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Update (8.1.2014): The court case against the Moroccan anti-microcredit activists is postponed again until 28 January 2014, because a new judge is being sent from the capital, Rabat.
Update (18.12.2013): The verdict was postponed yesterday until 6 January 2014, due to nine prosecution witnesses not showing up. A demonstration was held in front of the courthouse.
A woman and a man who led protests against microfinance institutions in Morocco are on trial. They risk of five years prison sentence without a chance of parole.
Amina Mourad and Benasser Ismaili, this communiqué (via ATTAC Morocco) reports, are leaders of the Association de Protection Populaire pour le Développement Social, an organisation of roughly 4,500 women who have been rallying against the policies, practices and interest rates of MFIs in Morocco since 2011. Four MFIs took Mourad and and Ismaili to court on counts of libel and threats. After the activists were found “not guilty” in the first instance, a new organisation backed by Planet Finance went into appeal, threatening them again with imprisonment. The verdict is expected on 17 December at the courthouse of the desert city Ouarzazate.
Morocco was the site of a microfinance crisis in 2008, caused by ever-larger loans to groups of borrowers, leading to 10 percent of clients not repaying (or not being able to repay) their loans by June 2009. The central bank estimated that 40 percent of borrowers had loans from more than one MFI just as the repayment crisis began (source). Even the always-positive ACCION Centre for Financial Inclusion admits that there is no effective client protection in Morocco: “Measures have been put in place to advance the adherence to the principles of client protection. While much has been achieved to date, there remains much more yet to be accomplished.”
The World Bank is a major backer of microfinance expansion in Morocco, hoping to show that microfinance markets can recover from the repayment crises they generate. The two largest MFIs in Morocco (Al Amana and FBPMC) earned a rate of profit of 45 and 28 percent, respectively, in the second quarter of this year (Mixmarket).
Jailing the protestors will certainly not improve the reputation of MFIs in Morocco, and may lead to violence. ATTAC have called upon the court to release the accused, asking for an international demonstration of solidarity via letters like this: Read the rest of this entry »
(*don’t know your customer)
Truth in advertising has never been very highly valued in the microfinance sector. Know-your-customer (KYC) sadly is also a much-espoused but rarely-heeded principle. The current promotional video for on-line lending platform Kiva shows that Kiva cares about neither.
This most widely known online microlending platform once claimed it facilitated person-to-person (P2P) microending. After the New York Times debunked that as a deceptive illusion in 2009, Kiva had to retract the claim, now fielding the (far clearer?) promise to “connect people through lending to alleviate poverty”. In fact, what Kiva does is merely lend your money for free to microfinance institutions (MFIs), which can then on-lend the money in whichever way they see fit, at interest rates somewhere between 20% and 100% APR. The joyful little cartoon video about “Pedro, a farmer who gets a loan through Kiva.org and transforms his business” doesn’t exactly make this clear.
But the main problem with Kiva’s video How Kiva Works is that the claimed impact of microloans is so absurd, it prompts serious questions about who at Kiva actually knows anything about what microfinance does. Let’s briefly look behind the cutesy imagery.