Microfinance in Africa
Fri, 07/23/2010 - 14:23
While I’ve been in Kenya I’ve been reading a new book by Milford Bateman; Why doesn’t microfinance work? The destructive rise of local neoliberalism
. Microfinance has been feted as an effective solution to poverty for the very poor for a number of decades now, and in 2006 Mohammed Yunus, the founder of the first microfinance institution, the Grameen Bank in Bangladesh, was awarded the Nobel Peace Prize.
But Milford Bateman’s contention is that microfinance is not only very bad at ‘lifting people out of poverty’, but that it has only survived and prospered in the mainstream development community because it fits very well with needs of maintaining a neoliberal economic system.
Africa is, of course, now flooded with microcredit lenders, and Kenya is no exception. Bateman’s book is excellent at demolishing the ‘myths’ about the efficacy of microfinance, including the contention that it empowers women. But with particular reference to Africa he argues that what Africa needs is not “a vast reservoir of self-employed traders” but “a robust light industrial foundation … and manufacturing-based enterprises capable of productivity growth.” In fact, he argues, “the proliferation of microfinance in Africa is associated with precluding the chances of establishing the industrial foundations required for future growth and poverty reduction.” (p97)
Gathigia village in the Muranga District of Kenya's Central Province. Caroline Griffin/WDM
Yesterday we visited Kenya’s Central Highland region. While much wetter and lusher than some parts of Kenya, the region is still packed with smallholder farmers getting poor prices for their modest coffee crop, and remaining net food buyers despite growing some maize themselves.
We met a women’s group based near Kangema who are looking for ways to supplement their income. They want to build on their knowledge of chicken rearing to set up a local business, but need some initial investment. They said they weren’t looking for charity, but they also wanted to steer clear of conventional microfinance (signs for which dotted the main roads in the area). There had been women who had lost their homes after defaulting on microfinance loans, they said.
One alternative for these women could be finance co-operatives or credit unions. These member-owned institutions have, according to Bateman, been far more effective at building local economies where they have been encouraged. Backed with a sympathetic government, which is also geared up to support indigenous small- and medium-sized enterprises, financial co-operatives could form the basis of a successful and more solidarity-based economy, just as they did in the Italian region of Emilia-Romagna after the Second World War for instance. (pp175-178)
Microfinance, on the other hand, fits all too easily with an Africa which is a source of raw materials and a market for multinationals who take their profits out of the continent, but not a robust economy in its own right. This neoliberal path has seen the growth of a middle class who benefit from the system, but a much bigger group who don’t and continue to struggle to make any kind of life for themselves.
In the context of this rising inequality, microfinance almost acts as a form of containment of the poor, encouraging the dream of individual advancement (no matter how unlikely) and discouraging collective solutions and political demands. Ultimately, as Bateman argues, it is actually a poverty trap.
On transformative action within the Kibera slum
Tue, 07/27/2010 - 11:26
The Kibera slum in Nairobi is home to around 1.5 million people. That's half the population of Nairobi, squeezed into just 2.5 square kilometres. On the way there, our driver, Charles described the extent of the violence that erupted in Kibera during the 2007 elections. Cars were set alight, men, women and children were beaten as they were forced out of their homes and pumped with tear gas by the Kenyan police. As we approached the entrance to the slum, Charles locked down the doors and wound up the windows. The public perception of Kibera within Kenya is that it’s a dangerous, lawless place.
Our perception was a very different one. We met with a group of eight women and Sheikh Ahmed Abdulrahim, a community human rights activist for a meeting under a tree just on the edge of the slum. They spread out their scarves on the ground for us to sit on and started to tell us about their campaign and their own personal experiences.
Kibera Women for Peace and Fairness connect the violence in 2007 with the extreme poverty they live in. The unrest was partly to do with a huge hike in food prices, which meant many people could only afford to eat one meal a day. This, and the horrific conditions and deprivation people have to suffer in Kibera led to the overflowing of simmering resentment against a government that ignores its citizens' basic human rights to sanitation, electricity, suitable housing and a balanced diet. It does not even recognise the slum as an official part of the city of Nairobi. Now the prices have stabilised, but people, including these women, still have to go through incredible daily hardship.
Antonina Masita, for example, is 58 years old, a widow, HIV positive and has 7 children between the ages of 8 and 14. She says she only scrapes together around 20-30 Kenyan shillings a day. A direct currency conversion of this amount is around 25p, but to put it in perspective, a 2kg bag of maize costs 50 Kenyan shillings in the slums. During the food price increases, where maize rose to around 120 shillings per 2kg bag, she was not getting any work and could barely afford to eat or pay the rent where she and her 7 children live crammed together in one room. At this time, many families only ate one meal a day, often just a bowl of porridge.
Antonina Masita, campaigner with Kibera Women for Peace and Fairness. Caroline Griffin/WDM
By campaigning for the right to a fair food price, Antonina and her friends hope they will never again have to watch their children and neighbours die. Now the food crisis is over – for now, at least – they have time to campaign on other issues, such as better conditions and an end to violence against women by changing the popular belief that if a man doesn't hit you, he doesn't love you. “We say there is no justification for violence against women. Once you say that, you are a changemaker,” Fanice Onjala, the secretary of the group told me.
So it’s high time the UK government made life a little easier for people like Antonina and Fanice so they can continue to transform their society and improve women's status rather than having to constantly worry about how they will feed themselves and their families. The government can do this by legislating to stop bankers and hedge funds gambling with food.
Dusty roads and maize farms
Thu, 07/29/2010 - 07:36
Over the weekend we visited Makueni, a market town about two and a half hours drive to the south of Nairobi. Driving first down the main road to Mombassa, then turning off to pass through the regional centre of Machakos, we arrived in Makueni after dark with the crickets signing to us. In the big cities, great poverty nestles next to relative wealth, but the further you go into the countryside, the more poverty keeps its own company.
The next day we met Phyllis Nduva, a community mobiliser, and she took us down a long road made of deep, fine, red dust to a village where the community had gathered to hear about Kenya’s proposed new constitution. The constitution is the big news here, with the efforts of the ‘Yes’ and ‘No’ campaigns dominating the headlines, and a referendum due on 4 August. I’ll write more about some of the issues involved later, but this gathering was aimed at educating the community about what they were voting on, even if the official ‘Yes’ campaigners turned up later to rally people to their side.
Phyllis Nduva talks to Makueni farmers about what a new Kenyan constitution will mean for them. Caroline Griffin/WDM
With all this going on, the village chief (an official government post) and his assistant chief gave us some time to talk about the impact of the 2008 food crisis on their area. The Makueni region is a dry one anyway (unlike, for instance the Rift Valley area), and the variety of maize they grow here has been specially bred by the Katamani agricultural research station to be more resistant to drought. Even so, after two years of poor rains, local food was scarce, and supplies from areas like the Rift Valley were disrupted due to the post-election violence of 2007. Add in rising maize prices on international markets, and you have a disaster waiting to happen.
What was clear, and even more so when we met some of those eking out a living in the area, was that the impact was not limited to temporary hunger, horrific though that is. People had to sell their animals to get a little money to buy the basics. The people we met who did that are still without animals. For one woman that means the milk she used to sell for school expenses for her children are gone, even though the rain has returned and she is now able to grow food again.
The office towers of the City of London seem about as far away as it is possible to get from here. Neither the bankers nor the farmers know much of each others’ existence. But in the search for profit through food commodity futures trading, investment banks risk delivering to poor farmers another crisis from which they may well not recover.
Decolonising the mind
Thu, 07/29/2010 - 21:56
Yesterday afternoon, James, Kiama Kaara from Kenya Debt Relief Network
and I drove to Thika, a medium-sized town 40km north east of Nairobi along a bustling road lined with traders, construction workers and shops for a meeting with Zachary Makanya from the PELUM Association
PELUM, which stands for Participatory Ecological Land Use Management, are a network of civil society organisations and NGOs working with small-scale farmers from East, Central and Southern Africa. Their vision is an inspiring and humbling one and what Zachary told us was very clear. Kenyans are still not seeing an improvement in their quality of life despite decades of aid money being poured into the country by mostly good-intentioned by often ill-informed and patronising donors and NGOs. The effects of aid dependency and the legacy of colonialism mean that the urgent process of ‘decolonising the mind’ must now start in earnest if African nations, Kenya included, are to resist the fierce and bullish march of globalisation and industrialisation, which is already wiping out traditional knowledge, languages, indigenous communities and the natural environment.
Zachary Makanya, PELUM Association, Kenya. Caroline Griffin/WDM
Like many who represent or work with small-scale farmers, Zachary spoke of the complex web of unfair global trading systems leading to subsidised goods from Europe and the US outcompeting local produce, tied aid, climate change and the commercialisation of agriculture. These pressures and injustices, brought on by the rich world, coupled with a government that is failing those who live below the poverty line (who make up nearly 50% of the country’s population), mean that half a century after independence, poverty is actually increasing in Kenya.
But for all this, Zachary’s message was a positive and inspiring one. He spoke of the need for small-scale farmers to be encouraged to view their environment and communities as resource-rich instead of a source of problems. This is the crux of the matter. At the centre of ‘aid’ and the notion of ‘development’ is the inference that Africa is in crisis and at the mercy of problems that are insurmountable without outside influence. If you turn this on its head and train small-scale farmers to work with what they’ve got, their world starts to looks like an entirely different place, full of opportunity and hope.
Our meeting took place in a tranquil compound which felt like the embodiment of this hope. Filled with varieties of indigenous trees, nursery beds and compost heaps atop with scavenging monkeys, it couldn’t have been more different from central Nairobi where you can’t walk far without seeing billboards advertising Orange, Barclays Bank and Nivea. This is where small-scale farmers come to learn how to grow indigenous staples such as cassava, share indigenous non commercialised seeds and control pests without chemical fertilisers.
Spinach growing in an agricultural test centre in Thika, Kenya. Spinach is a popular ingredient in Kenyan cooking. Caroline Griffin/WDM
Other experts we have spoken to such as Paul Gamba, an economist from the Tegemeo Institute, an agricultural research body in Kenya, point towards the need for small farmers to self-organise, for example in co-operatives, in order to move towards a situation where they are the processors as well as the growers. Farmers we have spoken to talk about the middlemen who don’t give them a fair price for their cash crops. By self-organising with the aim of doing the work of the middlemen themselves, Mr Gamba says this would also help stabilise prices and give back farmers control over their lives. As once-coffee farmer Justus Lavi, now Treasurer of the Kenya Small Scale Farmers’ Forum told us, coffee processing is not difficult, he used to do it as a child. All you need to do is “farm them, pick them, wash them, thresh them, wash them, grind them in the sand and the coffee is great.” And yet most coffee, which grows abundantly here, is processed overseas.
Scenarios like maize prices doubling in the space of a few days, which meant some people went without food for three days, must never happen again. We’ve been reminded by people we’ve spoken to that not being able to buy enough food to feed your family affects you psychologically not only physically. With local people and civil society in Kenya trying to build the self esteem of local communities and farmers, the last thing the country needs is another food crisis. But without legislation to curb the excesses of the financial markets, it is likely that another price spike will happen. It's the very least the UK government can do to put in place simple limits on commodity speculation to enable people to dust themselves off and start to rebuild and reinvent their lives.
A trip to Kibera
Sun, 08/01/2010 - 14:14
Today Caroline and I visited a part of Kibera. We were there to meet a group of women from Kibera Women for Peace and Fairness. The group, which comprises hundreds of women, was formed during Kenya’s post-election violence in 2007, which had its epicentre in Kibera. Women and children were being caught up in the violence, including the police response, and being hit by teargas and worse.
Kibera Women for Peace and Fairness, Kibera
When the food crisis hit in 2008, the women mobilised again. The daily wage that one person in Kibera is likely to be able to earn is about 50-150 Kenyan Shillings (around 40 pence). Before the price rises, a 2kg bag of maize meal, or unga, the basic staple, was around 50 Shillings. In order to make it into a meal for a family, they also need paraffin, cooking oil, salt, and ideally some vegetables as well. Yet when the price of maize on world markets shot up, maize meal in Kenya reached as high as 120 Shillings. Levels of hunger in Kibera, quite obviously, reached crisis proportions.
So the women organised a peaceful march to demand their right to affordable food. Despite being attacked by police, the march formed the basis of a campaign which forced the government introduce a subsidy to bring the price of maize down again. The women’s campaign is continuing, even if the price of maize meal has stabilised for now. They want their original demand, that a 2kg bag of maize meal should be 30 Shillings, to be met, and also for the government to take action to raise the wage level in Kibera.
But with the price of their basic staple still subject to the price of food commodities on world markets, the women we met, and all the hundreds of thousands of residents of Kibera, remain in a very precarious position. Its for them and many like them around the world that WDM is campaigning to limit food speculation
, and put the right to food before the profits of multinational investment banks.