The reactions to Tom Heinemann‘s controversial documentary “The Micro Debt” have mostly been strong. The film sheds light onto a number of questions, first and foremost the risk microcredit borrowers face of becoming trapped in debt. However, public debate has so far focused on two rather marginal parts of the film: a more-or-less resolved dispute over aid money (cf. “GrameenLeaks”), and a dispute about a house supposedly promised in the village of Jobra. It is worth investigating why so much publicity has been given to these two issues, and so little to the film’s main message: that microfinance can cause debt traps.

While the charges of financial malpractice in the Grameen conglomerate have now been largely cleared up, Muhammad Yunus still remains a target of negative attention from the Bangladeshi government. He is now apparently no longer Grameen Bank’s director. But Yunus’ personality and job status should have nothing to do with an impartial assessment of the virtues of microfinance. What becomes clear from the recent debate is how symbols are mobilised (and abused) in legitimising as well as challenging microfinance. However, this distracts from more substantial questions about what microfinance does or doesn’t, can or can’t, achieve.

Let us take a look at “The Micro Debt” and the reactions to it, and also take a look at another, less-known documentary with less impact but perhaps a better focus on substance: “Easy Money”. Both films make the allegation that microfinance can be exploitative and can cause more problems than it solves. But the reason why “The Micro Debt” has been perceived as so inflammatory, while “Easy Money” apparently has hardly been discussed at all, is that “The Micro Debt” attacks microfinance’s symbolic self-representations of success and integrity.

A tale of two Sufiyas

Given director Tom Heinemann’s earlier reporting on large cellphone operators’ terrible labour record in Bangladesh, it seems natural for him to have gone after the big players and their symbols of success in his recent investigation of microfinance. Aside from reporting Grameen’s NORAD financial muddle, he sought out the basket-weaver Sufiya Begum from Jobra village, to whom Muhammad Yunus supposedly lent a sum of money in 1974. Yunus’ books made her famous as the first microborrower, but according to the documentary she died in in abject poverty in 1998. In the film (which regrettably is only available online in its N0rwegian original version; it can be bought in English), a lady called Narunnahar Begum is introduced as Sufiya Begum’s daughter. She reports how she met Yunus years ago, and that Yunus “promised to give my mother a house… but nothing has happened in the last 3-4 years”.

(see the film here: Part 1; Part 2; Part 3; Part 4)

This may be a rather small issue compared to the livelihoods of hundreds of millions of microfinance clients worldwide, and one which should therefore not affect one’s assessment of microfinance. But the Grameen-NORAD financial misunderstanding and Ms. Begum’s house misunderstanding have been attended to far more than any other topics in “The Micro Debt”.

Youtube user “microfinanceresponse” has set out to rectify these symbolic representations of microfinance by posting contradictory videos. A number of clips has been published recently on Youtube, claiming to represent “The Truth about Microfinance” (a strong claim!); my guess is that the Grameen Foundation is behind this (see this letter). Update: The Norwegian TV response to the letter can also be found on-line. The name-change put forward by Grameen as the reason is indeed fishy.

In one of the “microfinanceresponse” videos, filmmaker Gayle Ferraro (a professed fan of Yunus and Grameen) is shown interviewing the same lady Heinemann interviewed. In the new video, she claims not to be the daughter of the first Grameen borrower after all. The reason for the discrepancy or confusion is never explained, but Yunus’ original Sufiya Begum is sought out based on an American TV news clip from 1989. When the “real” Sufiya Begum is interviewed, the solemn music suddenly becomes upbeat, and the video ends with Ferraro’s musings on “how well she’s done, helped along the way by Grameen Bank”. Case closed. Update #2: The same point, re-iterated, in another “microfinanceresponse” video.

Really, like anyone else, I have no way of figuring out the true identity of either of these Bangladeshi ladies, nor guessing which one of the documentary filmmakers was mistaken. I would at least give Tom Heinemann credence that he was convinced he was talking to the (daughter of) the right person. But it doesn’t matter – what counts is whether “the truth about microfinance” really hinges on Sufiya Begum’s house or Yunus’ NORAD money (or, say, Grameen’s real interest rate, the third minor point in the film which is picked up by microfinanceresponse, and which itself a subject of debate)… or instead on more serious questions: like microfinance’s apparent lack of macro impacts, or the risk of poor people falling into debt traps. (Roodman has already also commented to this effect.)

A battle for symbols

The upshot of Heinemann’s documentary really should be that microfinance is fraught with problems, and can potentially cause harm. I say should… not because Heinemann doesn’t get this message across (he does), but because a large part of his documentary gets caught up in confronting the symbolic representations of microfinance.

Nevertheless, the way Heinemann takes these publicly visible symbols (Yunus/Begum/The Nobel Prize) and seeks to expose what lies hidden from sight is probably what ensured him a good story for TV. Documentaries always do this: focus on key symbols, which are taken to represent an entire issue, and lead the viewer to generalise on their basis. In that sense, I wouldn’t criticise this documentary any more than any other, especially since this also happens to be how the other side, the microfinance-is-the-solution-side, tells and sells its story. (See “Small Fortunes”, “Kiva Documentary”, or the Grameen Foundation’s PR material for example… notice how here, too, the story is boiled down to a few one-sided symbolic representations; and, unlike in “The Micro Debt”, the clients get to say far less than the microfinance talking heads.)

The problem with documentaries (or at least documentaries aiming at some form of mainstream success) is that they may not be able to break away from such a symbolic, associative, nonrepresentative depiction of the microfinance issue; whether positive or negative. TV (and increasingly Internet) documentaries are by their nature visual, and in order to appeal to a large audience they must condense larger themes into a few symbolic visual icons, which they then either attack or promote. Filmmakers naturally focus on the symbolic power of the Nobel Prize winner, the first borrower, the housewife-entrepreneur, the first school day of her child, etc., in order to captivate their audiences. In this sense, “The Micro Debt” does what a documentary can be expected to do.

But microfinance institutions and enthusiasts too typically rely on using selected clients (and Dr. Yunus as a shining figure) as symbols to sell their product to the developed world, while they should instead be engaging in an informed debate with the public. Against this background, the knee-jerk reaction – defending the symbol rather than dealing with the more systematic allegations made by “The Micro Debt” – is as understandable as it harmful to real substantive debate, because it has largely ignored the real questions about microfinance’s effectiveness. Update #3: A day later, this point was echoed by the Guardian.

Perhaps the Grameen Foundation would be happy to go back to the days when “the truth about microfinance” was the simple story they told, of “how a few dollars change lives”, the upbeat microfinance story – the key figure of which was Dr. Yunus, the defining moment the 2006 Nobel Peace Prize. They can send a dozen more filmmakers to Bangladesh to tell that story over and over. But that would have little to do with engaging the public in an intellectually honest discussion about whether small loans are likely to do more good or more harm for the poor; whether the majority of Bangla people is now any better off than 30 years ago; whether the chance of one miracle entrepreneur should outweigh the risk of other clients becoming debt-trapped and suicidal. (Though, to be fair, I have been able to find this one substantive Grameen response to the film.)

In February, at the Harvard Kennedy School, I organised the first U.S. showing of “The Micro Debt”; and here the audience discussion treated the financial mismanagement allegation as peripheral to the film’s actual message, while the Jobra house dispute was not even mentioned. The audience preferred instead to discuss the debt problems which may be linked with microfinance, and the lack of clearly demonstrated effectiveness of microcredit. While not “balanced”, Heinemann’s film was understood by as an effective “antidote” to the usual upbeat microfinance story… Just one example of how to take messages of “The Micro Debt” seriously, instead of polemicising against them.

The documentary you won’t see on TV

Thanks to the good people at I recently became aware of another documentary, called “Easy Money“, which I would highly recommend to anyone concerned about where the real questions over microfinance lie. Particularly against the background of the Andhra Pradesh crisis, it is almost something of a historical document.

For 50 minutes, “Easy Money” does exclusively what Tom Heinemann’s “The Micro Debt” does in its better part: talk to the people on the ground in order to figure out what microfinance does on the ground. I wouldn’t call this film more “balanced” (which isn’t, and never has been, the role of the journalistic documentary) than “The Micro Debt”; it is definitely less professional, probably the reason why it focuses more consistently on the questions an average TV audience would have less patience for. And for that focus I give it credit.

Filmed in 2007, “Easy Money” shows that the problems exposed by the Andhra Pradesh microfinance crisis (which began in September 2010) were visible far earlier for those willing to look. In doing so, it discredits the industry claim that the compulsion, malpractice, suicides, and overindebtedness problems found in AP during the crisis were the invented or instrumentalised by a jealous or zealous state government aiming at bringing down microfinance. Rather, appears that in 2010 a long-festering problem finally reached critical mass and became political.

Best of all “Easy Money”, addresses the question with which I was most left hanging after watching “The Micro Debt”: If borrowing is so harmful, why do these people borrow? “Easy Money” explains,

Poor labourers continue to borrow in order to survive the debt cycle, each loan being used to pay back another, and so on, until the borrowers are forced to spend their entire lives paying off loans… It kind of made me think that this was a developing-country version of getting one credit card to pay off another; the debt cycle common in developed countries.

We are also shown the asymmetry of information which favours irresponsible microlending and borrowing. A client says, “I don’t know anything about microfinance, but I just took a loan from the group and repaid it.” The narrator explains,

Amongst the poverty-stricken, there is no question that words travel fast when the subject concerns access to money. When speaking with microfinance clients, one has the impression that microfinance has spread like a wildfire. So fast that it isn’t always clear that people know what microfinance even is.

AP microfinance institutions have apparently been willing to grow and become profitable on the basis of this naivety. In that connection, we should explore the power dynamics and mission ambiguities underpinning microfinance.

The women leave the same way they came: single-file, silently, orderly, obediently… To achieve the high repayment rates the MFIs target, the ethos of self-help groups needs to be one of compliance and conformity, and not one of social empowerment and transformation. We are forced to ask ourselves then what the true goals of the MFIs are, and if there really is a social mission, masked behind their apparent obsession with repayment rates. Like everything, it matters with whom you speak.

That’s the sort of unclear picture independent microfinance researchers deal with – and the sort of reality TV audiences will change the channel upon.

Both “The Micro Debt” and “Easy Money” make the allegations that microfinance causes more problems than it solves, and that it exploits the gullibility of the uninformed who have little choice. Both films make them well, in their own way.

But the reason why “The Micro Debt” is being so feverishly and polemically discussed, while “Easy Money” apparently isn’t at all, is that “The Micro Debt” also attacks microfinance’s famous symbols of success and integrity. I maintain that we should move away from that discussion. It would be great to see practitioners like the Grameen Foundation respond to the real allegations against their business and development model, effectively and convincingly, rather than post video clips poking at marginalia. They should deal with statements like this one from “Easy Money”, which seems an appropriate conclusion:

Those who uncritically celebrate microcredit seem unaware of the actual debates within the microcredit community, where the dominant issue is how best to build institutions that are genuinely sustainable, as versus short-term solutions designed to flood developing markets with quick cash in the hope of spawning new microenterprise. More money will not fix people’s lives. In fact, frequently, it only serves to prolong debt entrapment. What is needed instead is better money, not more of it.