A Critical History of Poverty Finance: Colonial Roots and Neoliberal Failures

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The result is that millions of small businesses in the Global South are one accident away from failure. A broken piece of equipment or unexpected weather can sink many of them. The microcredit industry says ‘give them a loan’ which simply leaves such businesses as exposed as they were before, but with more debt as well.

The chapter criticising microfinance and markets as the default mode of development intervention was also excellent in explaining why markets cannot deliver adequate means of finance or risk management to many of the poorest, and the inability to think beyond markets as a means of provision, which leads to the conclusion that the continued push to engineer markets is an indication of the structural power of finance capital in development Simultaneously printed in the United Kingdom and United States of America For Laura and Max, again Contents Latent" surplus populations and colonial histories of drought, groundnuts, and finance in Senegal Link opens in a new window', Geoforum 126: 441-450.I did most of the work of writing this book during what turned out to be a very strange year. I owe an enormous debt to Laura and Max. Both were around for much more of the writing process than any of us anticipated. Both provided (usually) welcome distractions, to which, in retrospect, I owe the fact I finished writing the book (mostly) sane. Max has been a nearly endless source of joy. I could not ask for a better friend or partner than Laura. This book is dedicated to them both. Acronyms The changing technological infrastructures of global finance Link opens in a new window', special issue of Review of International Political Economy, 26 (5). [co-edited with Malcolm Campbell-Verduyn] The elision of popular economic practices in these histories also stands in contrast to the microfinance institutions they analyze. Proponents of poverty capital have a longstanding interest in the everyday habits and behaviors of ordinary people. Indeed, the industry often invested in research on the lives and livelihoods of workers and peasants as part of their effort to extend debt to them. Large household surveys might ask how much people can afford to repay; behavioral economists might try to discern how finance intersects with other obligations. As Julia Elyachar writes, the animating idea of this style of developmentalism has been “to reconstitute the social networks and cultural practices of the poor as part of the free market.” In Cairo, where she studied, this involved mapping and appropriating the talents, proclivities, and friendships of would-be borrowers. In other words, the practices of people lumped together as “indigent” hold the attention of the microfinance industry because the sector rises or falls on the diversity of borrowers’ livelihoods, cultures, and ambitions. States, money, and the persistence of colonial financial hierarchies in British West Africa Link opens in a new window', Development and Change, 54 (1): 64-86. While Bernards says little about women, Meyerowitz foregrounds the significance of gendered notions of uplift and empowerment in remaking international aid.

The Global Governance of Precarity: Primitive Accumulation and the Politics of Irregular Work Link opens in a new window, Routledge/RIPE Series in Global Political Economy. There is a crucial paradox at the core of poverty finance interventions. The reason the poor are seen to need access to finance—namely due to their low and unpredictable incomes—is also a key reason why alleviating poverty by providing financial services to the poorest on a commercial basis has typically proven to be little more than a politically-driven fantasy. It’s risky and not particularly profitable, under most circumstances, to lend money to, insure, or provide other financial services to people with small and irregular incomes. Real accumulation, in short, doesn’t operate in the ways that neoliberals would like.Poverty finance and the durable contradictions of colonial capitalism: Placing 'financial inclusion' in the long run in Ghana Link opens in a new window', Geoforum 123: 89-98. This book takes a hard look at several such stories, notably about microfinance, microinsurance and fintech banking. It chronicles their ballyhooed rises, their unmasking, re-branding or substitution by yet other tonics for the poor. Intriguing are the accounts of futile efforts by the cure-all salespeople, the “professional associations, consultants, academics, philanthropies, and international organisations” to get global finance on board, “to coax capital into doing things it’s not particularly interested in doing.”

Today’s critics of poverty capital must come to terms with why people desire credit, as many borrowers are eager financial actors. Yet, without diminishing the horrific nature of these crises, they are also outliers. When we look at the longer history of poverty finance, we see a tendency for finance capital to pile into a few places (like Andhra Pradesh, or more recently Kenya), while skipping over the vast majority of people and places in the global south. This has taken place in the face of the prompting and prodding of the Bank and national governments seeking to promote wider ‘access’ to finance across the board. These fundamental dynamics manifest themselves in a recurrent tension between logics of inclusion and stratification. Soederberg (2014:22–3) argues, helpfully, that invocations of ‘inclusion’ and ‘access’ to credit and financial markets for previously marginalised groups – the extension of membership in the ‘community of money’, in Marx’s phrase – are powerful political interventions. They simultaneously invoke the right to participate in certain liberal freedoms (private property, enterprise, and contractual rights) while obscuring the underlying relations of exploitation on which financial transactions ultimately rest. Yet, actually-existing poverty finance interventions have frequently operated precisely by promising new ways of enabling financial institutions to reliably sort good from bad credit risks, insurable from non-insurable risks, productive farmers and incipient entrepreneurs from their (implicitly more deservingly poor) peers. Historically, we can trace out different responses to this tension, but it is a critical one, rooted in the fundamental contradiction between profit logics on one hand and precarious livelihoods on the other.I do so by drawing together an analysis of a range of activities that can usefully be grouped under the heading of ‘poverty finance’, running from the early twentieth century to the present. I’ve adopted the term ‘poverty finance’ from Rankin (2013). She uses it to refer to ‘the business of extending financial services to those traditionally excluded from the mainstream financial system’ (2013:547). For Rankin, the general term ‘poverty finance’ is a means of drawing out the connections between projects in the Global North and South – showing how both microcredit and subprime mortgage markets depend on a kind of ‘socio-spatial fix.’ That is, Rankin emphasises how poverty finance creates new avenues for the redeployment of over-accumulated capital, both by reconfiguring spatial relations (as in Harvey’s [2006] ‘spatial fix’) and by configuring the survival of racialised and gendered marginal populations in ways that are amenable to financial accumulation. For the purposes of this book, the general rubric of poverty finance – designating activities aimed at extending finance to those ‘outside’ the mainstream financial system – is also a useful way of grouping together a range of activities across time. Thanks to all at Pluto for their work bringing this book into production. I’m especially indebted to Jakob Horstman for his excellent editorial work, his close reading of the manuscript, and generally for his support throughout the development of this book. Thanks also to Miri Davidson for copy-editing the finished manuscript. I’m equally grateful to the four anonymous reviewers who provided very helpful comments at proposal stage which helped to give the project a much clearer direction.