Microfinance shouldn't do the government's job

It is a requirement of civil society that government obviate the need for payday lenders, writes Carl Packman.

There has been a recent interest in microfinance as a means to draw vulnerable people away from the scourge of payday lending – an industry which saw its inevitable growth over the Christmas period, with the number of enquiries about it at the Citizens Advice Bureau doubling from last year. 

The Financial Times recently ran an article headlined Microfinancier gives payday lenders run for money. Reporter Sarah O'Conner discusses to what extent this type of financial product offers a fairer deal for borrowing money, with more manageable prices attached to loans: £162 on a 52-week loan of £600 compares well with the £25-30 per month you can expect to pay for a loan of £100 with the average high cost credit seller. 

Although relatively rare in the UK, the microfinance movement is over 40 years old. It all began in the early 1970s in Bangladesh and Latin America and since then has seen small but effective support around the world. 

I spoke to Saloman Raydan Rivas, a microfinance expert, about Professor Mohammed Yunnus, the don of the microfinance movement. Rivas told me Yunnus wanted to develop a banking model which did not take advantage of the poor, but he was unsure of how to tap into existing local lending mechanisms, such as self-financed communities, to bring about change on a wider scale. 

Today there are many people trying to realise his dream, and Fair Finance, the case studied in the Financial Times' article, is one. In fact Faisal Rahman, the company’s director, is strongly influenced by the microfinance movement, and hopes to bring it to market in the UK.

But there is something rather rocky about relying on private equity funding, as Fair Finance does (a fact not discussed in the Financial Times article) that makes me worry, both in practice and on first principles. 

Fair Finance was declined investment money by Barclays and the Royal Bank of Scotland when it first started out, and they even had problems with Santander, which would not put up investment alone. When I asked Rahman about it, he admitted it was a setback, and one could argue this is hardly a surprise. Rahman wants funding from investors to sell loans ethically to people, charging low interest, and risking low returns, all to realise a dream of creating a banking model that undercuts usurers and rip-off merchants. 

For all the good he wants, many investors clearly see the words “low return” and run a mile. In short, we cannot rely on the good nature of profit-making big banks to finance ethical, non-profit, lending schemes. But should we expect any private business to do this? Since it is in the interest of the public purse to keep individuals' personal debt profiles down, should ethical lending not be a standard expectation of the government? 

It is surely a requirement of a civil society that the government allocate enough money – for instance, through a credit union – to ensure consumers aren't left with going to payday lenders as their only option.

Having said that, I understand Rahman’s motives. Recently it was reported that a loans company who target personnel in the armed forces with high cost credit at 3,300 per cent interest was sold advertising space in Defence Focus, the magazine of the Ministry of Defence. Is this perhaps a sign of how relaxed public bodies have become about payday lending?

High cost loans for the armed forces has become a big issue. A representative of Waterhouse Baker, who offer financial advice to any serving member of the forces, told me that payday loans is often a short-lived solution, “as many default as the monthly expenditure is too high for the income gained”. 

Problems like these need solving fast, because the problem of high personal debt is one which affects the whole economy and the whole society. For me, the buck stops with the government.

Given the enormity of the problem of debt, government should be in charge of reversing it. So while the aims of Fair Finance and other similar organisations are positive, pricing out payday lenders should be chiefly the preserve, not of microfinance, but of the state as part of its commitment to maintaining a civil society.

Photograph: Getty Images

Carl Packman is a writer, researcher and blogger. He is the author of the forthcoming book Loan Sharks to be released by Searching Finance. He has previously published in the Guardian, Tribune Magazine, The Philosopher's Magazine and the International Journal for Žižek Studies.
 

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The Femicide Census honours the victims of gender violence

The survey shows that the majority of women who are killed by men suffer their fate at the hands of a current or former partner.

 

The phrase “isolated incident” often turns up in media reports when a man kills a woman. The police use it at press conferences. It’s a code: it means the story ends here, no one else is in danger, the rest of the world can sleep safe because this particular killer does not have his sights on anyone else.

Thanks to the Femicide Census – a collaboration between Women’s Aid and nia, two specialist services dealing with violence against women – we now know how many of those “isolated incidents” there are, in England and Wales at least. Between 1 January 2009 and 31 December 2015, it was nearly a thousand: 936 women (aged 14 and over) were killed by men in seven years.

As the census reveals, the killing of women follows a very different pattern to the killing of men, although there is one thing both groups of victims have in common: their killers are almost always men.

But female victims are more likely to know their killer than male victims. In fact, they usually know him very well: 598 (64%) of the women were killed by a current or former partner, 75 (8%) by their son, 45 (4.8%) by another male family member. Killing is often what the census describes as “the final act of control”: not an “isolated incident”, but the culmination of a long campaign of coercion and violence.

This means that trends in femicide – the killing of a woman by a man – don’t match the overall homicide trend, as a 2011 UN study found when it noted that the overall rate of homicide had fallen while killings of women remained stable. But official records have long failed to recognise this difference, and there were no statistics specifically on men’s fatal violence against women until 2012, when Karen Ingala Smith (CEO of nia) started cataloguing reports of women killed by men on her personal blog, a project she called Counting Dead Women.

That was the start of the Femicide Census, now a high-powered data project on a platform developed by Deloitte. The list has been expanded so that victim-killer relationship, method of killing, age, occupation, ethnicity, health status and nationality can all be explored.

Or rather, these factors can be explored when they’re known. What gets reported is selective, and that selection tells a great a deal about what is considered valuable in a woman, and what kind of woman is valued. As the census notes: “almost without exception, it was easier to find out whether or not the victim had been a mother than it was to find out where she worked”.

Killings of black, Asian, minority ethnicity and refugee women receive vastly less media coverage than white women – especially young, attractive white women whose deaths fulfil the stranger-danger narrative. (Not that this is a competition with any winners. When the press reports on its favoured victims, the tone is often objectifying and fetishistic.)

Women’s chances of being killed are highest among the 36-45 age group, then decline until 66+ when they jump up again. These are often framed by the perpetrators as “mercy killings”, although the sincerity of that mercy can be judged by one of the male killers quoted in the census: “‘I did not want her to become a decrepit old hag.”

Another important finding in the census is that 21 of the women killed between 2009 and 2015 were involved in pornography and/or prostitution, including two transwomen. The majority of these victims (13 women) were killed by clients, a grim indictment of the sex trade. The most chilling category of victim, though, is perhaps the group of five called “symbolic woman”, which means “cases where a man sought to kill a woman – any woman”. In the purest sense, these are women who were killed for being women, by men who chose them as the outlet for misogynist aggression.

The truth about men’s fatal violence against women has for too many years been obscured under the “isolated incident”. The Femicide Census begins to put that ignorance right: when a man kills a woman, he may act alone, but he acts as part of a culture that normalises men’s possession of women, the availability of women for sexual use, the right to use force against non-compliant or inconvenient women.

With knowledge, action becomes possible: the Femicide Census is a clarion call for specialist refuge services, for support to help women exit prostitution, for drastic reform of attitudes and understanding at every level of society. But the census is also an act of honour to the dead. Over two pages, the census prints the names of all the women to whom it is dedicated: all the women killed by men over the six years it covers. Not “isolated incidents” but women who mattered, women who are mourned, women brutally killed by men, and women in whose memory we must work to prevent future male violence, armed with everything the census tells us.

 

Sarah Ditum is a journalist who writes regularly for the Guardian, New Statesman and others. Her website is here.