Banking the unbankable: Bringing credit to the poor. Ibrahima Worn and others. Panos Publications, London, 1989, xv + 224 pp.
| Published date | 01 May 1992 |
| Author | J. D. Von Rschke |
| Date | 01 May 1992 |
| DOI | http://doi.org/10.1002/pad.4230120213 |
Book
reviews
221
BANKING THE UNBANKABLE: BRINGING CREDIT TO
THE
POOR
Ibrahima
Worn
and
others
Panos Publications, London, 1989, xv
+
224
pp.
Bunking
the
Unbunkable
contains accounts of
11
reportedly successful programmes that lend
to poor people. Each is written by a different author, all
of
whom are journalists. The book
was inspired by development assistance agencies: its Introduction is by Idriss
JazaYry,
President
of the International Fund for Agricultural Development (IFAD), and Panos, the publisher,
acknowledges support from official Dutch and Scandinavian aid agencies.
Each case study focuses on at least one poverty-stricken participant in
a
programme who
used credit
to
improve his
or
her situation in the 1980s; organizers and village workers who
promote these schemes are also quoted. Each programme operates in a different country
and a chapter is devoted to each. Geographical coverage is broad: Kenya, Senegal, Tanzania
and Zambia in Africa; Bangladesh, India, Indonesia, Pakistan and Sri Lanka
in
Asia; and
Chile and Colombia in Latin America. Some involve only a few people, while the largest
is an initiative that claims to have formed
26,000
women’s groups. The programmes cited
include a wide variety of organizational forms and approaches to uplifting the poor, and
most include savings mobilization along with credit. Loan
sizes
range from less than $US
1
to more than $US
1OOO.
Contractual interest rates charged range from nil to three per
cent per month on the original balance.
In many cases the beneficiaries of these programmes are women, and a general conclusion
is that women use credit much more fruitfully than men and that female behaviour is more
conducive to credit discipline and hence to credit programme sustainability than is male domi-
nance. Women also appear to
be
more dedicated savers. In addition to the prominence of
women in these accounts, JazaYry notes that all programmes are participatory, with the poor
as ‘integral partners in development’, and that in all cases cited non-governmental organ-
izations (NGOs) play a crucial role. He also offers the helpful observation that ‘credit schemes
. . . are fundamentally about people’.
The projects portrayed occupy territory between informal moneylenders who are not viewed
as helpful to the poor; government credit schemes that are portrayed as distant, unsustainable
and occasionally corrupt; and commercial bankers. The poor celebrated here
use
credit wisely
and to their benefit, and repay their loans. They demonstrate that remunerative opportunities
for productive use of labour and for entrepreneurship exist even in desperately impoverished
communities, and that people in these communities can save. These accounts show that grass-
roots efforts initiated by principled and competent outsiders who help form and train groups
of borrower-savers, supported by funds to lend in very modest amounts, can have a positive
impact. Frequent, small instalments and flexible repayment schedules are rightly cited
as
appropriate.
In addition, one successful experience of using credit productively can lead to others. Ripple
effects include subsequent loans taken by previous borrowers to expand their businesses;
improved family welfare, especially when the successful borrower is a woman; and others
who may be inspired by a friend’s example to borrow and to venture. Credit groups that
master a task gain an appetite to succeed at others. Commercial banks may even become
involved at later stages when performance and conditions are attractive.
Several accounts suggest that women gain improved bargaining power with their husbands
when they have independent sources of income. Most indicate that producers can obtain
better terms from their raw material suppliers when they can pay in cash, in these cases
from credit programme loans, rather than by obtaining goods on credit from their suppliers.
A larger and very important question is whether examples such
as
those cited here should
inspire an avalanche of donor-supported, NGO-operated credit schemes for the poor. The
book is not a good source of answers, as it does not provide sufficient information to support
widespread replication of the cases it documents. Scepticism regarding this larger question
is justified by occasional references to failures of programmes and to individuals who did
not use funds productively, and by discussions of programme vulnerability in the absence
of a leader
or
with the withdrawal of outside support. This theme is not followed up systemati-
cally.
The book also neglects to explore the costs of the credit schemes it documents. While
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