Development for Whom? Neoliberalism, Microcredit and Women in Bangladesh

This study investigates the following questions: How do microcredit programs contribute to the formation of social capital, poverty alleviation, and empowerment of women in market rationality? What particular kinds of norms and values do microcredit programs nurture through the operation and management of credit? How do microcredit programs maximize the recovery of loans from the poor clients? How and under what contexts do rural women get involved in microcredit programs, and how do they negotiate the changes to traditions and values in coping with these interventions? Following the ethnographic research approach, this study explores these fundamental questions by employing in-depth interviews, case studies, and direct observations as data collection tools. The Foucaultian notions of disciplinary technologies (Foucault, 1977a) and governmentality (1991) have been applied as a theoretical framework to analyze the policies and strategies of microcredit programs of Grameen Bank and BRAC—two leading NGOs in Bangladesh—against the background of neoliberalism. This study reveals that Grameen Bank and BRAC offer credit by getting poor client women to form self-selected groups, which is a governmental strategy to reduce the transaction cost. Moreover, microcredit programs have reinforced the existing social relationships and utilized the social capital generated by the poor women themselves in order to check the moral hazards of the clients. The loan delivery and operational mechanism appears to have reinforced the existing social inequality along class and gendered lines rather than bridging the gap through the productive management of credit. It is also evident that microcredit programs have disciplined poor clients through the imposition of stringent rules and regulations, which subordinate them to the NGO mandates – in which processes groups, deposit books, and permanent residents act as surveillance for the timely repayment of loan from the poor clients. It also indicates that discipline is more effective on women than men, given the social and cultural contexts of the poor women in rural Bangladesh. Microcredit has even reached untapped rural areas, where NGOs have come to compete between themselves with their ‘home service’ loan, hoping to cash-in on the poverty of poor women. Thus, the commercialization of microcredit programs reflects the stark reality of the social context in rural Bangladesh due to longstanding poverty and a lack of organizations offering financial services to the poor without the so-called collateral free concept. As a result, the commercial nature of the programs has failed to function as an effective empowering mechanism for women, and has also failed to challenge the patriarchal social structure. Furthermore, microcredit programs appear to have no significant effect in elevating women’s social, economic and political agency to a level that could be effective for improving the intra-household gender relations and raising their status in the community and in broader society. Rather, the conjugal bliss has turned into conflicting relations due to repayment pressure. Moreover, most of the women belonging to different income groups are found to have not used credit money in productive activities. Therefore, misallocation of credit appears to have been detrimental to the alleviation of poverty of the clients. The only positive effects have been found in the smoothing of consumption for some groups in the upper- and middle- income poor. Credit is found to have been effective in addition to the existing asset base as well as investing credit in income generation projects. It is therefore debt-burden and risk that binds the clients into a vicious loan-and-repayment cycle rather than alleviating their poverty. However, microcredit has been a political strategy of neoliberal governmentality that subordinates poor women into NGO discipline and fosters the global agenda of neoliberalism at the grassroots level in Bangladesh by ensnaring poor women into formal credit practices through their entry into financial market.