The metamorphosis of micro-credit debtor

Farooque Chowdhury

Micro-credit, the well-propagated mantra in the fight against poverty, is now expanding crossing the national boundaries as capital has done for centuries. Countries in the centre and in the periphery in the present world system are near-spellbound by this mantra. The actors include kings, queens, statesmen, bankers, charity foundation initiators, economists, development workers and the poor. Only the last one is at the receiving end.
The metamorphosis of the micro credit debtor exposes the acts the capital plays in the act of micro credit and makes all its pious pronouncements hollow. The metamorphosis takes not only to the debtor, but also to other members of the debtor-household.
The debtor of the micro credit turns owner of the tools or raw materials necessary for producing commodity as the debtor returns home from market after purchasing these with the credit money. But with the joy of ownership a poor debtor enjoys through this metamorphosis there comes a new burden, the burden an industrial proletariat does not have to bear: the burden and responsibility of maintaining, repairing and replacing the tools, equipments or parts of these and the costs that accompany it as the debtor is going to produce and going to be a producer of commodities. It is an extra burden. Usually the job is done not only by the debtor, but also by the other members of the debtor—household. That means time, necessary or surplus labour, depending upon a situation. The proud ownership carries another intricate calculation. An industry owner provides premise, shade, light, water, storage facilities, transport, etc. for producing a commodity and before hiring a wage slave the owner has to spend money for these ranging from construction, power and water connections, supervision, etc. which are calculated before the surplus value is appropriated. But in case of the micro credit debtor turned independent owner of tools of production all these burdens fall upon the debtor. It is the responsibility of the debtor turned owner to repair/replace/heal and to spend money for these. That means the debtor has to arrange the constant capital, and sometimes, the variable capital. The creditor does not always provide the money required for these purposes or the debtor has to set aside a portion of the credit money for these purposes. If the debtor sets aside a portion then the person has to extend extra time to the portion of labour that produces surplus. Moreover, the debtor turned owner has to construct/raise a shed for carrying on the production activity and spend money and labour power belonging to the debtor and the debtor’s household. Actually, the debtor, most of the time, uses own premise, rent for which is paid by the owner of the production unit, the debtor. Maintenance and repair is paid by the debtor, now turned into an independent producer. An industrialist has to pay rent for the premise, utilities and other facilities while they are within the premises producing commodity. But in case of the micro-credit all these are the debtor’s responsibility. The metamorphosis of the debtor to owner of tools, etc., to independent producer thus does nothing but increase the surplus labour time and squeeze necessary labour time so that the repayment of the loan can be made as per schedule.
The debtor turned producer has to plan, search and work out comparative advantage, and procure and transport required raw materials for the commodity to be produced. The debtor, now acting as procurement manager of the household-based production unit, procures and carries or transports the raw materials for the commodity to be produced. Sometimes it is the spouse or sibling who performs the task, unpaid and unaccounted labour power put into the process. Is the equation in favour of the fellow who went to the banker for the poor to realise the fundamental right the banker propagates? Reality is that the shortened necessary labour time and the lengthened surplus labour time, obviously provide the answer. What about the level of appropriation? It is, certainly, not at the level Marx ‘calculated’. It is super-appropriation, never imagined by the mine owners of Rome, the colonial plunderers, the plantation owners, the slave owners in pre-slavery America, the multi-nationals operating in the countries on the periphery, not even the plundering-lumpen capitalists in a number of underdeveloped countries, but only by the multi-national micro credit capital. So, Michael Lipton and John Toye said in ‘Does Aid Work in India?’ : Rates of return on credit projects are particularly high in India; and Joe Remenyi said in ‘Where Credit is Due: Income Generating Programmes for the Poor in Developing Countries’: Credit - based income generating projects may be the most profitable way in which society can invest…Diminishing return has not set in this field…;…banking on and with the poor is a very good thing to do…. The typical successful CIGP …required an investment well below $1,000 per sustained wage - paying position created (one - tenth of the ratio in the formal sector)…[W]hen one is living at the margin of survival earning around $1 a day, an increase in earning capacity of 50 cents a day represents a substantial improvement in cash flow. These statements tell the truth.
The metamorphosis of the debtor moves further as the fellow turns wage labourer. The micro credit finds a new commodity as, borrowing from Engels, the ‘source of new value,’ source of surplus ‘income’ with which the debtor will repay and ‘this commodity is labour-power’. The labour power is stored up in the bodies of the micro credit debtors and other members of the debtor-household who extend respective labour power to extend the surplus labour time so that the repayment could be made on schedule. As an independent producer the debtor has to fix the pace of production and that determines the debtor turned wage labourer’s pace and length of working hour. Even, the debtor wage labourer has to borrow labour power of others in the household, who are actually paid only by bare subsistence. To make the statement complete it is not the debtor only, but other members in the debt ridden household, along with the debtor, also, turn wage labourer, at least, part time. Does it not appear more intense than the conveyor belt or the Taylor system innovated by the industrialists to increase surplus value? Thus, the entire household turns into a household of wage labourers, full time or part time. Actually, the pace of work is determined by the time schedule of the repayment. Within the scheduled time for repayment the independent producer turned wage labourer, along with the co-workers in the household have to produce and sell that quantity or that number of commodity that can bring in at least the amount of money needed to repay the instalment of the debt. If seasonal variations, changes in market, health problems, other unseen troubles, non-availability of raw materials or transport, in short, major and minor forces, i.e. ‘acts of god and acts of reality’, coordination with the marketing day and the instalment day are taken into account then the pace of production of a debtor turned independent producer turned wage labourer can be imagined. The person has to forget 8-hour working day, rest, amusement and attending to family chores. It is only to produce surplus enough for repayment. Does it sound like the sweating system? Does an industrialist having a supervisor or a foreman appear fool? While an industrialist has to devise a mechanism, a supervisory system and keep a physical appearance in the work place the micro credit capital does not require all these. Its mere regimentation, mere providing credit at the doorsteps of the poor and its higher level of ‘consideration’ or attention regarding collection of part of the credit from the debtor’s home so that the poor fellow does not turn a defaulter that determine the pace of production. This is the condition of the micro credit wage labourer, obviously a bit different from an industrial wage labourer. An industrialist ‘purchases the use of one week’s labour of [a] worker’ if the worker is paid on weekly basis, but the micro creditor purchases the labour of the debtor for an entire year, if, assumed that the loan will be repaid within a year, or for the entire period until the loan is repaid. With the payment for necessary labour time, a specific amount of money paid for subsistence of a worker and members of the worker’s family, an industrialist ‘ensures the continuance of labour-power even after his [the worker’s] death’, but the micro-creditor ensures the simultaneous use of labour - power of the household members of the debtor along with that of the debtor. The labour, through persistent struggles, has won, in relative terms, a number of measures to safeguard own body and soul and the capital has to compromise for its own sake. But the micro credit debtor turned wage worker toils without coverage of any such measure. The micro credit capital that finances micro-production units at household level is smart enough to escape, till today, the struggle of the debtor turned wage worker, by pass all rules, even norms attained so far, and stay safe. There is no working hour; no weekly holiday; no law, rule, regulation governing working time, working condition, safety measures, child labour, female working hour, etc.; no inspectorate looking at the working condition. This makes life miserable for the micro credit debtor turned wage worker and for the members of the household including the minors who help create surplus value without any legal coverage.
Now, only a few numbers quoted from Microfinance Statistics (vol.17, Dec., 2004), a publication of the Credit and Development Forum. These will help comprehend, at least partially, the width and length of the micro credit net and the surplus value it appropriates in a single country. In Bangladesh, in 2004, the number of active members in the 721 micro financing organisations (MFO), reporting to the CDF, was 16,622,047 and in 2000, it was 11,021,663 in 585 MFOs. In 2004 the number cumulative borrowers from 721 MFOs was 16,244,242 in a country of 140 million. It was 7,409,773 from 585 MFOs in 2000. There are many other MFOs that have not reported to the CDF, many others are operating in different guises and many other programmes and projects operating not as MFOs but carrying on micro credit business. From how many souls do a group of industrialists in a poor country appropriate surplus value? Are those always more than the number just cited? There are answers, obviously, to this question. It is expected that a reader will search the answers.
The metamorphosis of the micro-credit debtor continues further as the person moves to market with the commodity produced. The debtor then turns to an independent trader competing with peer debtors turned independent traders in the market place and at the same time they together fall prey to the vagaries of market governed by the mighty market forces. While carrying the commodity to the market, sometimes, some other members of the household, shares the load. This labour is unpaid in terms of wage. If counted or paid, the amount comes from the surplus value already generated. If it is unpaid then the amount thus saved stays within the surplus value to be paid to the creditor waiting for the next instalment of repayment. As an independent trader the debtor turned independent producer turned wage worker has to bear all the responsibilities of a trader. But an industrial labourer does not have to take all these responsibilities. The wage slave in a factory just completes respective job and gets compelled to be appropriated of the surplus labour time. Market, supply, demand, transportation of commodity to market, storage, taxes and tolls, speculation, price, etc. are not part of a factory worker’s business. But as an independent trader the micro credit debtor has to bear these extra burdens which are not the creditor’s concern at all. The creditor has tactfully, through the modus operandi, has put it upon the poor debtor’s weak shoulder. There are commodities in the market that are produced in larger, mechanised production units, with higher productivity, which means a cheaper commodity, and, commodities that enjoy facilities created by the WTO. This situation puts the debtor into an unfavourable, uneven playing field, cuts down the debtor’s competitive edge and presses down price of the commodity produced in the household by semi-skilled and unskilled workers and produced with artisan method and tools. There is the packaging, marketing and advertising factor. The person has to reconcile with the situation and that means further tightening of belt. The micro-credit thus pushes the debtor to such a situation with extra burdens while it demands regular repayment of the credit.
The data on the sectors or sub-sectors that use micro credit in Bangladesh show the sources of surplus value appropriated and who ‘offered’ the surplus labour to generate the surplus value. In 2004, according to the data published in the above mentioned CDF publication, of the 379 MFOs reporting to the CDF, 27.94 percent of cumulative disbursement was in the agricultural sector that included crops, livestock and fisheries sub-sectors while only petty trading sub-sector covered 40.61 percent. The percentage of food processing and cottage industries was 6.28 and of transport it was 2.20. In the years 2003, 2002, 2001 and 2000 the petty trading dominated. From where does trading, whatever its size is, produce the profit? A portion of it is surplus value generated by others in other places. What about the transport, the rickshaw van or the boat, and the cow fattening? The same answer. It is also the surplus value generated by and in different segments of the broader society that is appropriated by micro credit capital that gets in through the debtor’s hand. Other sectors and sub-sectors also provide similar explanation found in political economy. The above mentioned CDF publication provides a few more startling facts: ‘utilisation of loan by sector or sub-sector (as percentage of cumulative disbursement)’ in ‘social sectors’ in 2004 was 1.70 (health:0.44, education: 0.06 and housing:1.20); in 2003 it was 1.58 (0.45 for health, 0.04 for education and 1.09 for housing); in 2002 it was 1.41 (0.39, 0.05 and 0.97); in 2001 it was 1.76 (0.42, 0.11 and 1.23); and in 2000 it was 1.69 (0.37, 0.02 and 1.3). The ‘social sector’ meant by the cited publication was health, education and housing which are actually required for ensuring the debtor’s and the debtor household’s survival, keeping the body and soul of the household based producers or of the trader or of the transport operator together, ensuring that production or trading could be carried on or transport could be operated so that surplus value generation or taking share of surplus value generated by some other is ensured, so that the repayment that includes surplus value is ensured. If a debtor does not have a house or a shed the production unit will be inoperative or will face problems in the production activities; the raw materials, the tools, the fuel, the cow or goat or poultry, the commodity produced could not be stored in; the producer and others in the household joining in the production activities could not survive. So, the housing sub-sector was emphasized most while lending out money in the CDF defined ‘social sectors’. Of course, the façade was benevolence by the micro creditor. Then came health with the same arguments. A judicious choice of the appropriator! Material interest tops the list over human consideration. The extent of concern for health of debtor and debtor household is directly related and tied to the extent of concern of continuation of production, etc. activities. It was followed by education. The level of production and the level of transaction determine the extent of education required and the level of emphasis put into education. None can override this rule. The micro-creditor, also, faithfully follows this one and the life of debtor goes through this metamorphosis.
Thus, the circuit of metamorphosis of micro-credit debtor moves on and ultimately it completes a full path: a poor, an appropriated person turns debtor, the debtor turns owner of tools of production., the owner turns household based independent producer, the independent producer turns wage worker, the worker turns independent trader, the trader stays entrapped into debt with worsened condition and bigger debt turning one to debt slave. In its circuit the micro credit debtor only produces surplus value or takes a portion of surplus value produced by some other debtor or some other person or persons in the society producing surplus value and transfers a portion of it to micro credit capital. The circuit is both, a closed and an open, signifying the contradiction. The closed circuit keeps the debtor in perpetual and worsening poverty; sometimes, borrowing from the micro-credit literature, graduating a percentage of the borrowers, but pushing down or entrapping others in increased number; and often, throwing back the graduated debtor to the den of poverty again; and in these cases, the mainstream economics finds the rationale in ‘shocks’, ‘setbacks’, etc., natural and social, as their terminology defines. But whatever happens in the lives of a certain percentage of the debtor that does not change the basic structure of the circuit in the broader social matrix, in the process of appropriation of surplus value. Ignoring the macro scenario and putting forth the micro, a few individual cases, putting forth the exceptions instead of the general rule does nothing but vulgarises the arguments itself pushed forward by the mainstream. The open circuit intensifies and accelerates the pauperisation process and thus creating pressure on the system that creates poverty, makes a person poor, and appropriates surplus value. The vulgar economics with ‘hollow eye and wrinkled brow’ (Shakespeare, Merchant of Venice) extending support to micro credit capital may construct a façade by resorting, again, to vulgar arguments. It may argue that a certain percent of micro credit debtors have improved their living condition with the aid of the panacea as a few days ago they used to mean the micro credit. But this does not nullify the fact of appropriation of surplus value from others in the broader society. Rather, it puts the evidence that surplus value has been appropriated from some other persons. There are many economists in the bandwagon of micro credit who cite cases of increased consumption by the micro credit debtors. But it should not be missed that consumptions are of two types: productive and individual; while the first one is to create products the other is turned into means of subsistence. So, data of debtors’ increased consumption, claims regularly made by the mainstream economics, carry no meaning other than better and ensured supply of surplus labour power which is expropriated. The fact should not be missed that the entire system rests on the appropriation of surplus value and micro credit is a part and, now is an institution of the system. It is sustained by the system and it helps sustain the system.
The socialisation of micro-credit, with its profit profile, allures other capitals in banks and financing companies to join in. The capital engaged in micro-credit ties, quoting from Shakespeare, the ‘poor man’s cottages [to] princes palaces,’ organises and regulates debtors including members of the debtor-households, keeps them entrapped in the micro credit web, appropriates surplus labour power of them and others in the broader society. Moreover, it now regulates, based on its global power, the analytical process of a section of economists who overlook the process of appropriation of surplus value upon which the micro credit thrives, and try to ignore definitions of political economy and propagate vulgar ideas.

Micro Credit : A Few Hidden Facts

Farooque Chowdhury

The Bazaar, market, of micro-credit is growing bigger everyday as the capital has discovered allurement in the micro credit market because, borrowing from Marx, credit “money is breeding money”. Thomas Dichter of the Washington DC based CATO Institute informs in his policy briefing paper A Second Look at Micro-finance, The Sequence of Growth and Credit in Economic History informs: “Microcredit... has grown rapidly in the past decade, reaching tens of millions of individuals around the world and providing billions of dollars in loans.” About 100 million poor families are in the net of micro credit, as the Micro Credit Summit Campaign claims. The mission of the Campaign includes: working to ensure that 175 million of the world’s poorest families, especially the women of those families, are receiving credit ... by the end of 2015. The number tells itself that the issue should not be kept aside. Moreover, the number is related to human being, the poor turned debtors, and overwhelming majority of them is unaware of the name of the game. The debtor is the major factor of capital’s allurement and the debtor is available to capital at cheaper rate, cheaper than many other commodities in the present world economic system. The debtor of micro credit is poor and vice versa, micro credit has made the poor its prey. With the toil, to be specific, the labour power, of the dispossessed debtor the micro credit capital maximizes its profit in many countries in the periphery where the economic, social, political and investment climate is not safe for the capital to invest in manufacturing, etc. sectors and make profit. A closer look at a few facts hidden in the modus operandi of the capital engaged in micro credit help unmask the real face of micro credit.

It takes time, comparatively short or long, to get return, to appropriate surplus value generated from any investment and venture finance capital makes. And, in many cases, ventures turn to adventure for the finance capital and it has to bear the brunt. But in the case of micro credit the capital invested starts appropriating surplus value from the very moment it hands over the capital to the debtor. Whenever an amount of money is handed over as micro credit to any debtor an amount of money is kept with the creditor as the first instalment of repayment of the debt that includes the principal amount, the insurance premium of the credit money, the interest, and, as Marx tells in his Capital, “interest is a mere fragment of surplus-value”. If $50 is lent as micro credit, to be repaid in a year as $52 including the principal amount and the “service charge”, as the micro-creditors use the term instead of calling it interest, in 52 equal weekly installments, then $1, as first repayment installment, is kept with by the creditor while disbursing the credit money. Actually, the debtor receives $49, but the poor fellow’s debt is counted as $50. The $1 includes the principal amount, the interest, the credit insurance premium, recovery costs, the operational expenses, etc. If the creditor disburses micro credit, in a day’s transaction, to 1,000 persons, each of them with

$50, then the creditor actually hands over $49,000 while the creditor’s books of accounts record $50,000 as credit disbursed and $1,000 as repaid as the first instalment and the creditor pockets $1,000 as instant return that is again disbursed, as micro credit, to other guys and it follows the same circuit in a cyclic order. This $1,000, whatever it is, profit or surplus value or part of surplus value, is the money actually owned by the debtors who have received $49,000 in the name of $50,000 but forfeited by the creditor. The scenario described above is hypothetical. Following is a statement on micro credit disbursement : “The Grameen Bank operates its microcredit scheme on a fifty-two-week (one year) fiscal cycle. The first fifty weeks cover 100 percent repayment of the principal amount, that is, the borrower pays 2 percent on the capital amount every week. Te remaining two weeks of the fiscal cycle is scheduled for payment of the interest and borrower’ contribution to the emergency fund. In most investment loans the bank charges the rate of 20 percent interest; the emergency fund contribution of the borrower is 25 percent of the grosly calculated yearly interest on every repaid loan. The interest and emergency fund contribution together are twelve and half times greater than the borrower’s weekly instalment, but the borrower must pay it in the remaining two weeks of the year to become eligible for the next loan from the Grameen Bank. ...By the end of 1996, the Grameen Bank had modified the repayment terms. Now the interest payments are spread over fifty weeks and accepted with the instalment payments. Collection of an emergency fund was terminated in 1996" (Rahman : 1999).

A closer scrutiny of the above statement reveals the truth: from where and how the debtor pays? There are amendments, changes and alterations in the mode of repayment; variations in the mode of loan disbursement; variations among lending organizations and in countries. But the general mode of appropriating surplus value from the hapless debtor does not change. Moreover, there are organizations that tie other conditions to lending that carry implications in monetary terms, transfer of technology favourable to MNCs and to metropolitan markets and harmful to ecology. The mainstream economics, borrowing from the Capital, with “keen eyes of an expert”, hides this fact which history and the debtors will determine that whether that was an honest exercise or not.

Since its inception, as the Credit and Development Forum (CDF) publication Microfinance Statistics (MS) (vol. 17, December, 2004) informs, the cumulative amount disbursed by the world famous Grameen Bank was Taka (Tk) 217,313.9 million. There in the Bangladesh micro credit market the number of formal, institutional micro credit operators is more than a thousand whose cumulative amount of disbursed micro credit, it is assumed, reaches to more than billions of Taka. The MS tells: There were 4,059,632 persons -3,883,383 females and 176,249 males - only in the Grameen micro credit net spread over 48,472 villages (CDF:2005). And, the cumulative amount of micro credit disbursed as loan till 2004 by the 721 micro finance organizations (MFO) that reported to the CDF in Bangladesh? As reported by the CDF in its above mentioned publication, it was Tk 338,635.65 million in 2004, Tk 269,472.09 million in 2003 by 720 MFOs and Tk 125,607.61 million in 2000 by 585 MFOs. Any reader can now assume the

amount of appropriation. What will be the amount if the “$1 business” goes on for years and it is circulated and circulated?

The “$1 business” carries another intricacy that is not also discussed by the romanticist economists. The industrial or manufacturing capital appropriates surplus labour after it makes an investment, labour power turns the wheels and necessary and surplus labour times are passed. Even the capital engaged in trading or transportation takes its share in the surplus value after it provides its services to the industrial capital or completes a stage or a part of its functions and surplus labour time is pocketed after the necessary labour time is passed and surplus value is created. But the capital engaged in micro finance appropriates a portion of surplus value before the debtor actually produces it, even before the debtor goes back to his own home with the credit money, procures tools (a pan for preparing puffed rice, etc.) or raw materials (rice for preparing puffed rice, etc.) or a transport (a rickshaw van, etc.) even before the person procures bare necessities to keep own and household members’ body and soul together so that they can produce the required surplus value to repay the credit money with its interest. The “magic” happens with the $1 appropriated while disbursing the credit money. With the actual credit of $49, not the recorded credit of $50, the debtor has to work for the surplus labour time for repaying $51. This squeezes the necessary labour time and widens the surplus labour time. In other words, the creditor dictates and regulates the debtor’s working hour, pace of work, time for rest and the entire day-cycle. This intensifies the rate and speed of appropriation of surplus labour, and also, actually appropriates in advance a portion of the surplus value before it is produced and the appropriation takes place before the metamorphosis of credit money is completed and even the circuit of micro-finance money gets started. The appropriation by the creditor takes place before a debtor turns wage worker, produces subsistence for one self and for the family by spending necessary labour time. The industrial or manufacturing capital or the trading capital or even the capital engaged in speculation has not, till today, succeeded in making the “magic”. It seems that the circuit of M-C-M’ is “by passed” temporarily at the le premier pas. A working hand is asked to hand over in advance a portion of the surplus value the person will be producing in future. A “great benevolence” of creditors for the poor indeed!

Before a debtor receives a micro credit the person, along with the person’s peers, deposit an amount of money, on instalment basis, and after a certain period of time the persons organized in group appear eligible to be debtors. Then the micro credit is disbursed to one group member or more than one. The fund created with the savings of the poor usually acts as an insurance and collateral for the micro credit to be disbursed. Moreover, it helps the creditor to asses the credit worthiness of the would - be - debtors. During the initial period of depositing the would - be -debtors go through “motivation” and training, that are actually making them habituated to behave “properly” as debtor and disciplining or regimenting them and, “to train, good borrowers ...lowers the operating costs of ... the institutions which subsequently lend to them” (Hulme & Mosley:1996). Now, it is to the readers, to consider that whether the statement of collateral-free credit is true or false. A reader may recall the statement of G M Bell, a Scottish bank director, quoted by Marx: “Banking establishments are ... moral and

religious institutions ....How often has the fear of being seen by the watchful and reproving eye of his banker deterred the young tradesman from joining the company of riotous and extravagant friends? ...Has not the frown of his banker been of more influence with him than the jeers and discouragements of his friends? Has he not trembled to be supposed guilty of deceit or the slightest misstatement, lest it should give rise to suspicion, and his accommodation e in consequence restricted or discontinued? ... And has not that friendly advice been of more value to him than that of priest’.’” (Marx: 1977).

The scene of the “drama” does not drop here. Like wind-fall the fund is wind-blown to the crafty creditor. The poor fellows’ savings are loaned out to other poor fellows as micro credit and it revolves and revolves and it acts like a Geneva motion. The facts tell the “story”: Of the total revolving loan fund (RLF) of 721 micro financing organizations (MFO) that reported to the Credit and Development Forum (CDF) in 2004 the percentage of the “Members’ savings” was 28.50 and the percentage of “Service charge” was 23.69. The MFO’s “Own fund” was only 4.38% (CDF: op. cit.). The guys waiting to be liberated from the shackles of poverty provided more than half of the RLF with their toil and then they again paid the interest that carried a part of the surplus value they produced. Is not there room to be skeptic about the “benevolent” banker for the poor? This reveals only a part of the palm of micro credit.

While the regimentation, seasoning to be a faithful debtor, goes on the deposits, as idle money, continue its function: credited to others and, as usual, appropriating in advance a portion of surplus value before a commodity is produced or a transportation service is provided to a manufacturer, before the credit money is transformed to productive capital, to commodity capital, etc. An example will help understand the function: 10 persons organized as would-be-debtors group creates a fund of $40 in a month by depositing every week $1 each, and, the money instantly, save the transfer time, is lent out. If, there in a village are 2 groups; if, 1,000 villages are in the micro-credit net; and, if the cycle moves on for 12 months, will the amount be a peanut? The revolving loan fund of microfinance programmes of the above mentioned 721 MFOs in 2004 was Taka (Tk), Bangladesh currency, 57,627.97 million. In 2003, the amount was Tk. 47,363 million of 720 MFOs.

Yes, a creditor can / may calculate an amount of money as interest on the deposited amount of money of the group or groups in the books of accounts. What, in reality, happens to the fund generated by the group members? The answer is available in a few studies and is also available in the statistics of the concerned creditors’ reports. The answer is not a positive one. Whatever happens the questions it will generate will further unmask the hidden face of micro credit :

1. Is the rate same as the creditor charges from the debtors? 2. Is it calculated in the same formula for the both: the creditor and the poor depositing the money or separate formulas for the separate parties, simple rate for one and compound rate for the other, or flat method for one and declining method for the other? 3. Do the persons owning the money have the opportunity to decide the utilization of their deposited money? 4. Does a person have the scope of getting back own money if the person decides to withdraw? 5. Where is the insurance of the deposited money? A micro creditor will, obviously, provide sweet answers to

these questions. So, the last, sixth, question: is there any discrepancy between the pronounced answers and actual practice in real life? The embarrassing truth is in the pages of the above cited CDF publication from page 80 to page 169. Data in the pages show that there are wide difference between the two interest rates, one, from the debtor and the other to the depositor. There is also discrepancy, except a negligible number of MFOs, in the method of computing the two interest rates. The discrepancy in the method of computation of interest rates of the two makes the difference wider. A discrepancy between pronouncements and acts or a lie, whatever is termed, will weaken the creditor’s standing. And, facts from field are stranger than fictions produced by the friends of micro credit in the mainstream. Following is a finding:”[Grameen] Bank members report that group fund are not as accessible as they would like....Although it [emergency fund] has accumulated to Tk 145 million, disbursements to date are minimal and, consequently, the fund is unpopular with members, being seen as a disguised borrowing charge” (Fuglesang & Chandler : 1993). There are many other similar findings also which are not referred here.

The appropriation takes a more merciless form since the debtor goes back to own home with the credit money from the creditor. The debtor has to pay the second instalment on the next week or the next fortnight, depending on the style of the creditor. It may happen that the commodity could not be produced by the next week or the produced commodity could not be sold out or the quantity of the sold out commodity could not fetch in the requisite amount of money to repay the second installment or the market was depressed that refrained the debtor from selling the commodity produced with the credit money or the rickshaw van “failed to earn” the required money. Despite this reality the debtor has to repay the second installment. Instead of purchasing food, etc. for the household the debtor has to maintain the commitmeni to repay the next installment and the first and prime concern is the repayment of the debt. The creditor appears at the “door steps” of the debtor, which the micro creditors proudly describe as their “client-friendly” service delivery system that actually carries a different tact, and demand the installment. The failure of the debtor to stand by own oath carries consequences. In similar cases what the sincere efforts the faithful debtor makes to repay the installment? The answer unmasks the crude cruelty of the micro credit capital. The debtor, other than in a distorted situation, either deprives self and the household members by cutting down their subsistence or as wage worker having the means of production procured with the credit money squeezes down the necessary labour time put by self or by members of the household, lengthens the surplus labour time or sells self or other household member’s labour power to some other owner of the means of production and “collects” the promised amount for the loan repayment installment. In the second case, selling labour power to someone, the debtor turned wage worker takes away a portion of the money produced in the necessary labour time to repay the scheduled installment and that means, again, depriving self and the dependents of the subsistence and, at the same time, “extorting”, on behalf of the creditor, a portion of the value produced during the necessary labour time. Whatever “mechanism” is followed the consequence is tearing down the body and soul of the debtor and the dependents upon the debtor, irrespective of age—minor or old, gender, sick or

non-sick. In a distorted situation, the debtor borrows money from a moneylender in the informal sector, at higher rate of interest or from a friend or a relative or from a peer group member with interest or from some other micro creditor (SOM). In this case, borrowing from SOM, the debtor or the debtor’s spouse gets admitted with the SOM–organized group earlier. There is another distorted situation scenario: the debtor, if defaults, is issued a bigger amount of credit by the same micro creditor (SMC), the earlier credited amount is realized and the rest amount is handed over to the debtor as a new loan, which is a bigger one than the earlier one and thus putting a bigger burden of credit on the debtor. And, then what happens to the debtor? As Hemingway provides the answer: “First you borrow. Then you beg” (The Old Man and the Sea). Thus the SMC credits itself with an “amazing” recovery rate that has a role, partly, to construct the myth of micro credit. Whoever the “savior”, SOM or SMC, the debtor’s condition worsens, the “size” of appropriated surplus labour gets bigger. Then it turns out difficult for the debtor to free oneself from the tentacles of micro credit. The debtor thus becomes an appendage to the micro credit machine. And, as these “intricacies” of the credit capital takes place keeping the debtor unaware, in general, the appropriation actually turns to thievery.

Of these debtors referred above the overwhelming majority are the women. “(Female borrowers have proved more reliable than male borrowers: consequently some lenders have found that their financial performance can be improved by focusing on female borrowers” (Hulme & Mosley, op. cit). “[W]omen repay better than men...This may well ... provide an apparent rationale for the decision taken by a number of group –lending NGOs (including Grameen. BRAC.) to lend only to women henceforth” (ibid.). The loan recovery rate for general loans for women was 97 percent compareding to 89 percent for men in 1992 (Khandkar et al: 1993). Though there are two stories on women borrowers, their number and users of credit money borrowed in their names, one, proudly publicized by the media under the spell of micro credit, and the other, the reality found in a number of researches, theoretically it is the women from whom the capital engaged in micro credit appropriates surplus value most as women, according to statistics from literature of the MFOs, are the biggest debtor group and thus micro credit spares the “stronger” and exploits the “weaker” in appearance. The explanations forwarded by the mainstream economics in essence is the evidence of coercion or the fear factor that drives the women to perform as good borrowers who repay regularly. The micro creditors, however, propagate it as empowerment of the women. The reasons behind their “earnest” effort for “empowerment” of women include : possibility of migration or fleeing away or physical mobility of women debtor is least; and “their culturally patterned behavior (shy, passive, and submissive)”(Rahman, op. cit.). Rahman quotes Mafiz, a Grameen Bank (GB) worker. Mafiz said: Women in the village are easily traceable.They regularly attend more group meetings than men. Women are more reliable and are more disciplined (passive/submissive) than men. Working with women is easier than working with me (ibid.). Another GB worker told Aminur: In the field it is hard to work with male members. They do not come to meetings, they are arrogant, they argue with bank workers and sometimes they even threaten and scare the bank workers. It is good that our

superior officers have decided not to recruit new male members, although we do not have any written instruction about it (ibid.). There are other studies revealing similar facts. In patriarchal society women and their honour are more vulnerable than men and micro creditors capitalize this vulnerability under the facade of ‘empowerment”. Anne Marie Goetz, a political scientist and Rina Sen Gupta, an economist in their 1996 study “Women Leadership in Rural Development in Bangladesh” had similar observations. One female informant of Aminur told: When a woman fails to make her installments on time, she experiences humiliation through verbal aggression from peers and bank workers in the loan center (ibid.). Incidents of women debtors committing suicides due to humiliation for failure in repaying credit installments have been reported in press and by studies.

But astonishingly this is fact concerning human and ethics has not been highlighted by the mainstream and the micro credit fed propaganda machine.

The debtor of micro credit has no bargaining power. The virtual wage-slave embodied in the debtor can neither bargain the rate of interest, the size of the credit, the period of repayment, the rescheduling of credit, etc. All these depend upon the creditor with bagful of capital. Each debtor competes with the other one and thus strengthens the creditor’s unilateral power. The hapless position of the debtor and the very nature of the modus operandi of micro credit, along with the barrage of propaganda by the mainstream and the theoretical inconclusiveness of the critics of micro-credit have permitted the micro creditwallahs to avoid, till today, any law and regulation on working condition, working age, toil by women, safety measures, etc., and, any union of the debt slaves turned wage workers. Even, as far evidenced from the available literature, the critics have also missed the aspect. So, there is absence of charter of demands of the debtors the industrialists usually have to face from labour. The household based, individualized, isolated production or servicing units, each competing with the other similar units and in the market, permit, and in essence encourage avoid these aspects. The debtor turned wage labourer tries, on behalf of the creditor, to expand surplus labour time, to use cheaper labour power in own household, even sometimes using common property resource, to sharpen the competitive edge of the commodity produced in the household unit so that the repayment can be made on schedule and these allow prevail the condition. And, obviously a portion of benefits from common property resource (CPR) reaches the micro creditor through the hands of debtors. Who own the CPRs and who reaps profit from these? Is not it the people and is not it the micro creditor respectively? Has this fact of virtual usurpation of public property by micro creditor been discussed by the mainstream?

While the micro creditor has an in-built insurance of the credit money, discussed and calculated in micro-credit literature, the debtor’s production or servicing unit stands without coverage in the face of any accident. What happens when a rickshaw van faces an accident and its part or parts break up or, when a woman debtor faces an accident while producing a commodity with micro credit money in her household or, a rickshaw van puller faces an accident, a fracture in his leg and the rickshaw van was procured with micro credit money? While the micro credit money is insured and the debtors pay the insurance premium the

unfortunate debtors producing surplus value to repay the loan are uninsured. Is it “an inconvenient truth”? With billions in investment, with millions in the appropriation net the avoidance of related regulations has been made possible by the micro credit capital, a variation of usurer capital, in absence of any bargaining power of the debtor-slave. A unique scene of tranquility indeed! An evidence of skill, shrewdness and innovation of the capital engaged in micro credit also.

AN ANNEX

The labour power the staff of micro credit organizations put into collection of “deposits” from the debtors and repayments of credit money by the debtors during visits to the debtors’ gathering or at the individual debtor’s premise, the highbrow the staff exhibit on the debtor’s hapless face and the skill of intimidation they show, their extended, often super-extended working hour, that push many of them to the verge of physical and mental tear down condition is also a “channel” of surplus value that micro credit feeds on, with which it fattens itself. “Intensive loan-collection systems use the labour of bank [the micro creditor] staff (and some capital goods, such as motor cycles) to reduce the cost [of disbursing and collecting back the credit money] ... and mounts a credible threat against default” (Hulme and Mosley, op. cit.). While considering the question of appropriation of surplus value by the micro credit capital the labour power of these staff, mere tools and victims of the system, should not be overlooked, should not miss a sympathetic “mind”.

Source:

1. Rahman: 1999 : Aminur Rahman, Ph. D., Women and Microcredit in Rural Bangladesh, Anthropological Study of the Rhetoric and Realities of Grameen Bank Lending, Westview Press, Boulder

2. Hulme & Mosley:1996 : David Hulme and Paul Mosley, Finance Against Poverty, vol.1, Routledge, London and New York

3. Marx:1977 : Karl Marx, Capital, vol. 3, Progress Publishers, Moscow

4. CDF:2005 : Credit and Development Forum, Microfinance Statistics, vol. 17, Dhaka

5. Fuglesang & Chandler: 1993 : A Fuglesang and D. Chandler, Participation as Process-Process as Growth, Grameen Trust, Dhaka

6. Khandkar et al: 1993 : Khandkar, Shahid, B. Khalily and Z. Khan, Grameeen Bank; what do we know?, World Bank, Washington D.C., unpublished paper, 1993, quoted in Hulme and Mosley, 1996

Abracadabra

There are two ways of celebrations determined by the size of purse and determining the dynamics of social mobilisation. Here lies a seed of conflict, now overshadowed by celebrations, in appearance class neutral but actually acutely segmented,
writes Farooque Chowdhury

ICTS and crises are sometimes shadowed by celebrations. Pahela Baishakh was celebrated with much fervour and enthusiasm in Dhaka and in many other places in the country. An annual event for the past few decades, the celebrations pull millions of people onto the streets, and into colourful processions, parks, musical and cultural functions, and fairs of handicrafts and books. The number of people and events in places, rural and urban, suburb and peri-urban areas, across the country is swelling with each passing year. A Bengali carnival indeed! The euphoria shadows seeds of conflict.

It was an annual event for centuries in the farming life and to the traders in Bangladesh. Akbar, the great Mughal, introduced the Bangla year 1414 years ago to streamline revenue collection, coordinating it with the paddy harvesting time. The traders initiated haal khaataa, literally, updating the books of accounts, a business celebration to collect dues and debts from the regular buyers and customers to whose pockets the harvesting poured some money. The people celebrated it in their own way, a secular way. Village fairs were organised in different places. It is still a secular event in the life of the Bengali people.
Over the decades the celebrations evolved with the pressing needs and with the ways of protests and struggles of the Bengali people. It turned into a tool for protest and struggle in the area of culture by the Bengali nationalist forces against the ruling clique and ideology of Pakistan, of which the present Bangladesh was a province and a ground for exploitation and extraction similar to a colony. Chhayanaut, a Moscow-oriented left-led cultural organisation, initiated the celebration of Bangla New Year as a form of protest, to assert cultural identity that virtually challenged the ideology sold in Bangladesh by the ruling clique of Pakistan. The cultural movement with ideological-political agenda was led by the politicised enlightened section of the urban middle class of the province. They identified a traditional symbol, Pahela Baishakh, organised a function rendering songs composed by Tagore in a Dhaka park, related it with the Bengali psyche, gradually and successfully mobilised a section of the Bengali urban middle class around it, reinvigorated a sense of national identity and undercut the ruling ideas for bondage to Pakistan. It was a few scores of persons who gathered under a banyan tree in the Ramna Park in the first year of the initiative. There were, all over the province, many other cultural organisations including the Peking-oriented Krantee that also initiated and carried on the cultural movement. As the time moved towards the war of independence in 1971, the brilliant time in the history of the Bengali nation, the cultural mobilization widened and deepened. Remaining faithful to reaping profit the haal khaataa continued almost like a ritual without any heed to the nationalist fervour and the changing political atmosphere. The Bengali petty trading segment of society had support to the cultural initiatives.
Confined only to the city of Dhaka in the early years of Bangladesh, the urban Pahela Baishakh celebration widened in the post-1975 years. With the passing years since the days Ershad took control of the power in 1982 the celebration took mammoth turn and politicised the protesting tune. The carnival appearance in the celebration came through the initiative and participation of the students, especially from the Institute of Fine Art at Dhaka University and from the university itself. Huge masks and replicas of animals symbolising messages and ridiculing symbols adorned the colourful huge processions organised by the students. Characters of establishment and of status quo got satirised looks by the crafty hands of the institute students with the masks, jumbo-sized a few of those, they designed and the processionists carried. The processions turned mammoth as the ordinary people other than the culturally active section of the urban middle class joined in the streets making it a show of disgust and discontent as avenues of expression were made narrow, as attempts were made to muzzle down voices of protest, as efforts were made to vandalise and depoliticise the political arena. The celebrations spread to many parts of the country. It was the other cities in the country that adopted the celebrations first, followed by district level towns, and then came the smaller communities. In places, it is the establishment, as reports the press, and in places it is the cultural organisations and educational institutions that take the initiatives for the celebrations.
Then there was the entry of the multinationals. Commodity is wrapped with a cultural-colour as a number of multinationals are now capitalising on, for the past few years, the festive mood of the people by sponsoring cultural events and fairs under the guise of asserting cultural identity which is actually the advertising of respective commodities. A section of the cultural activists, a group of students of different institutions and a number of cultural organisations turned themselves into the media of advertising of the commodities marketed by the multinationals.
Under the guise of nationalisation and denationalisation the ruling segment successfully demobilised workers mainly in the state-run industries, an impact of plunderocracy of the, by the and for the ruling segments. Then came the sewing sector, the garments factories with its legion of workers, mainly the females from the rural areas. Vast portion of the newly organised legion joined in the celebrations, marches and songs as they are quickly adapting to the urban way and style of life. With them were lots of working fellows from the informal sector, the ‘fruit’ of the neoliberal policies. In the Bangla New Year celebrations now they, not the city-living-Tagore song practising middle class, are the majority. The national press reports: ‘It was millions on the capital-city streets on the Bangla New Year Day.’ Other than ordinary persons only the urban middle class cannot make millions on the streets.
Now it is the expression, from their, the ordinary guys’, part, of holiday aspiring for a well lighted and well ventilated life and tomorrow it will be an expression of discontent demanding a well lighted and well ventilated life. Manifestation of popular culture shall overwhelm the elitist culture, a mixture of all, pseudo-urban Bengali, Hindi, distorted and partial Anglo-American carried into home by the electronic media. One, of the ordinary people, moored in their life and struggles while the other, of the dominant segments, borrowed, copied and shallow. Struggles for production and in class arena provide life-blood to one while the other feeds on profiteering and plundering; one reflects life while the other mirrors lumpen character. The equation will force the latter to the backstage. This is the historico-cultural dynamics.
The class differentiations in the celebrations do not wither away. There those were and there they are though sublime at some moments of history. The neo-rich are there with their usual thirst for celebrations and zeal to spend money. A national Bangla daily reported that a person, an owner of a garments buying company, a trader, purchased a pair of Eeleesh, Hilsha Ilisha, with Tk 6,000. The pair weighed 4.25 kilograms. The cold-blooded fish seller hawked for Tk 7,000 for the pair. But the garments buying house owner made a good bargain and won the game, a bon marche. The fish trader sold another pair weighing 4.5 kilograms at Tk 7,000 the other day (The daily Ittefaq, April 14). The Eeleesh pair was procured to celebrate the Bangla New Year as consuming paantaa bhaat, the watered rice mainly the rural poor consume in the morning, and fried Eeleesh, mainly the rich nowadays enjoy, have appeared as the widely practised neo-style of the town- and city-living neo-rich. In Barisal, a southern neo-city, the fish dignified by money weighing more than a kilogram was sold at the rate of Tk 1,200-1,300 and the smaller sizes were sold at the rate of Tk 1,000 each. The Hilsha story does not terminate here. Quoting a fish traders’ association leader the daily informed: The total amount of the familiar fish sold from a market in the capital city from morning to evening on the eve of the New Year Day valued to about Tk 4 million. It was the upper segment of society that dominated the Hilsha market. The middle class trailed behind. The wholesale Hilsha market in the capital city traded Tk 10.25 million in a day prior to the festivities. Satires for innumerable times over the last few years in the dailies and weeklies have not made these neo-rich ashamed of this pseudo-Bengali practice, the paantaa-eeleesh.
While a neo-rich along with neo-segment brothers enjoy hot fried fish and watered rice, now not the food of the poor but a sophisticated food item, how much a poor earn? For an average working person in the informal sector in the capital city it is, on an average, Tk 200-250 a day. Quoting Halima, a female day-labourer, the daily informed in the same report that the wage of the labourer was Tk 150. The day-labourer complained that she had to pass three days without work after a day’s work. Probably, this was the employment scenario in the informal market. Halima went to a capital city-market to buy the beloved fish as her only minor son expressed the desire to have it. But she failed after two hours of bargaining. The amount of money she had was not enough to fulfil the desire of a minor son from a poor family. Halima had to go back without the coveted fish.
And, what the atmosphere in the food market was? The coarse rice was Tk 35-37 in the capital city as the above mentioned daily reported in its April 5 number. A few headlines of news of the period quoted randomly from the same daily tell, at least a partial, picture: ‘flour price rising’, ‘Sales centres run by BDR to be increased’, ‘The committee headed by the chief of the government to control the market situation starts work’, ‘Prices of flour are rising daily after the rise of prices of rice and lentil’ (March 24); ‘The poor are passing life subhuman in standards,’ tells a former adviser of the caretaker government; The Asian Development Bank director general said: low-income people are in severe crisis due to the ongoing food crisis (March 25); ‘Market beyond control’, ‘Can the people survive?’ (March 26); ‘Special US envoy is coming to see the food crisis in Bangladesh’ (March 27); ‘It is not silent famine, it is hidden hunger in the country now, says the food adviser’ (April 4); ‘The queue lengthens as the prices rise’, ‘Now it is loaf, biscuit, soap and cosmetics in the race of price hike’(April 5); ‘Not salary increase, food-ration required, DCs opine’ (April 6); ‘BDR opens 25 new rice sales centres in the capital city’ (April 7); ‘Thousands in the rice queue in front of open market sales centres in mid-night in Rangpur, Keshabpur, Kalaroa’ (April 8); ‘School students in the OMS queue’ (April 10); ‘Road blockade in Dinajpur as rice was not available in OMS, baton charge in Kurigram’ (April 11); ‘Middle class is in the OMS queue’ (April 12); ‘Donors are not assisting in resolving the food crisis,’ says the finance adviser (April 16).
What were the other celebrations in the life of the capital city and in other cities in that period? These were: lottery, live concerts, international trade expo, fashion show, singer-search campaign, inauguration of restaurant, New Year fair, musical soiree, function bidding farewell to the year gone, drama festival, kite-flying competition, spring fair, and many others. What the multinationals offered during the period to their would-be valued customers? New cell phone set, discount sale of fashionable clothes and shoes celebrating the New Year, summer sales offer of ice cream and other items, new rate of the cell phone calls that would allow ‘freedom’ (or bondage) to talk, automobile and education fairs, hundreds of thousands of taka in cash as sales offer, discount with summer-tour to foreign land, shinny silky hair, and many other amazing discounts, etc.
A fashion designer, claimed to be internationally renowned, said in a press conference on the eve of a fashion show: our people know magic (ibid, April 4). It is really a magical reality! What is the name of this magical reality? Profit’s indifference? A masqueraded truth? Or, is it a show of lumpenocracy? Does it adorn the segments dominating the society? The same daily in a lead news informed: The poor are increasing in number; people have not got emancipated from the clutches of poverty since independence 37 years ago (March 27). There are two ways of celebrations determined by the size of purse and determining the dynamics of social mobilisation. Here lies a seed of conflict, now overshadowed by celebrations, in appearance class neutral but actually acutely segmented. It shall rise with full force changing the dynamics of the celebrations. Has not history abhorred similar shows of acrid truth in many other lands on many other occasions? And, shall not history tell the dominating segments that live happily in islands of spending spree amidst vast expanse of poverty, but at last, a bas?
Farooque Chowdhury mainly translates books and articles