Touted as the solution to women’s poverty, microfinance is anything but. Often it is a trap where vulnerable women become mired and indebted in an economic system in which they cannot compete. Former “development” worker Maria Diarra of Mali talks here about the problems of microfinance and offers alternative solutions.

The thing that makes me scared is micro-credit. People think that cash is the only way to get out of poverty, and the only place to get cash is micro-credit because the bankers only give to the rich. When the micro-credit industry first came to Mali, the programs spoke of fighting poverty, but that’s not what they’re doing.

I was working in the development world. We were doing credit and teaching women to go through this entire system of becoming Western. The people who set up the credit, the loans, never trusted the villagers. The big man or woman always accompanied the farmer or the fisherman to the market to buy their fishing nets. I wondered, if the money is really a loan, why all the eyes to watch them? If they are the ones to pay back, let them do whatever they want. They are honest people. This system disempowered people.

Micro-credit wasn’t fair and didn’t work. Women would come and ask you for a gift so they could pay the loan back, or tell you they had to sell something to pay back. If it was available, they sold their only precious possession—maybe their house or land, or the gold earrings or bracelet they had saved in case of big trouble. There were no income-generating activities that could allow them to pay back the money because of all the interest that was piled on. We did a lot of research on what options women have for income-generating activities. They can sell goods in the market like peanut butter and ingredients for sauce. It’s so slow, so a woman might make fifty cents or a dollar everyday. At that rate, it’s very difficult for them to make a living with the loan and then pay it back.

The women said, “It’s no good, but what can we do? We are poor; we need money, so we’d better get it before we die from not having food to eat.” Why were these very poor women having to fail? They were suffering so much, paying as much as 30% interest a year, just to pay the salaries of the development workers [from the agencies that were making the loans].

I had never heard about people running away with money before, but I started to see a lot of cases like that. Because the money was coming from an external source, we started to experience all kinds of fraud. The man or the woman in charge, they would sometimes have funny stories about the money; the wind blew it away, stuff like that. You saw big leaders lying. Even the women who wanted to do it correctly were getting into bad relationships with their neighbors or their husbands, either because they were stealing or because they were opposed to stealing.

I don’t blame the people who are trying to cheat the development agency, because when you come with an intent that is not honest, that is distrustful, people know the expectation is that they are bad. They respond in kind.
This miniature savings and loan banking was like having the World Bank among us.

So I said in several meetings that we are impoverishing the women. Also it was really clear that once they got into the credit system, they developed all kinds of bad behavior. I was the subject of big meetings in Canada, where they said I was the barrier to project advancement. I said, “I have two ears. I hear what the villagers are saying, and what you say you want. As intermediary I really have to play that role because I honor resistance. I don’t try to protect the status quo. The resistance that I hear from the villagers, that is what I am standing with.” I always acknowledge resistance and honor it, because it helps me measure if the offer is matching the demand.

People need the chance to look for other things, because right now credit is the only thing on offer. You take it or leave it. They do so much advertising around credit that everybody is tempted to go and take it. It doesn’t work for most people. But when it works for you, you don’t think of what the alternative could be. It’s a lesson, a bad lesson, that poor people still have to pay and make the rich richer.

A big group of us working on this micro-credit started reflecting together. We were thinking that development wasn’t going to be a solution, that it wasn’t a good strategy. We knew that what was being done to the women wasn’t fair. We reflected: If we are not going to survive spiritually and mentally in the development project, although we we’re making big money, why stay? We didn’t want to be the accomplice of bad development in our country. We didn’t know the alternative but we decided we’d better quit.  We pulled ourselves out and started to create the Institute for Popular Education (IEP, in French), to make visible our alternative thinking.

That’s how we started to listen at the grassroots level again. There were ten villages which had refused the credit. They had said, “Since we are not honest, we are not good, we are not intelligent, we aren’t able to do your work.” So we stayed with those people and started building another process. Since that time, we have always worked to be sure that everything we do is an alternative to that big arsenal of development that is challenging people’s lives.

We at IEP started giving with our own money without thinking about the repayment. For one woman it could be a year before she gets what she needs as a means of production and could pay the money back. This doesn’t pass as theory in development, but it gives us satisfaction because at least the woman is still alive. One sister could come here and ask for credit, so we could help her start a business. But if you look at her means, you know that credit won’t work for her because she’ll never make enough profit. So you say, “Let’s think about other things.” But if what you give is oriented toward production but still has the identity of gift, the women will always pay back in some way.

For me, if someone comes to ask for a gift for production and you push her to be stable, that is good for the country. When she is really down, it’s very hard to make her stand again. She loses self-esteem and self-confidence. Those things are bigger than the money that might be lost on her. Now we see people around us stand up again, just from a bit of support. I have seen women get out of trouble with 25,000 francs and never return to ask for anything again.

I give when I have it, no matter where the person is coming from, or what sort of lie they are telling me, since I don’t have the measurement to see what is a lie and what is a real need. All the time people tell me, “Be careful, be careful.” But while you are being careful, someone is in trouble or is dying. With what is going on around us, we aren’t being attentive to our solidarity. This is the danger.

People do have parallel practices, like just asking a parent or a cousin. Or they have tontine [revolving loan funds], which gives the women access to cash. This is the way people build their houses. It’s an alternative to the World Bank.

Loans without interest are helping maintain the parallel economy. Yesterday, for example, a government worker came to me. He has a son who should join his workplace, but they don’t have any money for transportation to Kidal, which is far. He came to me and asked, “Could you give me 5,000 CFA before my paycheck?” You give it once. If he is honest he will pay you back without any interest. If he is not honest, you can go ask for it a couple of times and then you know to abandon that. But most of the time you get the money back without any trouble. Why wouldn’t you take that risk?

People in the region of Djenne don’t buy anything with money. Even movies, these people enter the movie with a cup of rice. They don’t have cash and they don’t care. It is the only place I know where people can survive without money. They buy everything with their crops. We worked with seventeen villages, and they all used crops. When we bought a grinding machine, we said that the price of a cup of rice was 25 CFA. They said no, it is the equivalent measure in another food. They have found a way to not be cash slaves; they just don’t bother themselves with money. We need to find a way to help them fight.

When people can grow their own food in any village, they can really use that economy of giving. All this has made me think: The exchange economy is a disease. What we need to do is to share and let the gifts circulate.

We do gift-giving for production, but sometimes we do it for zero. If a woman needs to get a tooth pulled and she has no money, you don’t leave her in pain. You put your money at risk for needs that will never make profit. We have been criticized for what we do, saying we shouldn’t do charity. I don’t have a name for what we do but I know it’s not charity. We hope it can get the women out of that credit system so that they can see alternatives to those loans. 

We don’t pay too much attention to how much of the gift is returning. We know that there are returns.

We say life is a rope, but rope is the same word that we use as credit or loan. Here, it means you owe me and I owe you. One should not break the rope. We make the rope between ourselves, and you have to hold onto it. If you drop it, you are the cause of the rupture. I love that explanation for what we are doing.

If our alternative movement fails, we will be slaves to the World Bank and the multinationals. But if we can keep our alternative practices viable, we can do for ourselves and not have to count on the outside.
Beverly Bell, coordinator for Other Worlds, has worked with social movements in Latin America, the Caribbean, Africa, and the U.S. for three decades.

Maria Diarra is a popular educator and co-founder of the Institute for Popular Education in Mali.