Trade-Offs, Rights and Responsibilities in the Business of Microcredit

Drawing on the theoretical ideas of Pierre Bourdieu, the thesis undertakes a critical analysis of the interpretations of social capital and the associated solidarity and reciprocity based on the conceptualisations of Robert Putnam, interpreting social capital as networks of everyday politics and replacing romanticised notions of co-operative social ties with an awareness of the realities of inequality and everyday struggle that characterise the microcredit clients’ social networks. The study explores the everyday politics, contradictions and tensions at several levels, including the clients, organisation and the wider economy and society. In the spirit of the concept of governmentality by Michel Foucault, the thesis also illustrates processes and practices of governance, and the creation of a set of rules and procedures that can govern and discipline microcredit clients to achieve selected goals. The results of this study illustrate how social relations between the members of the microcredit groups were based on ambiguous forms of co-operation and conflict around diverse interests and multifaceted power relations. While social networks were crucial for the establishment and maintenance of business operations, the structural conditions of poverty and marginalisation placed the women in competition with each other over limited resources and easily saturated markets. The group loan system caused various anxieties about solidarity lending and tensions between group members. The contrast between the idealistic speeches of solidarity, and suspicions circulating over who benefits from which businesses and on what grounds, was a striking characteristic of the everyday politics of microcredit. Although no financial collateral was required, various systems of collateral existed. High repayment rates were secured through strict rules and monitoring procedures; public reprimand in the repayment or “centre” meetings; extending repayment liabilities to husbands or other relatives; and refusing to let anyone leave the repayment meetings until the money was paid. Although according to the microcredit rhetoric group members take joint liability for loan repayment, in reality the centre, community and kin operate as collateral for microloans. This is an assumption in the group-based loan system in which the generally accepted rules apply only to the liabilities that clients as a group, as one unit, have to the organisation. In this kind of system, joint security is a fact only at the institutional level. There is no corresponding rule on the terms under which financial obligations are covered, shared or compensated among group members. In the everyday politics of the clients, business affairs and the logic of decision-making were tightly intertwined with financial, social and cultural norms and political power relations. The most successful clients were those who were able to utilise various social networks and regular household incomes, as well as take advantage of their social status to create the market, the network, and to gain symbolic capital, bolstered by various power symbols. In the everyday practices of the microcredit organisation, fieldworkers were in a key position to communicate the “truths” and the “right knowledge” about the microcredit programmes to the clients. Tension existed between empowerment objectives and disciplining of women, and guiding them towards NGDO-specified objectives. The adverse incentive system largely produced these conflicts by encouraging development facilitators to take as many clients as possible, which easily led to concentrating on quantity over quality. In terms of the disadvantageous ways in which people are incorporated into economic and social life, the study highlights the contradiction between the idea of a microcredit organisation operating as a “linkage” between formal and informal economies and borrowers considered as agents of their own empowerment, and the structural obstacles the poor encounter under systematic political inequality. Analysing incorporation and governmentality as processes of “dispossession”, that is, as the appropriation of poor women’s social networks to serve as an engine for development, the study calls more attention to the everyday struggles of these poor women caused by the distorting microcredit rules and mechanisms, the weak pillars of the society, and the vulnerability and disadvantageous power relations within which people are caught.