2/3/2021 NGOs, Neoliberalism, and Women in Bangladesh

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ISSUE 11.1-11.2 | FALL 2012/SPRING 2013 GUEST EDITED BY ELIZABETH BERNSTEIN AND JANET R. JAKOBSEN

GENDER, JUSTICE, AND NEOLIBERAL

TRANSFORMATIONS
NGOs, Neoliberalism, and Women in Bangladesh ARTICLE TOOLS

by Lamia Karim
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According to David Harvey, neoliberalism is the notion that “[h]uman well-being can best be advanced by PRINT THIS ARTICLE
liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by
strong private property rights, free markets and free trade. The role of the state is to create and preserve an SHARE Like 44 Tweet
appropriate framework to such practices.”[1] The role of the state should be to create an environment that
unleashes these entrepreneurial urges and to withdraw from the management of public life. Bangladesh
offers a paradigmatic site for an analysis of neoliberalism and women’s roles. It is home to some of the most
innovative NGOs in the world, including 2006 Nobel Peace Prize recipient Grameen Bank, and BRAC, the
largest NGO is the world.

Microfinance is the extension of small loans to start income-generating activities, and it is usually targeted at
poor women. Microfinance, also known as the Grameen model, also promotes the figure of the celebrated
rural female entrepreneur—the cell-phone lady, the chick breeder, the egg seller, and the dairy-cow owner. In
rural areas, it is the men who control the loans, and it is rare to find a female entrepreneur, unless she already
has some marketable skills.[2] In this new climate of neoliberalism and shrinking funds, many NGOs are more
driven by profit and financial viability than by concerns about the welfare of their poor female clients. This
transformation from social work to for-profit motives, and NGOs use of their members as internal markets has
been described as the NGO “poverty enterprise.”[3] Thus, what started out as a project promoting the welfare
of the poor has, over time, transformed into something advancing the capitalist welfare of NGOs.

When the US Congress passed the Percy Amendment in 1973, it required all USAID offices to integrate
women into all aspects of their programs. The idea was to increase women’s participation in national
economies and to reduce gender-related obstacles to education, work, healthcare, and legal rights. This was
followed by the United Nations’ declaration of 1975 as the “decade of women”. For the next decade, the
United Nations and its affiliates prioritized women in all spheres of their development efforts. NGOs were the
first responders to this call for the integration of women into development policies; they worked in the rural
areas with direct access to women.

In this new rhetoric of “women-in-development” (WID, later called “gender and development,” or GAD), the
third-world woman was conceptualized as an autonomous, sovereign subject who freely made rational
choices in the market. She was thrifty, hardworking, entrepreneurial, and a good manager of resources. The
idea that NGOs were seamlessly introducing millions of marginalized women—the majority of them
borrowers of microfinance—into the economy as “entrepreneurs” and “rights-bearing subjects” with very few
adverse effects, fed into the aspirations of Western donors to create societies similar to European
democracies. NGOs and their sponsors alike invoked this mantra of empowering poor women.[4] Research
from WID feminists also demonstrated that investing in women was an investment in children and families.[5]
NGOs were at the forefront of translating this WID idea into practice. Feminists addressed what has been
referred to as the “add women and stir” approach, and critiqued this policy as essentially window dressing
that did not challenge existing gender dynamics and inequalities, and in some instances even exacerbated
them.

At an epistemological level, there was no discussion of what it meant to frame development programs and
policies in terms of women and not gender. This “third world woman” was a “hyperreal” woman. Her abilities
and incredible entrepreneurship were so celebrated and inflated by organizations like the Grameen Bank

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that the idea of this woman became a substitute for the real woman on the ground. In development
discourse, little attention was paid to men’s social roles and labor or how South Asian women were
embedded in social relations with their husbands, in-laws, and kin, and how those relations circumscribed
their human possibilities. NGOs and their sponsors alike invoked this mantra of empowering poor women.
What this rhetoric did not take into account was how inequality, caste, class, social hierarchies, and feudalism
circumscribed and influenced social relations differently across the South Asian region.

The question of how power relations shaped women’s lives was restricted to a narrow analysis of rural
patriarchy with scant attention to how NGOs themselves appropriated existing gender roles and power
relations to exercise their will over their female members. Unlike rural men, women worked in the domestic
sphere. They could join NGO groups and attend meetings, a regular feature of these rural development
NGOs. They were also sought out as “creditworthy” and reliable members because they were easier to
police and dominate than rural men. These facts remained largely unaddressed in NGO- and WID-sponsored
research. As long as NGOs increased women members in their programs and hiring practices and publicly
promoted their fight against gender discrimination, the money flowed in from their Western donors.

At the center of this global success story stands the lone female entrepreneur, often a poor, illiterate
homemaker, who autonomously makes free choices in the market and excels with her entrepreneurial skills.
The Grameen Bank model rests on the idea of the individual entrepreneur who, with the help of microcredit,
becomes self-employed, owns private property (the assets she builds with the loans), and sells her labor on
the market. This out-of-the-home entrepreneur links seamlessly with neoliberal ideas of self-help and an
ownership ethic.

While new studies dispute the claims of microfinance proponents quite effectively,[6] microfinance still
continues to thrive and attract followers who are evangelical advocates for microfinance. Hence one often
finds people who are employed by MFIs writing in support of the work of these same MFIs. Why has
microfinance galvanized so many people around the world, and why does it continue to be such a powerful
instrument of poverty alleviation?

The pioneering institution of microfinance, the Grameen Bank, made its reputation through targeting poor
Muslim women in Bangladesh. The targeting of women as entrepreneurs, especially Muslim women, has
been key to the wide success of the bank and its microfinance program. Through its statistics, the bank has
shown Westerners how poor and illiterate Muslim women form a bulwark against Islamic patriarchy. Here,
patriarchy refers to Islamic notions of seclusion for women and religious proscription against women’s work
in the public sphere. By dissolving the private/public distinction, women’s work can gradually begin to
weaken the patriarchy from within and enable market forces to penetrate rural communities. Thus,
microfinance becomes an instrument of remaking Muslim societies into market societies that are similar to
Western societal norms. The important role of Muslim women in the Grameen Bank/microfinance story must
not be underemphasized. In addition to this, there are three key reasons for the story’s wide reception which
are both economic and ideological.

The Female Entrepreneur

Microfinance is based on the idea of individual female entrepreneurship, and it makes the individual, not the
state, the driver of economic change.[7] The microfinance model seamlessly links up with current neoliberal
ideas of development that see the role of the state as limited. If we replace the term credit with debt,
microfinance is reconfigured as a relationship of power and inequality between the creditor (the lender) and
the financially strapped woman (the borrower). Let us now ask: What happens to poor women when they are
entangled in relations of debt? What are the social realties within which these women and loans operate?
The majority of women borrowers live in extended family structures with social and kinship obligations.
These women’s identities are relational, shaped by a number of factors such as marital, kinship, ethnic, and
tribal allegiances. However, the microfinance literature tends to conceptualize women borrowers as
autonomous subjects who independently make choices in the market.

There are several categories of women who can use microfinance loans productively. They are usually
women who have marketable skills, own small businesses, have a certain market savvy, or who are widows,
abandoned, or divorced; that is, they do not have husbands who will lay claim to their income. Yet these
groups account for an insignificant number within the vast pool of borrowers. Women, even if they have
marketable skills, often find themselves beholden to their husbands and male relatives if they lack market
access. Thus, microfinance has to be located within the social constraints that poor people—and particularly
poor women—face. Often when women receive loans, their male family members take the money.

Although the women were the borrowers, I found that in almost 90 percent of cases, men controlled the use
of the loans, often with adverse effects on women. Moreover, they borrowed from five to six MFIs, which led
to an accumulation of debt that many could not manage over time. When defaults occurred—and they
occurred routinely for a variety of reasons—it resulted in heightened shame and pressure on the defaulting
woman. Women who could not pay due to unforeseen circumstances (illness, poor investment decisions,
theft of property) were subjected to public shaming by group members who were pressured by microfinance
institutions to recover the money. MFI managers would threaten group members that if they could not
recover the defaulted sum, either they would have to pay, or they would lose future loans. Thus, the defaulter

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would face the ire of the community, who now saw her as a person who had broken faith with the group.
Instead of developing social solidarity among the members, these loans led to an increase in intragroup
friction. In a face-to-face society like Bangladesh, the conduct of women is strictly controlled, and women are
the custodians of family honor. Public shaming of women brought dishonor to the men, and by extension to
the family. Hence, poor women bore the social costs of microfinance, often with negative consequences.

In Bangladesh, an innovative entrepreneurial subject who has emerged from this contact between loans and
women is the petty female moneylender. In this case, instead of becoming small-business operators, women
stay at home and lend to traders, richer farmers, and others in the community. In fact, there are very few
entrepreneurs. In the majority of cases, the women’s husbands use the loans. Thus, loans circulate from the
women to a wider group of people, and, if the loan recipients can invest successfully, they repay the female
moneylender the principal—plus interest. Thus, instead of creating entrepreneurs, microfinance in
Bangladesh has reproduced moneylending as a profitable and less risky option for these rural women, which
was not the intent of the Grameen Bank and other MFIs working in this area.

The 98 Percent Rate of Loan Recovery

The Grameen Bank with its much-celebrated 98 percent rate of loan recovery has effectively demonstrated
to the financial community that the poor are “bankable;” that is, the poor form a large pool of credit-strapped
people who desperately need access to capital and who will repay those loans. In other words, it has
demonstrated that the poor constitute a viable market for commercial banks.

MFIs, through high rates of loan recovery, have shown that the poor have a need for loans, and that they pay
back their loans. This has led to a profusion of dollars from aid organizations, corporations, and investors who
see MFIs as combining profit with social good. Yet many MFIs depend on high interest rates and fees, often
with many hidden costs, to sustain their operating costs. Thus, the poor borrowers pay for the salaries and
overhead costs for many MFIs through the fees and interest charged to them. Often these overhead costs
are out of sync with local community standards, and one sees jarring images of MFI officers driving in SUVs,
while their borrowers walk with bare feet.

A key function of loans is consumption smoothening for its borrowers, and often loans do not go into the
activities that they are intended for. In fact, many borrowers pay for things like medical expenses, wedding
dowries, and home repairs with loans. Yet loans continue to be recovered at phenomenal rates, and these
MFIs operate successfully. So, what is the story behind these phenomenal rates? First, it is important to make
a distinction between loan repayment; that is, loans that are voluntarily given, and loan recovery; that is, loans
that are recovered by applying pressure on the borrower. In many instances, MFIs force their borrowers to
repay by applying pressure through community members and other tactics available to them.[8] In face-to-
face communities, people fear social shame, and try to manage their affairs to keep public humiliation to a
minimum. Often when women cannot pay, they will borrow from other sources: from one other, from the
traditional moneylender, or from kin to cover the default sum.

Constructing Markets

Microfinance connects the most intimate sphere of private life—the home and women—with the larger world
of markets. Through these loans, money, commodities, and ideas circulate within communities, integrating
the local economy with the global. For example, Telenor of Norway and Grameen Bank jointly created the
Grameen Polli Phone (Village Phone) program that sold cell phones to rural women. Called Grameen Phone
Ladies, these women made an income by selling time on their cell phones to rural people to make calls. The
phones with their paraphernalia (phone, antenna, security deposit, pension scheme, connection fee) cost
approximately $700 in the early 2000s,[9] although prices later fell as the price of phones went down. While
initially many of the Grameen Phone Ladies had made money, very soon other cell phones moved into rural
areas, and undersold the Grameen Phone Ladies. Cell phones have become universal in rural areas as a
reliable means of communication. It costs very little to purchase a phone or to make phone calls. Many of the
women who had taken out loans to operate their phone businesses, saw themselves stuck with huge debts
that they had to repay although their phone businesses had declined severely. The point here is that
Grameen Polli Phone was able to use these poor women, who remain dependent on it for access to much-
needed cash, to usher in new market forces. These women had little or no knowledge of how competition
worked in an open market. Thus, I would argue that they were used instrumentally to create an environment
hospitable for corporations to come in and corner new markets.[10]

Footnotes
1. David Harvey, A Brief History of Neoliberalism, (Oxford: Oxford U P, 2005) 2. [Return to text]
2. Jude Fernando, “Nongovernmental Organizations, Micro-Credit, and Empowerment of Women,”
ANNALS, AAPSS 554 (1997): 150-177; Jude Fernando, Microfinance: Perils and Prospects, (New York:
Routledge, 2006); Lamia Karim, Microfinance and Its Discontents: Women in Debt in Bangladesh,
(Minneapolis: U of Minnesota P, 2011); Aminur Rahman, Women and Microcredit in Rural Bangladesh: The
Rhetoric and Realities of Grameen Bank Lending, (Boulder: Westview Press, 1999). [Return to text]
3. M. Mannan, “BRAC: Anatomy of a “Poverty Enterprise,” Non-profit Management and Leadership 2.2
(2009): 219-235. [Return to text]

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2/3/2021 NGOs, Neoliberalism, and Women in Bangladesh
4. S. Hashemi, S. Schuler, and A. Riley, “Rural Credit Programs and Women’s Empowerment in Bangladesh,”
World Development 24.4 (1996): 635-653. [Return to text]
5. L. Mayoux, “Questioning Virtuous Spirals: Microfinance and Women’s Empowerment in Africa,” Journal of
International Development 11.7 (1999): 957–984. [Return to text]
6. David Roodman, Due Diligence: An Impertinent Inquiry into Microfinance, (Washington, DC: Center for
Global Development, 2012); Milford Bateman, Why Doesn’t Microfinance Work: The Destructive Rise of
Local Neoliberalism, (London and New York: Zed Books, 2010); Karim 2011; Thomas Dichter and Malcom
Harper, What is Wrong with Microfinance?, (Rugby, Warwickshire: Practical Action, 2007); Fernando
2007; Rahman 1999. [Return to text]
7. Milford Bateman and Ha-Joon Chang, “Microfinance and the Illusion of Development: From Hubris to
Nemesis in Thirty Years,” World Economics Journal 1 (2012): 13-36. [Return to text]
8. Karim 2011. [Return to text]
9. Karim 2011: 97. [Return to text]
10. Karim 2011: 95-101. [Return to text]

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