On Tuesday, Mar 27, Nicholas Kristoff wrote a column on microfinancing, “You, Too, Can Be a Banker to the Poor". For those of you who don’t know what microfinancing is, it involves people in the first world making very small loans -- maybe $25 to $250 -- to small entrepreneurs in the third world to boost their small businesses. By and large these entrepreneurs have been screened, etc. In Mr. Kristoff’s blog, “On the Ground”, published March 28, he has some more explanation and a lot of comments by readers. Microfinancing is a good idea, I think, in some circumstances. I would think especially of urban poor who might be able to expand their market base outside theirown neighborhoods. In places like our Colonía, essentially a small town in a rural area, I’m not so sure.
First of all, it is important to realize that whatever aid efforts there are whether they be microfinancing or Save the Children or whatever, they are not going to help very many people. That's the nature of the beast: there are just an enormous number of people in the world who struggle mightily to keep afloat.
Second of all, the argument about “shifting poverty” brought up in some of the comments on Kristoff's blog is a very important one. That is, there is a limited amount of money circulating in many poor communities. Microfinancing in such places may simply allow one person to increase his income at the expense of another. An example: here in our community, we have quite a number of tiendas all of which sell basic dry goods, a lot of Coke and junk food, and some fresh vegetables. People don’t know of alternatives, so when they want to try to capture a bit of money, they open yet another tienda. Some do better than others. A new one always takes away something from an existing one. A loan to one of the more successful ones would probably cause the less successful ones to fold, thus depriving the owners of the little income they get from them. There are goods and services that aren’t available in our community, like a laundry. But again, there is only so much money to go around. We can't just shrug and blame everything on market forces. Sustainable development folks and the people directly affected need to work in tandem to plant the seeds of a sustainable community life.
In our community, we should be making efforts to enhance the community's potential. These efforts should not be imposed from on top and should not turn the community into yet another cog in the global production machine. Here, for instance, where we live amidst beautiful mountains, coffee and good soil, efforts in small scale sustainable agroforestry and garden production in addition to the very high grade coffee might work. People here are not indigenas living in a manner that lends itself to fair trade cooperatives, but would definitely take advantage of an organization tailored to its nature which could take into account the demands of the market and bypass the giant middlemen for distribution to specialty stores in Mexico City, the US and maybe even Europe might work as well as respect ownership of small properties.
It is important to think in terms of community. Community exists here. Economic development should occur on behalf of the lives that exist here, not in order to maximize profit. Profit is one of the means, not the end.
It is also important to realize that some sort of subsidy should be considered so that people can spend the time necessary to get worthwhile efforts off the ground.
We need to consider a menu of aid options and involve people both north and south in thinking about them. In some places, one thing will work, in another, something else. Always, we have to understand that the people whose lives are concerned should be considered the experts on their own needs.
Look at Kristoff’s column and blog. Any comments would be most welcome.