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Actor Matt Damon makes it sound like a great idea to give small loans to poor families so they can get access to improved water and sanitation. After all, he is the co-founder of the NGO water.org, promoters of the WaterCredit loan:
“Gary, my partner, pioneered this idea of, you give people loans. So, for instance, in a place like India in a slum, the municipality will be pumping water right through the street … If you could give them a loan to connect directly to the municipality, so you pipe the water directly into their house, a 75 Dollar loan, they use that time that they were wasting waiting in line for water – working, they pay off the loan at rates of like 98 percent, 99 percent. And they’re using that time in a more productive way.”
He makes it sound easy and appealing. And it is appealing. I’m sure Matt Damon, who is known for ardently supporting social causes, sees this as a real solution. The trouble is, his model doesn’t tackle the fundamental problems – like piped water actually being in the slum in the first place, which it normally isn’t. Damon also doesn’t contemplate the fairness of asking the poor to pay for this human right with a loan. Will the poor want to pay? Will they even be able to pay? This idea of microfinance for water and sanitation may make an already unfair state of affairs even unfairer.
Earlier this year, I had the pleasure to present a paper at the University of Pula, which was later picked up by Microfinance Focus in a nice article. Since then, the ideas presented in that paper have mushroomed and matured into a more thorough, comprehensive and analytical (and 158.1% larger) piece, which has now appeared as a Discussion Paper in the MPIfG’s series. Read the rest of this entry »
It’s great to know that people take note of the ideas we share on this blog. In April, I posted an entry introducing a paper I had recently presented in Croatia, called “Attempting the Production of Public Goods through Microfinance: The Case of Water and Sanitation“. The argument was that water and sanitation, because they have the characteristics of public goods, cannot be provided adequately via private individual credit like microfinance loans.
In a thoughtful article on microfinancefocus.com Katya Jenkins recently re-iterated this point (and quoted the paper). Her basic argument: some organisations are reporting successes, but we have good reasons to be skeptical, and it might not work in every case.
Jenkins makes one very important point at the end, which is that there may be a better case for small self-financing in water and sanitation if we were talking about community systems. Agreed. But microfinance organisations would have to adapt their business models a lot, giving out much larger loans (€ millions rather than hundreds), being far more patient with repayments (slower repayment means slower turnover means lower profits), and actually bothering to “know” their clients’ business (instead of easy and cheap “no questions asked” lending). That’s a long shot from today’s microfinance, even if a select few organisations like ProCredit have taken the step into SME finance; and probably “microfinance” would be the wrong name for it. Read the rest of this entry »
Practically everyone has heard the proverbial story of poor a Bangladeshi or Nigerian taking out a microloan to, say, buy a few chickens or start a small business selling mangoes, and becoming a wealthy and successful farm entrepreneur or fruit trade mogul. There is even a picture book for children about that story.
Picture books, however, don’t make the story any more real or representative. This blog has been critical of microfinance success stories in the past, because they mislead people into generalising from a few exceptional success cases (see also Tim Ogden’s smart analysis of the consequences of misleading storytelling). More generally, the blog has been critical of microfinance because not everyone who takes a loan can make a profit on a business venture and use the profit to repay the loan plus interest; very few will benefit spectacularly from this, and their successes do not equal “development”.
But donor bodies increasingly expect microfinance to become the centerpiece of development. Proposals for microfinance to reach beyond small-business-lending and into the traditional remits of the state abound. Microcredit loans are being suggested and applied by various agencies for generating access to a range of goods and services linked to development, from sending kids to school, creating better health, improving water and sanitation, to even helping with peace and reconciliation. Using microfinance for water and sanitation has been an area of particular focus (here is one prominent example, with its own success stories). Read the rest of this entry »
Content hosting services such as Google’s YouTube or Facebook are among the most important digital public spaces. Many entirely new forms of creativity have been inspired and flourish due to new and easy ways of sharing (more or less slightly) modified content on the net. What is more, popular examples of such user-generated remixes or mash-ups rarely stay isolated but lead to video responses – often based on another round of remixing.
Precondition for this ecology of user creativity is not only the technological platform but also an enabling legal framework: while, at least in the U.S., many instances of remix culture fall under the fair-use exemption of copyright, this cannot easily be recognized and thus bears risks of costly litigation. As a result, platform operators such as Google are tempted to pursue policies best described as “delete if in doubt” whether a particular work might infringe copyrights.
But why should copyright holders persecute such “infringements” by ordinary users – often fans and dear customers – who engage in creative work without commercial interests? The reason are commercial revenues generated by platform operators, mostly via advertising. Copyright holders of works (re-)used in user-generated content distributed on these platforms demand their share of those revenues and use their copyrights as a collateral in the respective negotiations. Read the rest of this entry »