This review was originally published on Microfinance Focus, and subsequently on microDINERO.
David Stoll’s new book, “El Norte or Bust!” is a magnificent read. Rarely have I learned so much, in such a wide range of topics, from such an accessible book in so short a period. I fear it may not reach the audience due to the subject matter, caught somewhere between the topics of migration, microfinance, historic narrative and critique of development. This would be a pity as it is an important work.
Stoll is an anthropologist. This is apparent in both his personal style of writing, his deep knowledge of the region of Guatemala where much of the book is based, and the notable absence of graphs and econometrics. The reader is provided with a concise history of Guatemala since the conquest, the civil war, the influx of aid agencies, the waves of mostly illegal migration north, and the recent financial crisis. Rather than a dull list of past events, this filled many gaps in my understanding of Central American history. Stoll manages to piece this together in a broad overview of the social, economic and political situation of the Guatemalan highlands, and is careful to explain the impact upon the region. The legacy of the civil war; the arrival of evangelical Christianity to the region; the ancient customs practiced by the indigenous population; the role of the CIA in the overthrow of Arbenz; quite why volcanoes retain a magical place in the beliefs of the people; and the on-going role of Mayan shamans – it’s all there. He explores the obsession of NGOs and aid agencies with this region of Guatemala, and in a witty summary of this influx Stoll writes, “The meek have yet to inherit the earth, but it is pretty clear who has inherited Nebaj”.
The book examines three main areas: (illegal) migration to the United States; the role of microfinance institutions (MFIs) in the communities; and the impact upon the people of Nebaj. Spanning two decades of experience in the region, Stoll writes with convincing authority. While the accounts are largely anecdotal rather than statistical, the picture clearly emerges:
“It is a fateful convergence between immigrants attracted to American consumption levels, employers hungry for cheap labor, and visionaries who argue that bankers can help the poor by giving them credit”.
I am no expert on the intricacies of illegal migration, and Stoll explains the complexities and ironies of the migration decision process eloquently. The coyotes who smuggle desperate migrants across borders and desserts are usually portrayed as unpleasant characters, but Stoll explains in detail how and why they offer this service. Some are clearly guilty of appalling treatment of their clients, but by examining the complex web of people-smugglers, the ways they work together, and their often heroic status in the communities, the reader is left less certain that these apparent vultures are not in fact valuable service-providers. He explains the risks faced by the coyotes, how they finance their operations, and how they compete amongst one another to develop their own variety of branding.
Through extensive interviews, Stoll describes the rationality, or rather the lack of any obvious alternative that leads so many people, predominantly men, to pack their bags and head north. Rather than stop with the overly simplistic conclusion that it is for “money”, he explains the vicious circles the poor find themselves in. Parents with “armfuls” of children are unable to survive on the paltry wages available locally while simultaneously servicing the loans they used to send their first child north. So they send their second, and third, in constant fear of the bank re-possessing the roof over their head. Neither does Stoll romanticize the plight of the poor illegal migrant. While some are indeed heroes, providing valuable remittances to their families in the south, he describes the often negative impact they have in the United States, including towards one another. Men abandon wives and children stuck in Guatemala. Established migrants are often the worst exploiters of new arrivals. The United States policies of immigration are discussed in a non-partisan manner, and the reader is left bewildered as to quite what the correct policy of the United States should be – a fair conclusion given the complexity of the topic, and one which advocates at both extremes of the migration debate should pay close attention to. The good/bad dichotomy is unclear, the only relevant calibration is shades of desperation. While the author offers no simple solutions, his account opened my eyes to the complexity of the debate.
Of particular interest to me was the role of the MFIs (helpfully listed on pages 53-54). With over a decade working in microfinance, including just across the Mexican border from where much of the book is set, I had not fully appreciated the symbiotic relationship between microfinance and illegal migration. By explaining the specific mechanisms of migration in such detail Stoll is able to delve into the financial transactions that underpin the process. “Debt is the subtext of every conversation about going north”.
The over-arching irony is that microfinance may, in part, be fuelling the illegal migration to the United States. Many of his conclusions are familiar to anyone aware of the pitfalls of microfinance – over-indebtedness, confiscation of assets, extortionate interest rates. On page 63 the reader sees the first warning signs that the miracle cure for poverty may have some unintended consequences:
“Factories across Central America are struggling against low-wage competition from China. As for retail commerce, every category has multiplied to the point of saturation. So has motor transport – the streets are clogged with vehicles whose owners are barely making their loan payments. Certain kinds of artisan production such as furniture and textiles provide employment, but not of the kind that satisfies aspiring consumers. Nor can these endeavors absorb the tens of thousands of Ixil youth without enough land to farm. So Nebaj’s most important produce, its principal export, continues to be surplus labor.”
The futility of many micro-enterprises emerges early in the book. Guatemalans are left with only one real choice, to quote The Clash: “Should I stay or should I go?” In a devastatingly concise conclusion Stoll suggests, “Pumping large amounts of credit into a crowded mountain environment with little potential was, in retrospect, not such a good idea”. If only such humility were applied more broadly across the development community.
He describes with alarming statistics the flow of remittances to Guatemala. Banks quickly caught onto this revenue stream, and facilitated such transfers. Soon regular remittances flows could be used as collateral for a loan, to send the next eager local up north. MFIs would refinance the over-priced coyote loans as soon as the remittances began trickling in, not asking too many questions about the ultimate loan purpose. One microfinance client with a single pig paid a small “commission” to the helpful loan officer to be upgraded to “pig-raising enterprise” in order to secure a larger loan. Loan officers were overly keen to lend – indeed incentivized to do so. In Andhra Pradesh this led to suicides, in Guatemala the damage was equally devastating. Inevitably chronic over-indebtedness ensued and crisis was not long to emerge, as anyone familiar with Nicaragua will find of little surprise. “And so microcredit quickly evolved into debts that were no longer micro, because of the ease with which borrowers could pay off initial loans by taking out more loans, and pay off these loans by taking our still more, until the banks stopped handing out money in 2008”.
Stoll persuasively argues that this entire façade began to take on uncanny similarities to a pyramid scheme, but thanks to his explanations of the driving forces behind what may appear superficially to be an irrational decision, he describes how such vicious circles emerged. Desperate to reap the benefits of illegal migration, families were pushed further and further into debt, with MFIs all too willing to provide the fuel.
Perhaps the most sobering aspect of the book is the impact this merry-go-round had on the local community. There are countless tales of families losing their houses or land as loans went sour and their collateral was at stake, pushing them further into poverty. The influx of remittances led to rapid inflation making it nigh on impossible for the youth to acquire increasingly scarce land or a roof over their head without also heading north to the Promised Land. Wealth disparities actually widened in many villages between those with remittance flows and those without. The few returning migrants flush with cash were unwilling to work for local salaries, and merely served to persuade others to take the journey north, often before they themselves chose to return to their dish-washing jobs paying 10 times their Guatemalan earning potential.
Paradoxically this led to an increase in the legendary “evil moneylenders”, the great boogie-man of the microfinance sector. Those with spare cash, or access to comparatively cheaper microfinance loans, would lend to those without access to credit at rates of 10% per month. Indeed, lending to migrants preparing to depart northwards may have been about the only productive micro-enterprise possible in Nabaj, largely devoid of alternative viable business opportunities. The microfinance community usually presents itself as a replacement to the moneylender. Stoll demonstrates the relationship between microfinance and moneylenders may in fact be symbiotic. And just as I thought the situation could get no worse the reader is presented with harrowing accounts of suicides and kidnappings triggered by remittances or the halo of deprivation surrounding them.
The hopelessness of the situation is perhaps nowhere better described than in an interview the author did in 2004, anticipating the inevitable impact with haunting accuracy:
“… the bulk of the poor in Ixil country (that is, below-subsistence farmers) are so unlikely to mount productive enterprises, of the kind that can pay back loans, that they would be better off with food security strategy.”
The warning signs were perhaps visible even at this early stage, just as the development community was ramping up its love affair with microfinance, and Nobel Prizes were being prepared. How did we miss this?
To conclude, this is worth reading on many levels, and should appeal to a wide range of audiences. I would urge microfinance practitioners to study this carefully – the warning signs that Stoll describes are worryingly visible in a number of countries currently. Migration experts may not fully appreciate the link to microfinance in their studies, and will find this sobering. Broader development experts will appreciate the meticulous manner in which Stoll describes the inter-connectedness of the various players, and how seemingly bright ideas can have tragic consequences. We need to think very carefully before wading into these communities with the latest fad in development thinking. And anthropologists will find the style accessible, engaging and holistic in approach.
I am pressed to think of shortcomings of the book, but the relentless reliance upon anecdotal evidence did sometimes leave me wondering how hard statistics would support the claims. The focus upon one region of one country is on-going, and there is little description of other areas of Guatemala, let alone the rest of Latin America. The book offers few solutions to the mess, and in a dramatic moment Stoll appears to suggest that it may be wise to actually ban remittances (page 222), which raised an eyebrow. At times it is heavy reading, and the array of characters in the book is extensive to the point of confusion. A glossary of the players as an appendix would be helpful. I fear the book had insufficient detail on the individual MFIs to generate the attention it deserves within the microfinance community, who will be sorely tempted to dismiss this as “non-empirical”.
But, critique aside, this was a superb and informative read. It is well written, sobering and yet amusing in places. It is written by a man of obvious passion for his subject-matter, and this passion is contagious. Well done, Mr. Stoll.
Hardcover: 296 pages
Publisher: Rowman & Littlefield Publishers (December 2012)
Language: English
ISBN-10: 1442220686
ISBN-13: 978-1442220683
