Ashin Ghozhaka’s Village: Microloans and the UN

Twenty-year-old Ashin Ghozhaka was walking to his mother’s village near Kyaukpadaung, central Myanmar, when a Land Rover drove past him. He waved it down and got a ride.
“It was air conditioned, and the people inside didn’t speak Burmese,” he remembers. “I was confused. Much later, I realized they were from the United Nations.” That was a decade ago, when the United Nations Development Program (UNDP) first started a microfinance program in his village.
Skip ten years ahead to Yangon, the former capital of the country, and Ghozhaka would have seen the ancient golden pagoda towering 99 meters above the city competing with chrome high-rises spurting from colonial courtyards. Across from a soccer field dotted with students in traditional sarongs, a shopping center attracts the modern crowd, with hot pink manicures and mocha frappuccinos.
Since the day Ghozhaka climbed into that UN van, Myanmar’s rocky path towards reform has seen Aung San Suu Kyi’s release from house arrest, a banking crisis, and a flood of international attention. The global community has met Myanmar’s open doors with a mixture of caution and lip-smacking anticipation. After all, it is the last untapped market in Southeast Asia.
But today, Yangon and Ghozhaka’s village aren’t just separated by a 16-hour train ride, a seven-hour drive, and a final two hours on foot. They are also separated by a decade of development. When Ghozhaka, who now heads a Buddhist temple in Canada, went back to visit his family, he was surprised at how little things had changed since he left. His sister’s peanut farm hadn’t seen the benefits of a promised irrigation system. Most of his fellow villagers had heard about the microloans, but they had also heard stories about aggressive collectors, and were afraid of borrowing. Hardly anyone could communicate with the UN officials, except for a recent university graduate, who eventually left for the city. In fact, the only big changes were that an iron mining company had set up work nearby, and some of his neighbors had fled the area.
Certainly, Ghozhaka’s home had not been scarred by ethnic strife or military oppression like the border provinces, and he was grateful for that. But the decade-long efforts of the UN program seemed hardly to have made a dent. Was the military junta to blame for blocking UN supply lines? Or were there setbacks in the microfinance program itself, that perhaps ones that the UN hadn’t foreseen?
The knee-jerk answer is that the military junta is at fault. But while the West has consistently pressured the regime to address rural poverty, we have turned a much less critical eye toward our own aid programs. Microfinance may only be one part of the United Nations Development Plan, but it is a crucial one. Touted by Oprah, Bono and other celebrities as the Next Big Thing, it promises to benefit everyone involved: economic payoffs go hand-in-hand with social responsibility. And at first glance, this couldn’t be truer. What had started in the 1960s as a student-run volunteer program called ACCION, with just $90,000 in funds, has now lent out over $200 million to borrowers across four continents. A 1970s research project in Bangladesh has now ballooned into the Nobel Peace Prize winning Grameen Bank, with over 4 million borrowers and a repayment rate of over 95 percent. At least from the economic payoff point of view, the very existence of these organizations suggests that microfinance is here to stay.
Economists like Jonathon Morduch worry, however, that microfinance in Myanmar misses out on the other end of the bargain: social empowerment. Whether we look at data from the UN or from Grameen Bank, evidence for their success relies a great deal on individual stories of empowerment. A wool weaver in Guatemala tells us how she started her own business with a microloan. A craftswoman in India recounts how she became financially independent from her husband. These anecdotes are no more — and no less — powerful than the story of Ashin Ghozhaka and his family’s peanut farm. Especially in a country with laws as restrictive as Myanmar’s, it remains almost impossible for economists to conduct meaningful research on the effects of these programs. The truth is, we simply may not know how well microfinance is working there.
This June, President Thein Sein announced plans to pour US $1.4 million in microloans to farmers outside Yangon, meaning that microloan organizations elsewhere may finally be granted the legal status they crave. Yet even this latest effort has been criticized as political posturing.
In an interview with the Irrawaddy, the leader of Burma’s farmers association said, “Although there are good policies, the implementation of them is weak. So far, the public has not felt the positive effects.” Could Burmese microloans be another well-intentioned idea, as Australian economist Sean Turnell thinks, good in theory but applied in the wrong ways? When I asked Ashin Ghozhaka, he sighed and shook his head. “When I go back to village, it’s the same. The government cannot help, UNDP may be helping, but not much. But they’re trying.”
Image credit: Rachel Wong/Harvard Political Review

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