Post
by ElGauchoInsufrible » Tue Mar 14, 2017 5:24 pm
*MFIs sometimes force contracts that make whole villages collectively responsible.
I was told this by a (sober) director when I asked how loans were enforced. However, that director did not use the word "forced".
*Collateral often includes basic necessities like the family scoopy or land (shelter, typically food).
It does in like countries in like situations and I have been directly told so as well as read research. Misleading as a run-on sentence, agreed. But seemingly little data or reportage to go on here.
*I think the poor are often the ones taking the big risks here.
They always are.
*Imagine what happens to your family's goods whether they form part of the collateral, not to mention that family's social relations, if things go awry.
In the case where responsibility for a loan or collateral is collectively held I imagine it is not pleasant for the defaulters, no. But I am jumping the gun here. I don't know what role collateral plays vs collective responsibility. There must be some onerous inducements.
*one can imagine a situation in which a company cleverly moves into Micro-financing bad loans for hopeless projects, a company that owns the factory next door, for instance, and is interested in gaining as much leverage over the community and community infrastructure as possible, including land set aside for village or community use. Again, assuming collateral is put up again, but other forms of leverage/enforcement/punishment will exist.
There are ethical companies out there... sure. There are also companies that are unimaginably exploitative to the extent one can imagine them doing the above, easily... e.g., forestry/palm oil industry in West Papua.
*Although as another poster mentioned a lot of these little microfinance companies are run by Amercian retirees playing banker in the tropics by hotel pools.
I know of more than two examples of older business people from the West being involved and they stay at very nice hotels but I don't know statistically who owns what bwecause as in the linked-to article data is hard to come by and the company reps and investors are not talking, it seems.
*I would love to see an expose of what tactics are used by the companies to enforce colatoral contracts - do they pay off police or sangkat, for example?
Yes, instead the announcement being just another opportunity to slag off the PM.
*Do they use thugs? etc
Loan sharks in the West do. They repossess. They lean on people. They take on doomed loans by desperate people because of the threat of that muscle. It is reasonable for me to wonder.
*"So was this post just hearsay"
Nope. It's a mixture of direct reportage from a reliable source; hearsay (told secondhand, thirdhand); actual situations in other countries that I have been told about, read about, or even witnessed; and speculation based on all of that - yes. Mashed together badly but then I am not a paid reporter just a nobody dork wasting his week off in a hammock on the internet.
What's your interest? Investor? Critic because it will hurt the poor?
Again, that article by Erin Hale is worth reading. I hope there's more reportage and analysis by journalists following this announcement and not just "official said/investor said" articles. How hard would it be to send out some reporters to the provinces? Maybe they are on their way.