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European Microfinance Network: Conference in Berlin between Mircolending and Small Credit
The EMN hold its conference in Berlin with the participation of activists from the Microfinance institutions as well as from banks. We had not the chance to attend the large variety of interesting meetings. Many of the presentations are available on the Internet.

One event was a podium discussion where five questions concerning the future of microlending were answered by two activists from the UK and Bolivia together with a critique of the present move into microfinance. As the audience had to vote on the acceptability of the answers the opinion of most of the participants was accessible.

A vast majority favoured the extension of special microfinance institutions in Europe, asked for more subsidies to support its non-financial activities, saw growth of its institutions as a way to increased sustainability and did not distinguish between microfinance institutions in overbanked and underbanked economies.

For a minority microfinance was just a laboratory of democracy and a critical instrument to denounce the increasing discrimination within the official banking system. They supported also the idea that microfinance should be partnered by banks who guarantee the highest quality and sophistication of its services as well as the view that microfinance is banking and should obey to its standards.

A more fundamental critique of microfinance came from its idea to target only poor people. This would necessarily cut them off from the benefits of a wider riskspread where rich and poor share the same products and services.

Its effects could be demonstrated in the difference between the UK and Germany. While the UK already has segmented its markets in Germany the present legislation (which is now threatened by the new single Credit Card Credit Passport in the Payment Directive) still keeps special institutions for the poor outside which again channels all political pressure towards servicing the poor sucessfully onto mainstream banking. Minimum bank accounts and affordable and flexible overdraft credit that consolidates all small credit into one account are the socially desirable effects while in the UK usury, flipping, exploitation, loan sharks and pyramiding have destroyed rational behaviour with credit and debt with the poor.

As banks have been developed as social agencies to centralise savings for its redistribution under a broad riskspread microfinance has to cope with this basic flaw of combatting exclusion with an exclusive instrument which could furhter already exsiting Ghetto economies.

In his workshop a representatives of the World Savingsbanks Institute showed how main stream savingsbanks could play on social exclusion at average rates and average quality with for example the French system of "Parcours Confiance" which integrated Microfinance Institutions less as creditors than as servicing agencies.

In the light of the critique Microfinance has experienced in the USA to be primarily a political annex to neo-liberal policies which in the third world accompagny the fading trust into the World Bank on one hand while in the industrialised world it distracts public opinion from the retreat of deregulated financial institutions from large part of society the conference was quite mute.

This seems to be als the core of the politics at DG Employment which told the audience that it had shifted its financial engagement from employment to inclusion. (20%) While DG Employment seems to be the main financial background for EMN as well as this conference one can ask whether the American critique of Microfinance as a political tool to futher certain neo-liberal politics is also true for this DG.

In his presentation a representative of DG Employment revealed that anti-poverty programmes were turned from income to inclusion programmes. Inclusion signified the possibility to play in the market without any further criteria of social sustainablity.

This kind of anti-poverty politics assumes that people who are playing in the market are the haves while those outside are the have-nots. This is questionable, Those people who are part of the credit, labour, housing market may be worse off and more exploited than those who are living outside on welfare etc. The German labour market has shown these effects where 3 € per hour with hair cutters are less than one can get from social welfare. Minimum wages, rent ceilings and usury restrictions


No credit or no job may sometimes be better than this credit or that job. It is the neo-liberal deviation which has


The European Commission is the main supporter of the European Microfinance Network. This comes out

ID: 39684
Author(s): UR
Publication date: 07/05/07
   
URL(s):

EMN_Conference Berlin 2007

DG Employment: Microfinance Policies of the EU Commission
 

Created: 07/05/07. Last changed: 07/05/07.
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