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Gates’ Billion Dollar Leftism, Part Four: Funding High Interest Microloans
Posted By Michelle Horstman On June 1, 2010 @ 10:00 am In NewsReal Blog,Uncategorized | No Comments
One of the Gates Foundation’s big recipients of grant money at almost $10 million in 2009, is the Grameen Foundation, one of the first to promote the worldwide microloan industry. Although winning its’ founder, Muhammed Yunus, a Nobel Prize in 2006, many question the motivation and actual results coming from the microloan industry.
Uday Kumar Barua, a resident of Jobra village told Shaptahik 2000 that, even a single person in the Jobra village was not benefited by Dr. Yunus. Most of the borrowers turned completely pauper and they even had to sell their homes for paying the loan interest and left the village. Many of them even ended up as baggers.
Even after having Hillary Clinton in one of the Grameen bank´s project at Rishi Palli at Moshihati, shrewd Yunus initiated a project named ´Hillary Adarsha´ [Hillary Model] and started distributing loans to the locals. Although Hillary Clinton was given assurance of providing soft-term loan to the poor villagers, in reality, they [the villagers] were to pay 30-40 per cent interest.
In years after the visit of Hillary Clinton, the entire village turned into a land of horror. Extreme poverty due to high interest charged by Dr. Yunus pushed them towards starvation, poverty and other social problems.
Another post from the Center for Global Development investigated a very expensive and flawed FINCA study of microloans, well worth reading, with some insightful thoughts from commenters, such as:
The MFI industry has become a profitable money lending business for consumer finance. Its exaggerated claims to get people out of poverty is blinding the policy makers and donors to look for new products and services in which microfinance is not the whole story. Poverty in Africa has rural roots and unless rural poverty and agricultural development are addressed, eliminating poverty will remain a distant dream.
Even the New York Times exposed the less-than-noble side of microloans in a piece titled Banks Making Big Profits from Tiny Loans. Regarding the sky high interest rates, they stated:
In recent years, the idea of giving small loans to poor people became the darling of the development world, hailed as the long elusive formula to propel even the most destitute into better lives.
But the phenomenon has grown so popular that some of its biggest proponents are now wringing their hands over the direction it has taken. Drawn by the prospect of hefty profits from even the smallest of loans, a raft of banks and financial institutions now dominate the field, with some charging interest rates of 100 percent or more.
Their article concludes:
Promotion aside, the overriding question facing the industry, analysts say, remains how much money investors should make from lending to poor people, mostly women, often at interest rates that are hidden.
“You can make money from the poorest people in the world — is that a bad thing, or is that just a business?” asked Mr. Waterfield of mftransparency.org. “At what point do we say we have gone too far?”
Loaning to the poor sounds very noble, and in some cases it may be, but there are many questions without answers. Why would someone with good intent allow such exorbitant interest rates to be charged, especially with huge donations from Gates to help finance the project? Is it fair to demand that the loan recipients agree to things such as the size of family they choose to have, as Grameen does, or forced savings accounts tying up a percentage of their loan money? Why are so many people jumping on the microloan bandwagon, like Shore Bank, while receiving their own bailout? Coincidentally, as Glenn Beck recently mentioned, even Barack Obama’s own mother Stanley Ann Dunham was a promoter of microloans, along with Timothy Geithner’s father, Peter, through the Ford Foundation. Sounds like this has been a popular way to move money around for quite awhile.
Why is this sounding more like a really big pawn shop or payday loan scheme to me than philanthropy?
Coming…Part Five: Conclusions
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