Alternative Globalization Addressing Peoples and Earth

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To some extent, the situation has improved with initiatives such as the
formation of credit and savings cooperatives, worker self-managed
initiatives, ethical investment banks, community currencies and microcredit
schemes. The churches have been active in this field through the
Ecumenical Loan Fund (ECLOF) and later Oikocredit. However, the recent
upsurge in micro lending by many other actors is having mixed results,
and does not address systemic inequality. A few decades ago, the practice
of lending small amounts of money, often without collateral, to poor wouldbe
entrepreneurs, was on the fringes of international finance. Today there
are many initiatives. They are often democratic and participatory, favour
loans to groups or co-operatives rather than individuals, keep procedures
for reviewing and approving loan applications simple, and disburse small,
short-term loans quickly. Because of their repayment record, women’s
groups receive a disproportionately high proportion of micro-credit. At
the same time, some women’s groups report that the “tyranny of repayment”
and the fear of letting down their group have caused great stress and trauma
to the lives of women participating.
In spite of their relative success, enthusiasm about micro-credit schemes
must be tempered. Such schemes can achieve their full potential only if
legal systems that discriminate against them and favour conventional
lending are changed. There is the danger that some micro-credit
organizations may be unable resist the temptation to “institutionalize”
and shift their focus away from the poor to the less poor. Micro-credit
organizations need careful judgement about their impact. The micro-credit
strategy cannot replace systemic economic transformation.