Microfinance, Gender and an Interesting Potential Confrontation

There’s a fascinating, if not slightly obscure conference coming up in Boston shortly. Ominously referred to as “Extreme Inclusion”, it is hosted by the Fletcher School, Tufts University. What intrigues me about this conference is two of the women speaking at it. One is cool. The other less so.

Kim Wilson wrote a scathing summary of Catholic Relief Service’s microfinance activities for Malcolm Harper’s book “What Wrong with Microfinance” (not to be confused with Bateman’s “Why Microfinance Doesn’t Work”, or the ever growing number of books with titles suggesting the entire microfinance experiment was largely a farce). I read this chapter in London some years ago, and nearly fell of my chair. It was one of my early encounters with serious criticism of the miracle cure for poverty. It felt like a slap in the face at the time, until I gradually began to see that the author was merely ahead of her time.

Anyway, I had no idea who this woman was until shy mysteriously wrote a review of my book. It’s one of my favourite reviews, and not entirely positive I might add. But what was fascinating about her stance was the gender angle. My wife is a women’s rights activist, so this was really interesting for us to read. See what she wrote towards the end of the review:

“There is another implicit warning in Confessions: it has to do with women. Females don’t come across well, though the author makes various attempts to give examples of helpful women, but frankly, we don’t look very helpful or very strong, or much like leaders. We look like wimps, gutless. And maybe that is because we have been gutless. We did not strike at the lies of the Microcredit Summit when we knew they were lies, or at the small fibs perpetuated by MFIs. We did not chip away at the menacing accretions that slowly layered in around the cause (remember all those ratios?) which in fact diverted us from the cause, one purportedly about women. Nor did we unite when we heard first hand from female borrowers who had been humiliated by loan collectors, their cows taken, their roofs ripped off, their children lent to the landlord. For decades we have gyrated dumbly inside the spin machine… while each woman in each place might be doing her bit to affect change in front of her, each is isolated and allowing a microfinance machismo to dictate the trajectory of services to women. It is happening today, now. We can just stand by, ask meekly that we have social performance indicators, or we really can do something about it.”

Pretty powerful stuff. Actually I am all in favour of getting more women into positions of authority where possible in the largely male-dominated microfinance sector. We bang on about female clients, but look who’s running the sector in the commercial banks, funds, P2Ps etc. Sure, there are exceptions – Zidisha is a cool P2P run by a cool woman. Marilou van Goldstein is a very effective leader of the mostly decent Triodos fund.  Maria Otero is not my favourite microfinance celebrity following her $2m reward for exploiting poor women in Mexico before shuffling into the White House, but Tom Heinemann swiftly dealt with her.

But one of the most intriguing women in the entire sector is also participating in this conference, not surprisingly defending microfinance – Beth Rhyne. This is the woman whom I spar with occasionally on blogs. She doesn’t usually speak in public, so this is a golden opportunity to grill her. And she is the brains, or perhaps just brain, behind the inappropriately named Smart Campaign. They actually prefer to use capital letters for SMART but I think this grossly exaggerates the intelligence behind the concept. One review suggested they should be renamed CRAFTY. Anyway, there is some interesting background to this woman.

First of all, check out what Smart actually is. It appears to be some sort of independent body, but in fact it is fully owned by Accion. Smart has no separate accounts, it has no 990 form, it is physically based in the Accion building, in fact it is a mere department, not even a subsidiary of Accion. They state on their website “The Smart Campaign is housed at Accion’s Center for Financial Inclusion, which is managed by well‐known microfinance expert and author Elisabeth Rhyne”. Housed in this sense means owned, fully controlled by, and part of the larger Accion family.

Naturally their main sponsor is (take a wild guess)…. Accion, followed by Deutsche Bank, Credit Suisse, IFC etc. – all the usual suspects with a vested interest in controlling the self-proclaimed self-regulator of the sector. None of these jesters want actual scrutiny of their activities, or, God forbid, actual regulation, so this is the spin organisation they placidly erected. Everyone and their dog endorsed the Smart Campaign, of course, including many of the worst offending MFIs on the planet (“endorsement without enforcement”). Sponsoring generally gets you a board seat on the steering committee, which reads like a who’s who of those with vested interests in maintaining the microfinance myth. Our friend Asad Mahmood is on the list, of course, despite a string of questionable microfinance investments to Deutsche’s name. IFC, Oiko, Fonkoze, Finca, SEEP, the UN, CGAP, IADB – they certainly got the main players involved. And Beth Rhyne is also on the steering committee, of course. Larry Reed is about the only genuinely interesting person on the list – he’s the head of the MicroCredit Summit Campaign, who also did a surprisingly positive review of my book, and recently published a very frank assessment of the state of the sector. He’s a good guy, thoughtful, seems pretty honest, former head of Opportunity International, and genuinely concerned for the welfare of the poor, i.e. a lone voice on the steering committee – a black sheep.

Anyway, to launch into a critique of Smart is not the purpose of this blog. Anyone capable of reading can do that. It’s the gender angle that Kim Wilson of the Fletcher School that intrigues me. She talks about important women in the sector who stood-by, turned a blind-eye to abuses, who lacked leadership, or the courage of their convictions, who perpetuated the spin. And now there’s a conference where precisely the woman she describes is leading the pro-microfinance camp – Rhyne herself. I would love to go to the conference were I not having to do an assignment half way up a mountain in northern Peru at the time. They’d probably not let me through the door, or Rhyne would panic and pull out. The New York Microfinance Club refused to record one of their meetings because I had threatened to plant a question to the Deutsche Bank/BlueOrchard boys (which I had, to be fair). Don’t worry Beth – I’m not going – you can speak freely about your pretend initiative without fear of genuine scrutiny.

Anyway, what do we know about Rhyne and her little campaign? First of all, she’s a veteran at Accion, joining in 2000; previously at USAID, Harvard PhD etc. – firmly established in the upper echelons of the US microfinance establishment. According to the 2011 990 form of Accion she pocketed $242.202 + a bonus of $13.750 for a 35-hour working week. Nearly a quarter of a million bucks, approaching $150 per hour. Who is paying this? Well, obviously Accion has a war-chest from the IPO of Compartamos, by far their largest investment, so basically poor women stumping up extortionate interest rates pay her salary. But the donors to Smart presumably are also subsidizing her activities, directly or indirectly. They, and Accion, have every interest in getting someone subservient to their goals, even if it costs them $0.25m a year, in order to enable them to continue their nefarious activities largely involving exploiting poor people for financial gain, to summarise it concisely if not slightly simplistically.

So, for all this money what do we get? An apparent self-regulator that is entirely ineffective, a well-trained ape could conceivably become an endorser of Smart, and a set of client-protection policies that neither protect clients, their children, nor are sufficiently well defined to actually mean anything. Oh, she picked up $210.311 in 2010 according to the 2010 990 form and the 2012 isn’t available yet. The 990 forms are useful resources, and the means by which Heinemann detected the Maria Otero salaries. They are publicly available, and contain a wealth of information.

Was Beth Rhyne the woman Kim Wilson was writing about in my book review? She matches the description entirely. And the two of them are going head-to-head in this conference. What a day for the women’s movement, no? Needless to say they will dance around and pretend that everything is fine, ask polite questions to one another and avoid the really important questions. We know Kim Wilson has had the courage to stick her neck out in the past, her CRS piece is fairly brutal and probably got her in trouble – criticism inside a cult usually does. But will the “Extreme Inclusion” conference really get to the heart of the problem?

Some tough questions for Kim might include “who are these gyrating women you referred to in your review of Hugh’s book?”, or more simply, “Beth Rhyne appears to match perfectly your description of women who sit back and do nothing while millions of Mexican women get exploited in order to pay her massive salary, what do you think of that?”. Of course no one will dare ask such a question. But to Beth there are all sorts of intriguing questions:

  1. Do you think there might possibly be a conflict of interest, if not a massive irony, of Smart being housed, hosted, financed and owned by one of the largest vultures in the entire development sector?
  2. Smart has a policy on fair interest rates. What do you think about the extortionate interest rates charged by Compartmos, the main asset of Accion? Or the reported 229% charged by their latest acquisition CrediConfia in Mexico – are these a little on the high side, or are they “fair”?
  3. Why do all your client protection principles talk about vague, nebulous terms such as “fair” pricing, and “appropriate” product design?
  4. Smart bangs on about prevention of over-indebtedness, and yet Mexico, where Accion’s treasure chest is based, is possibly the worst case on the planet for this right now – what does Smart think about the main player fuelling this bubble in Mexico – Compartamos?
  5. How do you justify a $0.25m annual salary while failing to protect poor people who will likely not earn even a tenth of this over their entire lives?
  6. Why have you refused to add the rights of children to the client protection principles, while a number of MIVs, P2Ps and networks have such policies?

This last point is the one that most annoys me about Ms. Rhyne. That she takes blood money is up to her, I personally like to know the source of my salary. That she works for a vulture is also her decision, albeit in the one department of Accion that is superficially disguised as doing something “useful”. That she turns a convenient blind-eye to the profiteering of Compartmos at the expense of mainly women clients in Mexico is shameful in my opinion. But why doesn’t she at least spare a thought for their kids? That is weird to me. If I may be so bold as to generalise about an entire gender, women tend to fairly reliably care for kids – the whole maternal instinct thing. Someone from such an established Accion pedigree can hardly be expected to have much of a conscience (they would have been filtered out over the years in a Darwinian process – presumably how little sparrows eventually evolved into vultures, although I’m no biologist), but the idea that Rhyne can explicitly refuse to include the rights of children in her otherwise farcical client protection principles is a genuine mystery to me. It would cost her nothing, she is ideally suited to do so, she has the only real tool to implement such an improvement in best practice in her hand, and she declines to do so. She herself bangs on about being the fair-trade label of the microfinance sector, and almost every fair trade label holds prevention of child labour as one of their principal policies. Vision Fund, Oikocredit, Opportunity, HOPE, MyC4, Zidisha and ProCredit all have explicit policies to prevent harmful child labour. Even Deutsche, BlueOrchard and responsAbility (their spelling) have such policies. But the self-proclaimed self-regulator, now dishing out Seals of Brilliance to MFIs that meet their mild criteria, fails to consider this rather obvious danger of microfinance.

So, with this in mind, and referring back to Kim Wilson’s comment quoted earlier, I have two further questions to ask Rhyne in this forthcoming conference:

  • Do you have children?
  • Are you gutless and weak, and turn a blind-eye to abuses of women when we all know these are taking place under our noses? Are you gyrating dumbly inside the spin machine? Are you meekly pretending to do something about social performance of just creating a facade?

Needless to say no one will dare ask these questions, unless we can get some heckler into the conference. Who are these Boston microfinance club members? Forward this blog to them. If you care about the poor, about their children, or simply wish to improve the sorry state of the microfinance sector, sign up for the conference here, it’s free, ask some tough questions, and record them. I’ll post them here, anonymously if you like.

Kim Wilson – keep up the good work whoever you are, I love your writing, don’t back down, keep up the pressure, and forward this to the club members if you dare. And Beth – be careful, sooner or later someone will catch you out in a conference unless you get your act together and join the “real microfinance revolution”, not the harmful, damaging, destructive microfinance revolution that another speaker in the conference, Marguerite Robinson, espouses.

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2 Responses to Microfinance, Gender and an Interesting Potential Confrontation

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