From Poverty to Power Green, Oxfam 2008 - weman

4 RISK AND VULNERABILITY FINANCEinclude exploring the links with remittances sent home by migrantsand using new technologies such as ATMs and mobile phones. In2007, in what was described as a world first, Kenya’s biggest mobileoperator began allowing subscribers to send cash to other phone usersvia SMS messaging, obviating the need for a bank account and potentiallygiving whole new groups of customers access to microfinanceproviders. 33Although Kofi Annan called micro-credit ‘one of the success storiesof the last decade’, and the award of the Nobel Peace Prize toMuhammad Yunus boosted the hype still further, it is far from beinga ‘magic bullet’ for reducing poverty. Loans generally go to themoderately poor, missing out the most deprived individuals andcommunities, who continue to rely on social protection from the state,such as pensions and work schemes. 34 In addition, most businessrelatedloans go into creating more sellers in an already overcrowdedinformal sector, with few chances of long-term progress, and do notdeal with the underlying structural problems of under-development. 35In East Africa, commercial microfinance lending at 2–3 per cent amonth still leaves villagers with heavy debts, and risks microfinancebanks becoming little more than kinder, gentler loan sharks. Theflipside of high repayment ratios is that, however heavy the burden ofrepayments, women are often too fearful of social opprobrium todefault (as loans are generally guaranteed collectively). In other cases,men have forced their wives to apply for loans and then taken themoney themselves, showing that simply lending to women may notbe enough unless unequal gender relations in the home are alsodealt with.Despite these caveats, the rise of microfinance demonstrates howhuman security can be enhanced by active citizens, including bothgrassroots organisations and social enterprises that seek to combinesocial objectives with a sustainable business model. By solving some ofthe problems caused by financial exclusion, the rapid expansion anddiversification of microfinance has enabled millions of poor people toreduce their vulnerability and to climb out of poverty.223