remain on the edge of economic activities. Women comprise 52% of the South African population, of which 91% of white women are banked, as opposed to 38% of black women. 42% of black women have no access to financial assets, with the remaining 20% resorting to informal financial products, including savings clubs, retail credit, insurance, or burial societies. Black women comprise the largest self-employed segment of the population, with the majority of their businesses in the informal sector. (Naidoo, Hilton and Melzer 2006).
The International Finance Corporation (IFC), a member of the World Bank Group, operates under the G20 Financial Inclusion mandate to “promote access to finance and asses the size of the women-owned small and medium enterprise (SME) market, the financial needs of women entrepreneurs in developing countries, and the obstacles they face in assessing finance” (IFC 2011: 2). To complement this agenda, IFC is using a “women-targeted approach” in an effort to scale up programs piloted in Africa to help women entrepreneurs access financial capital (IFC Women 2011: 3). In South Africa, the Broad-Based Black Economic Empowerment Act (BEE) was enacted to increase opportunities for black women to own or manage entrepreneurial enterprises, and increase skills training and financial infrastructure to support their endeavors. Black women remain marginalized by financial gender inequality, despite the provisions of BEE, because financial institutions assume their issues are addressed automatically. Despite the fact that women traditionally repay loans at a higher rate than men, women entrepreneurs face prejudice and barriers to access to abundant private and public sector financial resources. Specific obstacles include lack of financial literacy and confidence in decision-making, lack of understanding about availability of public and private development microfinance resources, and insufficient BEE targets for women’s business activity. The study found that most women are disqualified business loans through traditional bank services, which rely on collateral, asset-based lending. Only one of every four banks considered engaging in more women-owned enterprise programs, and only two microenterprise lenders exist to serve 56,000 primarily female microentrepreneurs. Rural areas remain disadvantaged and neglected. (Naidoo, Hilton and Melzer 2006).
According to the IFC, private sector engagement empowers women to influence economic decisions within their circles and communities, and “harnesses an untapped potential for advancing development” (IFC Women 2011: 4). Gender, as a measurement index, cuts across IFC’s Sustainability Policy and Performance Standards, which measure the “gender-specific impact” of investments since 2008 (IFC Women 2011: 6). Their slogan, “what gets measured, gets done” (IFC Women 2011: 6). Kate Bedford argues that the technocratic statistics-driven performance standards, such as these, result in “pressures for efficiency framings of gender policy, focused on how attentiveness to gender enhances productivity and growth” (Bedford 2007: 292). Improving the status of women through access to finance and entrepreneurship is labeled “smart economics” because “economically empowered women are major catalysts for development” through greater investment in their children’s health and education, increased bargaining power at home, and promotion of the next generation’s “human capital” (IFC Access 2011: 15). Bedford would most likely point to the previous argument as a example of World Bank employees who are “notorious in development circles for stressing the business case for gender equity” with research to back economic repercussions from domestic violence, rape, HIV/AIDS, and abortion – though data may not adequately support these “efficiency-based claims (Bedford 2007: 292).
Amy Lind argues that poor women, though targeted for relief under neoliberal development policies, continue to struggle– “not only for their daily lives, but also to change economic, political, and social inequalities in their societies” (Lind 2002: 228). “The poorest of women today have higher economic burdens than ever before;” therefore, “finding a language to speak about development policies that benefit poor sectors of women is difficult in this historical period” (Lind 2002: 229). Lind argues that neoliberal policies place poor women at risk as a “source of cheap labor” to shore up a “weak welfare state” – resulting in “disempowerment” in the development process (Lind 2002: 229). Social constructionists do women no favors by “burdening women with improving their daily living situation and changing societal values about gender” (Lind 2002: 230). Neoliberal development policies, according to Lind, are often applied at the local level in ways that “sustain and reinforce women as volunteer or undervalued labor” (Lind 2002: 233).
Though some scholars acknowledge progress for institutional embedding of gender-based discourse and standards, others fear it will “render feminist development efforts complicit in neo-liberal restructuring” (Bedford 2007: 292). Lind calls for caution in addressing “gender biases in neoliberal social- and economic-development policies” in order to prevent institutionalization of women’s survival strategies (Lind 2002: 246). The financialization of poverty and gender may overburden women as a development cure, exacerbating a gender bias where “women are viewed as willing, passive absorbers of economic crisis and restructuring (Lind 2002: 245). To provide a reality check on the theoretical debate on neoliberal gender-based policies, the first African woman to receive a Nobel Peace Prize offers her perspective on why women matter in the development discourse – “women are responsible for their children, they cannot sit back, waste time and see them starve” (Westoll 2010: 7).
The central question of this paper explores the role women microentrepreneurs play in fueling a market-based economy for their impoverished rural communities in South Africa. Can they be an instrument to jump-start growth when granted access to microcredit and training through the Women’s Development Businesses programs, and being given access to graduation loans to continue growing?
In developing countries, a disproportionate share of women-owned enterprises range from micro to medium, which often fail to scale – creating negative implications for development growth to reduce poverty (IFC 2011). South Africa’s Women’s Development Businesses Group helps fill the gap in microcredit and financial services for impoverished women in rural areas, and promote social and economic empowerment. Following the fall of apartheid and encouraged by the Grameen Bank microcredit strategies, Zanele Mbeki started WDB in 1991 to alleviate poverty and empower the “ever-marginalized rural poor” – the very poorest of the poor (Westoll 2010: 9). Though few microcredit NGOs break even, WDB is a women-owned microfinance success story, along with the success of the poverty-stricken rural women who received and profited from access to microloans. WDB was “kick-started through donor funds, scaling up to concessional loans,” and eventually profitability (Westoll 2010: 13). Though WDB has since closed out its partnership with Kiva, it was Kiva’s first field partner in South Africa, securing microloans and repaying the outstanding balance in full. Since its inception, WDB disbursed R36 million (over $4 million) to 35,000 women, meaning 150,000 benefitted – assuming an average five-member household.
The founders and initial staff members rose up from the “struggle for a democratic South Africa. Their histories are rich, fraught with emotion, sacrifice, and idealism. Some went into exile, others remained in South Africa. The common motivator for all was not self, but the determination to be free and uplift others” (Westoll 2010: 81). They operate the organization based on principles and values of social justice. WDB is not a place to get money, it’s an organization where the women they lend to are expected to give back, to “contribute to the greater welfare,” and “find meaning in life through service to others less fortunate” (Westoll 2010: 81). They see their role primarily as a change agent to intervene in the cycle of poverty, with organizational sustainability and profitability as secondary (Westoll 2010).
Starting with R20,000, which is the equivalent of little more than $2000, Mbeki gathered together female colleagues with business, financial, and banking skills set out to “change the world,” starting with a pilot program to meet the needs of 50 unschooled rural women in Acornhoek, Mpumalanga (Westoll 2010: 9). The women received R300 or $34 for their initial loans – “an overwhelming sum for women who had seldom held more than R10 ($1.10) in the hands” (Westoll 2010: 9). After three months, the woman repaid 100% of their loans, launching WDB into its current operation with three divisions: WDB Microfinance, WDB Trust, and WDB Investment Holdings.
The story behind WDB follows the script offered by Roy of debt trade in poverty capital. WDB founder Zanele Mbeki’s experience is echoed in Roy’s description of microfinance as the “mystical and transcendental practice of monetizing the promise of a poor woman who has never before touched money,” and yet, I find the story no less compelling (Roy 2012: 142). Mbeki believes that access to microcredit is “one good act that can be undertaken within the growth-based strategy” in favor of the poor which enables the “poor themselves to gain access to productive resources so that they can realize their own productive potential, improve their own living standards, and take full advantage of the evolving physical and social infrastructure” (Westoll 2010:12-13). The women who received microcredit from WDB broke through “barriers of cultural brakes, suspicion and ignorance and created trust, self respect and self confidence – surely the foundations of a rich and healthy society not based solely on materialism and superficiality but on humanity, principles, ethics and values” (Westoll 2010: 12). WDB served as an alternative to the mashonisa, the shadowy moneylender in black South African townships (Bond 2012). The mashonisa – the Zulu word for “one who impoverishes” or “takes and continues to take indefinitely” – represented the only experience these women had with money lending (James 2012:21). When first approached by the WDB city ladies about microcredit, rural women of Mpumalanga wanted nothing to do with them. They had witnessed all too often what happened when male members of the communities failed to repay high-interest debts owed to masonisas, and all the family’s possession were repossessed.
Most of these women were illiterate and had never been allowed to handle, much less manage, money. The opportunity for credit of any kind seemed suspect. In order to win over the women of Mpumalanga, the WDB founders and staff learned to follow cultural traditions, by winning approval of the male tribal and community leaders to allow the women of their community to participate. The community leaders, amused by the experiment at first, began to respect and encourage participation after seeing the success of the 50 women in the pilot project. The women formed lending groups that were accountable for the collective repayment of the loans. No additional loans would be disbursed until all the initial loans in the group have been repaid. The women worked together to reach success. WDB taught them basic literacy, book-keeping skills and computer training. The women improved their lives as a collective unit rather than as individuals. The Mpumalanga women weren’t content with “just one or two loans to get by,” they took out larger loans, diversified, pooled their resources, and built business together – recruiting their children, husbands, and neighbors (Westoll 2010: 11).
Financial inclusion through the “financialization of development” can only be achieved by “converting the shadow economies of the poor into enterprise” which involves risk (Roy 2012: 138). WDB sees it differently. A WDB Advisor described the “precious and powerful” kind of entrepreneur cultivated by the microfinance loan and training programs, comparing it to “what the Israelis did in the desert, bringing barren land to bloom, but seeding and planting human beings. Some grow like tall trees, others smaller, but all growing where there was nothing before” (Westoll 2010: 60).
The WDB story is not without it’s failures and growing pains, but they persevered and learned from their mistakes. Over the years since the first microloans dispensed in Mpumalanga, the WDB reconfirmed that “women constitute the largest percentage of the very poor,” they “experience hunger and poverty worse than men,” they are willing to “follow the onerous microcredit procedures, and will sacrifice more to get their families out of poverty” (Westoll 2010: 13). Roy, however, argues that the “global media story about microfinance switched from entrepreneurialism to debt and despair” (Roy 2012: 136). Peck might argue that the WDB success story can be critiqued not as “simply found objects,” but rather “actively co-produced with the new consensus on poverty alleviation” – “self-fulfilling affirmations” of neoliberal microfinance policies that benefit the creditor, which is, in this case, WBD (Peck 2011: 176). Testimonials and success narratives serve to “incentivize risk-taking, investment-oriented behavior on the part of poor households,” yet this behavior reaped reward, according to WBD literature (Peck 2011: 165). Roy labels this discourse, “necropolitics,” where the “global headlines of microfinance” no longer tell the story of resilience, but give testimonies of “death and despair” – the “suicide epidemic” among Third World female microentrepreneurs in developing countries (Roy 2012: 135).
At first glance, critics may argue the WDB success neglects inevitable stories of “bankruptcy courts and collection schemes” that accompany the credit/debt cases (Roy 2012: 139). However, looking more closely at the WDB, the organization works hard to provide transparent documentation, as well as impact assessment where they closely monitored client growth, diversification, change in living standards, improved education for the children, and nutrition. When they found drop out rates over 10 percent with women’s groups, they interviewed the individuals to reassess the tailored approach for the community, then changed the format to better reflect the needs of their clients. Their approach is highly labor-intensive for the individual loan agents, who spend much of their time in the field with the communities they served. WDB demonstrates real commitment to transparency and ethical management. When they discovered fraud in the accounts, they investigated the entire financial structure to determine the root of the problem. They dismissed the entire Board and set more rigorous accounting practices in place – even though these decisions drew attention to the problem and risk hurting their ability to raise donor funds. They learned from their very costly mistakes that their values and principles must be rooted throughout every level of the human capital infrastructure. From this low point, they focused on the impoverished rural women (Westoll 2010). Except for the one incident with corruption which WDB addressed, the organization would most likely score high marks with William Easterly and Tobias Pfutze for best practices in how they distribute funds, specifically for their commitment to transparent book keeping, specialization and selectivity in providing aid exclusively to the impoverished rural women, and effective channel for the funds directly to microcredit. Their overhead costs were higher, however, due to the cost of sending loan consultants out in the field for months at a time to live in the communities they served (Easterly and Pfutze 2010).
WDB believes that the goals of economic development should recognize the “feminization of poverty” and provide solutions that offer “improved living standards alleviation of poverty, access to dignified employment and the reduction of inequality” (Westoll 2010: 13). Constanza Tabbush provides a feminist skeptic take on the practice of poverty relief that “relies on the actions and willingness of poor women to exit from their situation of deprivation” (Tabbush 2010: 438). “Recruiting women in poverty reduction” programs promotes a “feminization of responsibility and obligation” – using a gender construct that places women as the “main instrument of social protection” and the means for creating their own “path out of destruction” (Tabbush 2010: 438-9). WDB recognizes the reality that poor women in impoverished rural areas have no way out of poverty except by constructing the path themselves – with help from microcredit and WDB loan consultants. They conducted impact studies that demonstrated “money reaching a family through women brings more benefit,” which validates why their NGO targets the poorest women in the population (Westoll 2010: 13). They also found that women who participate in microcredit programs gain self-esteem, respect and improved status in the family, better access to nutrition and education for their children, improved home life and lower morbidity rates. They create rural jobs within their communities, and generate savings and other financial assets – fuel for the neoliberal growth engine (Westoll 2010).
The case of the WDB demonstrates how microfinance can bridge seemingly opposite outcomes – “from rebuilding the self-worth of the world’s poor to rebuilding the portfolios of investment banking” (Roy 2012: 138). WDB practices have proven successful breaking through what James calls “credit apartheid” providing access to credit for the poorest of the poor women in rural South Africa (James 2012: 33). The WDB believes South Africa should invest “massively in the poorest women” of the nation in order to “attain the national goals of eradicating structural poverty, of bridging the gender, racial, economic and digital divides” (Westoll 2010: 17). Mbeki believes they are the “barometer of economic and social development. From their living conditions, the world will judge if South Africa is a caring and humanitarian society” (Westoll 2010: 17).
Debt is a social problem, according to James and Roy, but so is poverty. Any tool can be used and abused. In answering the question about the viability of microfinance as a poverty-alleviation tool, the case of WDB demonstrates that when managed and applied responsibly, microfinance can prove to be a successful neoliberal tool for economic growth, especially with microentrepreneurs can graduate to small and medium enterprise loans. In the question of whether or not women have equal access to financial services, I believe the answer is a resounding no. All literature points to discrimination in culture, attitudes, and tradition, but the debate continues around the wisdom of gender bias in policy decisions. The central question about the role women microentrepreneurs as fuel for the neoliberal growth engine is proven successful in the case of the WDB and their careful cultivation of impoverished rural women through the labor-intensive, community-based opportunities for microcredit and essential training. Microcredit enables these women to create jobs and financial assets for the community, a building block for development. In the rural communities of the most extreme poverty in South Africa, the microfinance programs offer women new skills in business and marketing, where often none existed before. WDB offers a holistic model on how to create successful microbusinesses within a culturally-sensitive community support structure for women microentrepreneurs, that has been proven to be an important component to economic viability of their families and community. This model, if applied in a cultural context, may be generalizable to other regions and nations in Africa. The long-term effect of gender-based market transformation lies outside the scope of this paper.
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Crosspost on my personal blog: “Message of Hope: Female Micropreneurs.”
