Matt Jenny on the Grameen Bank

Over at the Center for Stateless Society, Jenny takes a close look at the dark side of Grameen Bank, for whose microlending efforts earned its founder a Nobel Peace Prize. But apparently the Bank is not engaged in private lending to help third world enterpeneurs. The bank raises capital by way of loans from governments and quasi-governmental organizations like the UN and the IMF. Jenny elaborates on some of the creepier elements of the bank:

The high repayment rates by the debtors are achieved through methods which could be called coercive. The borrowers are grouped into cells of five. Future loans, which are much higher than the first one, are only granted if each member of the cell has repaid his or her first loan. This creates an incentive for each member of the cell to make sure everyone pays back their loans -- how they do this is up to them. The repayment rates for second-time borrowers are much lower even though employees of the Grameen Bank monitor all borrowers door-to-door on a weekly basis. In addition to these unusual methods, the borrowers have to chant the "Sixteen Decisions" during parades, which express the worldview of the Grameen Bank. Decision 16 reads as follows: "We shall take part in all social activities collectively." Other Decisions emphasize the attempt of the Grameen Bank to emancipate Bangladeshi women from the traditionally patriarchal structures. This seeming emancipation and financial independence come at the price, though, of dependency on the Grameen Bank, which turns out to be less of a bank and more of a cult.

Why miss a chance at social engineering when helping people pull themselves up by the bootstraps? Read more here.

UPDATE: B.K. Marcus weighs in on the hoax as well.

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Written on Thursday, October 19, 2006