Date: Mon, 23 Aug 1999 10:41:46 -0400 From: Eugene Versluysen To: Subject: New book on microfinance Message-ID: <> Dear DFNers. The purpose of this rather lengthy message is to shake off some of the late-August blues and say a few things about my recent book on microfinance; "Defying the Odds; Banking for the Poor", which was published in May by Kumarian Press. The book is based on what I have learnt during the time I spent with the clients and staff of Grameen, BRAC, BRI, BancoSol, PRIDE and several other MFIs in South and East Asia, West Africa, and Latin America. The central theme of "Defying the Odds" is to draw the linkages between the rise of self-employment and informal activities, and the budget cuts and structural reforms which developing countries had to adopt to deal with the aftermath of external shocks and misguided economic policies. What makes this theme pivotal is that, in country after country, free-market policies and the effects of globalization, fiscal austerity, and cuts in programs for the needy (most of which are consequences of the IMF’s and World Bank’s "support"), have widened income inequality, and caused massive job losses and poverty. This part of the book, which offers a ploitical-economy perspective of microfinance, also shows how poverty and the rise of informal activities reflect particular socio-economic contexts: the aftermath of the debt crisis in Latin America; chronic underdevelopment in sub-Saharan Africa and south-east Asia; and east Asia’s economic implosion in the late nineties. This part of the book describes the "odds" which MFIs face. In addition to this, I had three other objectives in mind, when writing the book. The first was to show how, by financing income-generating activities, "banking for the poor" can stave off some of the effects of class divisions and gender bias, and of economic programs and policies that push, or trap people in destitution, at the margin of society. Instead of handouts that perpetuate passivity and dependency, small loans for self-employment can help fight poverty and marginalization. They make people self-reliant, build their confidence, and empower those who are excluded from the mainstream of society. Encouraging self-reliance is also more cost-effective and equitable than the anti-poverty programs of development agencies that take charge of people (and countries), tell them what is best for them, and usually by-pass the neediest—particularly women and indigenous communities, whose needs are mostly ignored by conventional poverty-reduction strategies. My second objective was to stress the importance of blending savings with credit. If impoverished households have sufficient incentives to save, even if only a few cents at a time, they can begin accumulating working capital and build up a safety cushion for emergencies. The truth is that saving is always better than having debts. But for the majority of people in the informal sector that is a moot point, since they can only begin to save after receiving a loan to start a small business. The last objective was to provide a comparative analysis of microfinance programs that are leaders in their field, and illustrate their successes, as well as their shortcomings. I have chosen the five country case studies that are presented in the book on the basis of the role and place of microfinance in those countries, and to illustrate the contrasts between institutions that already have several million clients, and others that are shoe-string operations. Eugene Versluysen Washington, D.C. PS: Just in case, Kumarian’s email is