Micro-credit touted by experts who ape, failed badly | Sunday Observer

Micro-credit touted by experts who ape, failed badly

18 April, 2021

This Sinhala and Tamil New Year was a triumph of the human spirit. Though the build-up to the New Year festivities may have been slow, when the time came, it seemed the people were determined that their can-do attitude is indomitable. In towns such as Maharagama, the social media photos indicated, the crowds soared — but there was discipline too, and mask wearing.

The people were back with some urgency. With that, hopefully the economy as well. All this was amid the ceaseless rumblings in ranks of the SJB and JVP that there was a coconut oil crisis, and hence a konda kevun (oil cake) crisis, and that the people are in the throes of an economic apocalypse.

The optimism about a recovery is now so high that even the World Bank could not resist joining the refrain. World Bank forecasters have predicted a recovery year for Sri Lanka and with that, it is time to take stock of what happened and how we should chart this comeback in the months to come.

Arguably, some came out of the Covid-19 induced crisis better than others. The self-employed small business folk probably came out better than the private sector wage earners who were hit by downsizing and pay cuts that were put in motion due to the pandemic induced economic crunch. But yet, among the worst hit were the women who had obtained rural credit in various micro-credit schemes that blossomed much before the crisis hit.

This crisis in micro credit — the fact that women in some rural areas were driven to suicide — was a lesson that once again told us to keep off the fad of the day as recommended by the various international trend setters, pundits, advisors and what have you.


Of course the micro-credit calamity was setting in much before the Covid-19 induced crisis began taking a toll on the economy. But perhaps the situation after the pandemic took hold made matters worse. So where are the NGO experts and the gender equality pundits now that what they touted as a panacea for all ills has proved to be quite the disaster? For the uninitiated, here is the story.

Not so long ago, the NGO resource persons as they are called, went about selling the story of the Grameen bank micro-finance success to rural villagers — rural women in particular.

“Many MFIs, through their social mobilisation process, create opportunities for women to interact with the broader society, build social assets such as social networks and mutual trust, and raise self-reliance. Moreover, it is believed that women through the involvement in MFIs develop social skills, leadership skills and managerial skills/ entrepreneurial skills.” That’s a direct quote from a local think tank survey on micro-finance, carried out in the year 2017. MFI stands for Micro Finance Institutions. Notice the almost rapturous language used about alleged female empowerment through micro-credit/micro-finance arrangements. MF was touted as the new shiny thing in the realm of empowering developing economies. But when everything fell in a heap and rural women were caught in dangerous debt traps due to micro-finance schemes — some being driven to suicide in the process — the pundits disappeared.


The Grameen Bank micro credit concept, born in Bangladesh, won its conceptualiser Mohommed Yunnus the Nobel Prize. Generally, countries such as Sri Lanka have the experience of being told to do something if it had been successful in Bangladesh and Nepal. Both countries have considerably greater poverty levels than Sri Lanka, and according to the Indexes, a quality of life that lags far behind ours.

But even so, if Bangladesh catches cold, we are told to go and catch influenza because their common cold was so potent.

Remember the so - called independent Constitutional Councils (CCs). When they were introduced first as some sort of shiny new thing in modern democratic praxis during the Chandrika Bandaranaike presidency, the Colombo NGO intellectual sphere was in a tizzy over the glittering new object. When this writer was critical of the Constitutional Council idea at the very outset, super-lightweights such as Nigel Hatch were unleashed on cautious critics such as myself and others who had seen the early warning signs. Chandrika Kumaratunge never fully implemented the Constitutional Council legislation in her tenure.

When finally the CCs were made a functioning reality during the term of the Yahapalana government, contributing in no small measure to the now infamous gridlock in government due to the power struggle between the then President and the then Prime Minister, all the great fans and advocates of the CCs had decamped. They were mostly AWOL.

To get back to the MFI crisis, micro-credit is not supposed to kill. How can cooperative credit where rural women get together for instance, and form a cooperative credit scheme, lead to suicide after some debtors are forced to default? Surely, there is a safety net, and the self-help ethic functions in a way that the less successful debtors are rescued from their indebtedness?

In theory, yes. That’s the way micro-credit was touted. It was also sold as a scheme where the “irresponsible” men were bypassed and credit was often given to women who were supposed to diligently use the loan facilities extended to them. But when it all fell in a heap, the pundits initially murmured something about the males controlling the credit given to women in Sri Lankan households, and when all these arguments proved to be hollow and without any basis, they essentially bailed out and rejected any ownership of the colossal failure they had spawned.


It’s a cautionary tale. Half baked economic theorists such as those in the last government who were mostly pretenders anyway, are generally susceptible to be conned — ingloriously duped — by various schemers who produce shiny new schemes before them.

It’s not a coincidence that both the failed CCs and the failed Micro Finance Schemes were imports that were smuggled in through the agency of governments in troth to so called ‘liberal values.’ The Chandrika Kumaratunga administration falls into that category, needless to say.

A thorough investigation is necessary as to why the Sri Lankan micro credit sub-culture blew up like a hand grenade with a faulty fuse on its handlers. When will we ever learn that what’s touted as a success in Bangladesh and Nepal by NGO experts from elsewhere — who are funded by others in Europe or North America — cannot work here, because our culture and value systems are different?


Some may say that micro-credit has worked in rural Sri Lanka despite the fact that some women have been driven to suicide, but that’s no argument in the face of the fact that there is a tremendous backlash against these schemes in the villages. There is a complete lack of trust of the entire concept of micro-credit in this country, and that calls for some soul searching as to why we as a nation regularly fall for these fairy tales hook line and sinker.

One reason this happens of course is that we have a class of monkey like imitators who are not trained to think, but are almost genetically predisposed towards copying.

It is good that the current economic orientation is moving away from this culture of aping, but the structural underpinnings that regularly propels us towards the culture of imitation and adaptation is still very much intact.

There is the NGO superstructure and then the second tier technocratic superstructure too, that still harbours men and women who fawn over the imported idea.

To wean ourselves away from that sort of aping, we need to radically overhaul attitudes and comprehensively ignore the input of the failed monkey brigade that went after the foreign idea, and idolised the foreign expert.

They are now making noises from the level of the political gutter — and seeking all types of sleight of hand to reintroduce their alien models that have brought us inevitably closer to disaster than to redemption.

There must be more vehement riddance of their bad rubbish — and it must be on a more permanent basis.