Framing in microcredit : evidence for a changing aid architecture?

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Framing in microcredit:

evidence for a changing aid

architecture?

Molly Witman 11026669 witman.molly@gmail.com BSc Human Geography and Urban Planning Bachelor thesis project Supervisor: dr. ir. Yves van Leynseele Second reader: dr. Ori Rubin 14 January 2019

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Abstract

Microcredit is often perceived as a highly valuable development strategy that benefits both poor people and investors. Over recent years, however, the industry has received a lot of criticism as well. Microcredit is said to be exploitative, unsustainable and has even been accused of providing a ‘neoliberal safety net’ for capitalist expansion. Since conclusive evidence on microcredit’s impact on the lives of the poor has not yet been presented, it would be useful to take a deeper look into the underlying institutional characters of organisations that are involved with microcredit. A framing analysis will be applied to examine the political

intention rather than the actual impact of microcredit projects of three actors in the microcredit

industry: The Consultative Group to Assist the Poor (CGAP), Building Resources Across Countries (BRAC) and the Grameen Bank. The identified frames will be organised according to Bourdieu’s forms of capital (economic, social and cultural capital), and the way the organisations understand and define poverty. After identifying the three frames they will be linked to processes within the broader development architecture. It is found that interests in microcredit can be related to a broader shift towards commercialisation of development aid. Furthermore, framing is highly influential when combined with knowledge making and could point to self-preserving tendencies of powerful Western institutions.

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Introduction

“The study of poverty is marked by the ethics of distance—of lives that are studied but remain distant from the privileged researcher” (Roy, 2010: ix).

In her New York Times Bestseller ‘Dead Aid’, Zambian-born Dambisa Moyo (2009) criticises the way development aid is hindering progress instead of supporting it, labelling aid a “silent killer of growth” (ibid.: 49). Economic aid in its orthodox form, according to Moyo, makes governments dependent, corrupt, and prevents innovation. One of the solutions she offers to improve aid is the use of microcredit services. Microcredit (as part of the broader term microfinance1_{) is the extension of a small loan to a poor person, supporting them to set up} their own business or other money-generating enterprise, eventually lifting them out of poverty through entrepreneurship (Fouillet et al., 2013; Hsu, 2014). In 2006, Muhammad Yunus and the pioneering microfinance institution the Grameen Bank (of which Yunus is the founder), were jointly awarded the Nobel Peace Prize for their microfinance services. Microcredit has been lauded as “an historically unparalleled poverty reduction and ‘bottom-up’ economic and social development episode” (Bateman & Chang, 2012: 14), which offers a solution not only to extreme poverty (Miled & Rejeb, 2015), but also to gender inequality, since microcredit mainly targets poor women for its loans (Al-shami et al., 2017). Furthermore, proponents of microcredit praise it for both empowering the poor, while generating profit for the financial institutions that are involved; it’s basically a win-win strategy for everyone (Singh, 2008).

The entrepreneurial development strategy that microcredit provisions, aligns with the ideas presented by C. K. Prahalad (2004) in ‘The Fortune at the Bottom of the Pyramid’. “Fighting poverty with profitability”, as Bill Gates summed up the arguments presented in this influential book, seemed to transform the development industry into an interesting investment opportunity for commercial financial institutions (Grene, 2009; Singh, 2008). Many microcredit NGOs have over the years been commercialised into for-profit organisations, making high profits off of their microloan provisions (D’espallier et al., 2017; UNDP, 2008). A broader shift towards a ‘Trade not Aid’ policy regarding national development aid can be identified in government reports (Ministry of Foreign Affairs of the Netherlands, 2013). Development aid being executed through this kind of ‘business’ approach, is said to secure basic economic as well as social needs for the poor in a sustainable way (Likoko & Kini, 2017: 84).

Scepticism about microcredit being a ‘golden route’ to sustainable development, however, arose after the 2008 financial crisis. Combined with national ‘sub-prime style’

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microcredit crises occurring worldwide from India to Bosnia, the crisis exposed some of the industry’s flaws (Lützenkirchen & Weistroffer, 2012; Roy, 2010). Extensive studies into the real impact of microcredit on poor people have been inconclusive (Aggarwal et al., 2012; Duvendack et al., 2011); previous research has even been accused of lacking methodological reliability (Fouillet et al., 2013). Moreover, harsh criticism has been cast on the underlying assumptions of microcredit policies. Some authors detect a clear neoliberal agenda behind the development strategy, stating that microcredit’s focus on entrepreneurship and financial inclusion is not targeting the structural causes of poverty and inequality, which instead can be found at the base level of the neoliberal market system (Bateman & Chang, 2012; Johnson, 2013).

Different frames around microcredit are being presented by different actors involved with microcredit, ranging from social and economic scientists, to NGOs to multinational organisations like the World Bank (Roy, 2010). These different views on microcredit, its merits, limitations and political associations, have not yet been systematically mapped out. It has been suggested that microcredit implementation has to be adjusted in order to function better (Lützenkirchen & Weistroffer, 2012; Pedrini et al., 2016; Singh, 2008). Contrasting frames about microcredit could lead to contrasting and even conflicting policies and strategies, which could negatively affect the potential merits of microcredit (Johnson, 2013). Furthermore, the variety in frames around microcredit could help us understand the underlying shifts in the international development architecture towards a more entrepreneurial approach. The frames could also tell us something about a certain hierarchy of ‘truth making’ within the development ait community. This research will thus try to systematically map the different frames that are current in microcredit, using a comparative case study approach.

Since microcredit’s actual impact has been researched very inconsistently, a frame analysis can be useful for studying the political intentions behind the project. Building on this analysis, the research will then look at the broader shift towards privatisation of aid in the international development architecture. The research question proposed is as follows:

How do three actors in the microcredit industry (CGAP, BRAC and Grameen Bank)

frame their policies

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_{towards empowering the poor, and what can these frames tell us}

about the broader international development aid community?

The frames will be studied according to each actors’ conception of ‘empowering the poor’, a goal that microcredit is said to achieve. The research will pay attention to each actors’ definition of poverty, its proposed solutions and its priorities within their strategies. It will then organise the frames according to the form of capital each actor finds most important to poverty alleviation, along with the way poverty is defined. A distinction will be made between economic capital on the one hand, and social and cultural capital on the other, using

2_{In this thesis, policies will relate to the strategies that the actors propose for alleviating poverty.} Strategic documents will be used to identify the way each actor defines poverty is understood and how they think a solution to poverty should be approached.

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Bourdieu’s (1986) definitions of these concepts. These theories, along with a discussion about microcredit’s merits and weaknesses, its place within the broader development architecture, approaches to poverty and a conceptualisation of framing and frame analysis, will be elaborated upon in the theoretical framework that follows. Thereafter, the methodological justification will go into the details of the actors and sources studied for this research. In each following chapter, the three following sub questions will be answered:

1. How do the three identified actors in the microcredit industry (CGAP, BRAC and Grameen Bank) function and operate with regards to empowering the poor?

2. What are the different frames around microcredit and empowerment of the poor operated by the different institutions?

3. What can the current frames in microcredit industry tell us about the broader international

development aid community?

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Theoretical framework

Microcredit

In order to better understand the different frames vis-à-vis microcredit, the concept will have to be explored further. Microcredit is a microfinance service, which gives out small loans “to people previously considered un-bankable” (Fouillet et al., 2013: S1) to help them start their own business or to invest their money elsewhere – offering them not only access to traditional banking services, but also making financial markets accessible for them as entrepreneurs. The literature on microcredit is not very clear on its merits and weaknesses. It has been praised by many as a multi-dimensional tool for poverty reduction, but discredited by others as a ‘safety net’ for neoliberalism that reinforces exploitation and inequality (see Bateman & Chang, 2012; Hsu 2014; Weber, 2004a).

Merits of microcredit

The main benefit of microcredit that is often presented is its claim to poverty reduction. Several studies have found that microcredit does alleviate poverty (Imai et al., 2012; Miled & Rejeb, 2015). Furthermore, the microcredit project is often presented as a win-win situation; while alleviating the poor of their burdens, the financial institutions involved with microcredit can make a profit as well. In this way, microcredit offers “not only […] a source of profit for the poor, but [also] for the lender” (Hsu, 2014: 246; see also Saboo, 2015; Singh, 2008). Entrepreneurship and self-help are promoted as crucial skills to economic development:

“Microfinance is an effective weapon in the fight against poverty. Providing financial services, savings, and credit to the very poor household creates opportunities for the economically active poor to create, own, and accumulate assets” (CGAP, 1998A:

6-7, quoted in Weber, 2004a: 360).

Another important merit of microcredit, is its claim to gender empowerment (Geleta, 2013). This gender aspect is a focal point of many microcredit institutions, since lending to women is said to work out positively for both the lender and the borrower. Women are considered more trustworthy when it comes to repaying their debts (Fouillet et al., 2013: S5)

and are more inclined to spread positive outcomes of the loans to the rest of their household,

thus forming a more sustainable development outcome (Garikipati, 2010). A study by Al-Shami et al. (2017) found that microcredit loans positively affected women’s decision making power and their control over household resources. Connected to this is the effect microcredit can have on social capital, especially women’s social capital (Rauniyar & Kanbur, 2009). Microcredit loans are often exclusively provisioned to groups, which rely on peer pressure from members for repayment of the loan—social collateral is created since most poor people lack material capital (Qayum, Samadder & Rahman, 2012; Moyo, 2009). Al-shami et al. (2017) stated in their research that group borrowing enhanced women’s social capital and allowed them to engage more with the community. Panda (2016) underlined the success of

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this form of social collateral with his research into trust relationships, which seem to be stronger in microcredit group lending programmes.

Downsides of microcredit

The microcredit project as a form of development has, however, faced extensive backlash over the last few years; ranging from doubts about the actual impact of microcredit loans (Duvendack et al., 2011), to harsher criticism about the microcredit industry exploiting the poor rather than alleviating them of their precarious living circumstances (Weber, 2004a). The main criticisms of microcredit have been summarised into three different themes.

First of all, there are critiques about the exploitation of poor people through microcredit provision. Weber (2004a) for example, speaks of ‘banking on the poor’ rather than of poverty alleviation. The poor have, according to these critiques, been reconceptualised by development aid institutions and private investors as financial consumers (Hsu, 2014; Weber 2002; 2004a; 2014). The national crises of microcredit that took place between 2000 and 2010 sustained these claims of exploitation to some (Bateman & Chang, 2012). They brought to light the problem of over-indebtedness; customers often borrow money from one microcredit institutions to pay off their debts at another institution, or they borrow money from family, leading them down a spiral of debt (Bateman & Chang, 2012; Fouillet et al., 2013; Weber, 2004a). Bateman & Chang (2012: 30) even call microcredit a disguised “poverty trap”, which benefits only a “lucky few”.

Secondly, there are doubts about the sustainability of microcredit as a development project (Chowdhury, Ghosh & Wright, 2005). Weber (2004a: 378, original emphasis) states that structural causes of poverty are not addressed through microcredit provision: “‘[t]argeting poverty’ and achieving poverty reduction (which must mean also a reduction in vulnerabilities) are not synonymous”. Bateman & Chang (2012) draw attention to the importance of macroeconomic infrastructure and the need for sophisticated enterprises that are neglected by microcredit loans. They argue that because of the need to make money quickly, in order to pay off their debts, microcredit customers refrain from investing in long-term, sophisticated business. Johnson (2013) underlines this lack of sustainability, by arguing that the current take on microcredit’s market functioning, neglects the embeddedness of markets in social relations. Poverty, she argues, is partly (re)produced through these markets; simply including the poor into the market system will not solve the underlying problems causing them to be poor. The development aid community is, according to her, not reflective enough of these structural obstructions to poverty alleviation. The claim that microcredit is used for entrepreneurship also seems to be based on questionable grounds: in reality microcredit users mainly take out loans for primary survival, like buying food and clothes (Hsu, 2014).

Lastly, some authors believe microcredit to be a ‘neo-liberal safety net’ that supports a very Western-oriented ideology. It has been characterised as having “huge political serviceability to the neoliberal worldview” (Bateman & Chang, 2012: 14), based on the

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2010). Some authors identify a capitalist ‘crisis management’ strategy in microcredit practices. They argue that microcredit has been used by Western development aid agencies to dampen international critiques of neoliberalism, framing opposition as resistance against poverty reduction rather than neoliberal policy implementation (Bateman & Chang, 2012; Delaney, 2010; Fouillet et al., 2013; Weber, 2002; 2004a; 2014).

Shifts in the development aid architecture

Microcredit as a development strategy is located in a wider development aid architecture3 (Radhakrishnan, 2015), which has been subjected to several shifts in its nature. First of all, aid architecture has acquired an increasingly global character over the last few decades. Whereas aid used to be provided from one state to another, the actors involved with development aid have become more versatile, ranging from local bottom-up projects, to NGOs of all scales to multinational organisations (UNDESA, 2010). This fragmentation of actors could lead to a decrease in effectivity of development aid (ibid.).

Another shift that has transformed the global development architecture over recent years, has been a transformation of development aid into an investment opportunity:4

“We predict that, by 2025, mutual (bilateral) foreign trade and investment interests will be powerful and transparent determinants of ‘development’ cooperation for most countries. In such an environment, it is natural to consider that official aid will also be used increasingly to promote expansion of markets and investment opportunities”

(Kharas & Rogerson, 2012: 14-5).

Instead of increasing aid, development organisations are directing their policies towards trade relations (Ministry of Foreign Affairs of the Netherlands, 2013). More focus is put on supporting entrepreneurship in receiving countries, which could result in profit-making for the providing countries. This results in a certain level of self-interest into development aid policies (ibid.: 21). The high levels of risk that accompany investing in developing countries are promoted as attractive business opportunities, as high risks provide high returns (Kharas & Rogerson, 2012: 14). Many NGOs have transformed into for-profit organisations to increase their efficiency and social outreach (Chahine & Tannir, 2010). The increasing involvement of the private sector in development aid has been connected by some to the growing digitalisation of communication and financial services, that are often handled by the private sector (Enghel, 2015; Schiller & Fregoso, 1991).

These shifts in the characteristics of the development architecture have been associated by some with neoliberalism (Fouillet et al., 2013; Roy, 2010), or as Fernando

3_{The ‘development aid architecture’ will in this thesis be defined as the community of development} aid institutions, supported and founded by national governments, NGOs, private and public funds, for-profit organisations and private sector investments.

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(2006: 5) terms it: market-led development. Additionally, the commercialisation of many (microcredit) NGOs has by some been interpreted as a sign of an ongoing neoliberal shift towards profit-based development aid (Fouillet et al., 2013), which has been criticised as distracting from the original goal and intended customer base: alleviating the extremely poor of their burdens (D’espallier et al., 2017; Fouillet et al., 2013: S8). Bateman (2010) underlines the self-interest of development organisations when it comes to commercialisation: according to him it usually works well for the promoters of this strategy, but no so much for the receivers.

Framing

In order to make sense of microcredit, and its role in the changing global development architecture, a frame analysis could be highly useful. A frame can be understood

“as a particular way of representing knowledge, and as the reliance on (and development of) interpretative schemas that bound and order a chaotic situation, facilitate interpretation and provide a guide for doing and acting” (Laws & Rein,

2003: 173).

Johnston (1995: 218) states that “ultimately, frame analysis is about how cognitive processing of events, objects and situations gets done in order to arrive at an interpretation”. Framing is “critical to the question of if and how a situation is understood, communicated and treated” (Feindt & Oels, 2005). Because it presents a problem a certain way, framing also determines how solutions and policies are formed (Coburn, 2006). At the same time, framing could lead to blind spots in solution finding, thus preventing a system from operating in the most efficient way (Boda, 2017). Framing can also be a sign of a certain power play or rationale. As Roy argues:

“certain world views and knowledge paradigms have more purchase than others among poverty experts. This in turn has crucial implications for the allocation of resources and opportunity” (Roy, 2010: 14).

Feindt & Oels (2005: 167) identify the relationship between power structures and framing as follows: “the narrative of one universal rationality is used to set up and support partial and biased practices, to silence alternative views and to disguise power effects”. Frame analysis is thus an efficient way of analysing underlying power effects behind a certain social phenomenon.

Frame analysis

This particular research will make use of a frame analysis in order to map out the different interpretations of microcredit and to make sense of the current global development architecture. This can be highly useful for detecting a parallel between the microcredit and ongoing processes within the broader development aid community.

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There is no clear consensus on how to systematically apply a frame analysis (Johnston, 1995). While this can be interpreted as a flaw of the research method, it can be very useful because of its potentially flexible application. This research will apply a frame analysis by looking at three dimensions of a frame: the actors; the strategies they use; and the texts they publish.

The first two dimensions of the frame analysis can be derived from Jeong’s conflict analysis framework (2008). In his study, Jeong centralises actors and how they shape their strategies within a conflict. Even though his proposed framework is better suitable for conflict analysis, it can provide us with an understanding of how actors shape their strategy and why. Jeong identifies three main variables that can help us analyse actors and two that can be used to analyse their strategies. Actors can be studied through their needs, values and interests. Strategies can be studied through their goals and their perceived issues.

Johnston (1995) identifies discourse analysis as a way of reconstructing frames (which according to him exist only in the mind). Johnston interprets discourse more or less as texts, be it public announcements, written statements or informal chats (ibid.: 225). In this sense his approach is more closely related to the methods of the ‘founding father’ of frame analysis, Erving Goffman, rather than a more widely accepted Foucauldian interpretation of discourse (Feindt & Oels, 2005: 163-4). This text analysis can then, according to Johnston (ibid: 234) “approximate the underlying cognitive organization that structures experience and influences behavior”.

The identified frames in this research will be analysed based on each actor’s assumptions about the importance of different forms of capital for empowering the poor and the definition of poverty that is handled.

Poverty

Poverty can be understood in many different ways. Two approaches to understanding poverty, its foundations, and resolutions, will be discussed here. The distinction will be made between a residual and a relational approach to poverty.

Residual poverty

A residual approach to poverty understands poverty as a result of some groups being left out of the market system because they lack the income to participate on these markets (Johnson, 2013: S39). Following this line of thinking, the solution to poverty seems to be presented as being fairly simple: integration into the market system will bring prosperity to the once less fortunate and so resolve poverty. The main assumption that this approach is based on is the trickle down effect of economic growth, which assumes that economic growth on a macro-level will benefit even the poorest of a society eventually (Bernstein, 1992). Bernstein describes how this approach is often translated into development policy by targeting “the rural poor in order to integrate them into processes of development they have been excluded from. In practice, this typically means integrating them more deeply into markets” (ibid: 24,

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emphasis added). Residual approaches to poverty can thus be very useful for actors who desire more market freedom, or more access to new market consumers. They can base their propositions on the argument that more market access for poor people will help lift them up out of their impoverished states.

Relational poverty

Critics of residual approaches to poverty state that it is a depoliticised understanding of a concept that is produced and reproduced through certain power structures (Gordon, 2013). These critics argue for a relational understanding of poverty instead, which acknowledges the multi-dimensional characteristics of poverty (Gordon, 2013) and emphasises “the extent to which development, growth, and the workings of markets can also produce poverty” (Hickey & Du Toit, 2013: 138). As Johnson (2013: S48) states:

“[markets] are implicated in the underlying causes of people’s poverty through the ways in which people are adversely incorporated into them or excluded from them through relational processes”.

A relational interpretation of poverty thus analyses the structural and institutional causes of poverty and argues that, in order to reach a solution to poverty, these current structures of power and property should be challenged (Hickey & Du Toit, 2013; Johnson, 2013). Furthermore, Hickey & Du Toit (2013: 141) argue that relational approaches to poverty challenge the conventional assumption that “inclusion is an unproblematically ‘good thing’”. When poor people are included into the same market structures that have exploited them and created their poverty in the first place, a new exploitative structure could arise (Hickey & Du Toit, 2013; Johnson, 2013).

The frame analysis will look into how the different actors defined poverty, which will then be used to classify them as residual or relational.

Forms of capital

In order to conduct a frame analysis and get to the perspectives on poverty that are used by the actors, their proposed poverty alleviation strategy will be studied. The solutions an actor proposes or identifies as effective and desirable, say a lot about the causes of poverty they have recognised and their ideas about the best way to reach empowerment of the poor. When defining which issues should be addressed in order to alleviate poverty, one defines the causes of poverty as well. Thus, these strategies for solving poverty are inherently related to the definition of poverty, and thus to residual and relational understandings of it.

These proposed solutions will be categorised using a simplified version of Bourdieu’s notions of capital; a distinction will be made between economic capital on the one hand, and

social and cultural capital on the other hand. Bourdieu’s analysis of capital has not yet been used

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power with capital (Geleta, 2013: 416), this will be a useful lens to study empowerment of the poor.

Economic capital

Economic capital is defined as the accumulated assets of an actor, which can consist of tangible money, or can relate to property like a house or a car (Bourdieu, 1986; Geleta, 2013). Economic capital has “a potential capacity to produce profits and produce itself in identical or expanded form” (Bourdieu, 1986: 241). In the context of this research, economic capital will be aligned with financial inclusion, which strives to alleviate poverty through granting poor people access to financial services and thus economic capital.

Several authors have noticed a shift in development policy recently, moving away from a poverty, or ‘problem’ focus, to an inclusion, or ‘solution’ focus (Bateman & Chang, 2012; Johnson, 2013; Roy, 2010). Financial inclusion is a strategy that aims to give previously economically excluded people, mostly the rural poor, access to financial services so they can become self-sustained through entrepreneurship (CGAP, 2018b).

Financial inclusion is said to alleviate the poor of not only their economic, but also their social burdens (Gupta & Pouw, 2017: 98). Dasgupta (2009: 41) describes how “financial exclusion often exacerbates other kinds of exclusion”, interlinking progress towards financial inclusion with social, political and other forms of inclusion. Financial inclusion has been recognised by the World Bank as a strategy to achieve several of the Sustainable Development Goals and is said to increase resilience not only to economic crises but also to health related and environmental shocks (CGAP, 2018b).

However, this solution of focusing on the economic aspect of poverty alleviation has been criticised, mainly for having a solely residual approach to poverty. Mader (2015: 18) argues that by financially including people based on a trickle down assumption, the obligation for development institutions and governments to help develop other highly relevant dimensions of poor people’s life, like education, protection from natural disasters and better work environments, is conveniently removed. Moreover, Johnson (2013) states that targeting poverty through financial inclusion, defines poverty only in terms of income, and ignores the social construction of the markets that the poor are being excluded from, relating to the more structural causes of poverty that a relational approach might identify (see also Rauniyar & Kanbur, 2009).

Social and cultural capital

Bourdieu (1986) starts his discussion of ‘the forms of capital’ by expressing his surprise that capital is mainly understood in its economic form, which has rendered other forms of capital to be devalued (1986: 241-242). He states that both cultural and social capital are equally important and can even be transformed (under the right circumstances) into economic capital (ibid.). Social capital is defined as social connections, or membership of a group. Bourdieu describes how this provides individuals with a certain type of ‘credential’; being part of a specific group, which in turn “entitles them to credit, in the various senses of the word” (1986: 247). Social capital has, in microcredit studies, been identified as both a vehicle for

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repayment—constituting social collateral through group pressure (Dowla, 2005)—and an outcome of group-based lending programmes that create social networks between participants (Al-shami et al., 2017). These suggestions comply with Bourdieu’s argument that social capital and economic capital are very much related to each other.

Bourdieu (1986: 243) distinguishes three states of cultural capital: the objectified, the institutionalised, and the embodied state. The objectified state can be seen as the most tangible representation of cultural capital and relates to books and artworks for example. The

institutionalised state of cultural capital refers to educational qualifications. Additionally, this

form of cultural capital is easiest to convert into economic capital (Geleta, 2013: 415). The

embodied state takes form within the mind and body itself and relates to a certain way of

thinking and doing things, like traditions. Embodied capital is gained through “a continuous process of ‘socialization’” (Geleta, 2013: 415) and is often acquired unconsciously (Bourdieu, 1986: 244).

In his later elaboration on the conceptualisation of capital, Bourdieu defines an additional form of capital: symbolic capital, which is concerned with a person’s status, feelings of pride and honour and authority (Bourdieu, 1989; Geleta, 2013). This fourth form of capital is, however, not related to very often in development studies, since it is less visible and tangible than the others (Geleta, 2013: 416).

Social and cultural capital can be interpreted as a relational approach to poverty, since these concepts are based on the assumptions that there are multiple dimensions to capital and thus to poverty (Saith, 2001). Understanding that certain social structures and cultural barriers or differences exist, sheds another light on the understanding of poverty and the possible solutions for the problem.

This thesis proposes that one-dimensional focus on one form of capital will not lead to a complete understanding of the structural causes of poverty and will therefore not lead to sustainable empowerment of the poor. A relational understanding of poverty is thus needed in order to be able to fully grasp the multi-dimensionality of poverty.

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Methodological justification

Epistemology and research type

This thesis will use a qualitative frame analysis to conduct research into microcredit practices. The epistemological assumptions behind this type of research are interpretative by definition of what a frame analysis is: interpreting the world around us (Johnston, 1995). The research will be of an explorative nature, trying to reach a deepened understanding of the dynamics of microcredit institutions and the accompanying power relations.

Case description

The unit of research for this study will be the different frames that are current in the microcredit industry. In order to achieve a satisfactory conclusion to the proposed research question, a multiple comparative case study was executed (see Bryman, 2012: 72). Comparing different, slightly similar cases with each other, allows for an easier analysis of the hybridity of frames at play in the microcredit industry. Even though these actors all have different modus operandi, different priorities, interests and strategies, it is to compare them because they are all involved with microcredit to some extent. The following cases (microcredit institutions) have been selected for the research.

The Consultative Group to Assist the Poor (CGAP)

This institution is funded by and operates within the institutional framework of the World Bank, which itself is a highly influential actor within the development aid community. CGAP is considered one of the leading institutions in microcredit. It is therefore also influential in the ‘making of knowledge’ about microcredit (Roy, 2010), which is useful for analysing power structures in relation to framing. The World Bank, and more indirectly CGAP, have been related to the implementation of structural changes in receiving countries of their aid, the most well-known form being Structural Adjustment Programmes or SAPs (Singh, 2008; Weber, 2004). Taking this institutional background into consideration could be helpful in relating the identified frames to a specific hierarchy and the broader development aid architecture. The following documents will be analysed for this actor.

CGAP’s (2018a) most recent Annual Report, which covers 2017. The annual report will give a brief overview of CGAP’s main strategies and its perceived position within the development aid community.

This analysis will be deepened by studying the ‘Strategic Directions for the Fiscal Year 2019-2023’ (CGAP, 2018b). This document goes into details on how to reach strategies that have been proposed in the annual report. Furthermore, it will provide valuable insights into CGAP’s vision for the future, which could prove to be useful in analysing shifts within the broader development aid community.

Since CGAP considers itself to be an important ‘knowledge maker’ in the field of microcredit and financial inclusion, it publishes influential guidelines, like ‘Good Practice

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Guidelines for Funders of Microfinance’ (CGAP, 2006). This document advises funders and donors how to engage with microfinance strategies to empower the poor. Here, CGAP’s views on microcredit could be presented very clearly.

For comparison, the updated version of this 2006 document, the publication ‘A Markets Systems Approach to Financial Inclusion’ (Burjorjee & Scola, 2015) will be analysed. This document could provide a lot of information about a shift in focus that CGAP has gone through, which could then be linked to broader shifts within the development aid community.

Building Resources Across Countries (BRAC)

BRAC is an NGO founded in Bangladesh, which prides itself for its ‘holistic’ approach to development (BRAC, 2018a). BRAC is not only active in the field of microfinance, but rather sees it as one part of their broader approach to development. BRAC operates in eleven different countries all around the world, from Myanmar to the United States. It not only works on the ground, but also publishes many reports and findings on the impact of their strategies and programmes, and is globally recognised as the founder of the Graduation Approach to alleviate the ‘ultra poor’ from poverty. It is thus both a ‘knowledge maker’ and an active institution in the field. Keeping in mind that BRAC is an NGO, its institutional character differs from the other two actors. Since CGAP sees itself as an important knowledge maker, it would be interesting to compare BRAC’s influence on the development aid community (through the Graduation Approach for example) to that of CGAP. BRAC’s frame will be mapped using the following documents.

BRAC’s most recent Annual Report (BRAC, 2018a), which happens to be the 2017 edition, will provide a good overview of BRAC’s current development strategies and understandings about capital and poverty. Since BRAC operates in multiple countries, and subsequently publishes annual reports for all these countries, a choice had to be made. The Annual Report: Bangladesh will be analysed in this thesis, because that is were BRAC was founded and were it headquarters are still located. It is thereby also the most elaborate annual report that BRAC has published in 2018.

This analysis will be complemented by studying ‘The Integrated Development Programme” (Ara et al., 2017), which will go into more detail about BRAC’s claim to ‘holistic’ development.

The document ‘Group Norms and the BRAC Village Organization – Enhancing Social Capital Baseline’ (Qayum, Samadder & Rahman, 2012) will provide more intel on how BRAC envisions the creation of social capital through microcredit programmes.

Then, since it is one of BRAC’s own development projects which has gained worldwide recognition, a document on the ‘Graduation Approach’ (BRAC, 2017) that targets the ultra poor will be analysed.

Furthermore, to gain more insights in BRAC’s focus on the ultra poor, the document ‘Integration of the Ultra Poor into Mainstream Development’ (Shams, Mahmud & Das, 2010) will be analysed.

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The Grameen Bank

The Grameen Bank was founded by Muhammad Yunus in the early 1980s and is considered the formative institution of microcredit as we know it today (Mader, 2015: 43; 53). Studying this actor could help provide an insight into shifts that have taken place in the microcredit industry over the years, since its rise to popularity. At least five annual reports, published by the bank itself, will be analysed, ranging from 1990 to 2017 (the most recent report).

The Grameen Bank does not provide a lot of detailed information about its functioning or argumentations behind its projects. On its website, it only publishes Annual Reports, that date all the way back to 1983. In order to get a good overview of the Grameen Bank, and hopefully the microcredit industry more general, different annual reports will be analysed. Starting with the 1990 Annual Report (Grameen Bank, 1991); followed by the 2000 Report (Grameen Bank, 2001); the 2005 version (Grameen Bank, 2006); the 2010 Annual Report (Grameen Bank, 2011); up until the most recent version: the 2017 Annual Report (Grameen Bank, 2018a).

Data gathering and research methods

Data gathering

The main source of data used in this research, will be documents. Through reviewing official reports and policy documents that have been published by the identified actors, the policies around microcredit and more importantly the argumentation behind it can be studied. As previously discussed, Johnston (1995) emphasises the importance of text and what it can tell us about frames; or as Riles (2006: 2) puts it: “documents are paradigmatic artifacts of modern knowledge practices”. Even though an attempt was made to conduct interviews with relevant actors in the field, no response has yet been received.

Research method

A frame analysis will be applied to study both forms of data. As described in the theoretical framework, a universal systematic frame analysis has not yet been developed; the research will therefore be of an exploratory character. This will be used as an opportunity to achieve a more realistic analysis of the very hybrid frames that will be analysed. The frames will be identified focusing on their approach to poverty alleviation—residual or relational—and on which type of capital this is based: economic capital or social and cultural capital. Although it is likely that these frames are highly fluid and contain aspects of several different approaches, it will still be attempted to give a concise and conclusive overview of these frames.

The frame analysis will look closely into the three actors mentioned; the strategies they use and the texts with which they present their policy. In order to achieve this, each actor’s most recent policy report regarding microcredit provision was analysed. Atlas.ti, a CAQDAS method (Bryman, 2012), will be used to code and subsequently compare the reports and thus the four actors. The indicators proposed in the operationalization table will be used as the coding categories (see Appendix I).

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Limitations of research

Since a frame analysis is by its very definition highly interpretative (Johnston, 1995), the findings in this thesis are so as well. A weak point of frame analysis is that quotes and extracts are taken out of context; presenting them in a certain way could demonstrate an entirely different frame than what the actor is actually trying to convey. The further I got into defining the frames, the more I found myself tempted to leave certain things out and incorporate minor details, just to fit the already established frame. I have tried to not do so to my greatest ability, but the risk that this is still what happened is, of course, always present.

Furthermore, the theoretical framework was already formed before the analysis had started properly. When the analysis started and all the documents were to be gathered, I found that the Grameen Bank has an extremely low number of publications when compared to the other two organisations. The only official documents that I could find were Annual Reports, which did not communicate that much relevant information. To my conclusion, this resulted in an unequal analysis when it came to information: there was just way more information available on the other two actors. This extensive supply of information, could on the other hand also have led me astray from the more relevant publications. I have chosen the documents in my analysis based on their abstracts and keywords. It is very likely that they present only small aspects of the actual intentions of the organisations. This is not related to the annual reports, who hopefully give a more accurate overview.

Lastly, when analysing the documents for this research, I was highly aware of the fact that these strategic documents are written with a particular audience in mind. Depending on which actor is addressed, for example, the organisation can use a slightly different tone or focus. Because of all these factors and by its very nature, a frame analysis is highly interpretative and therefore incomplete. This should be considered when studying the research findings.

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Chapter I – Mapping out the different actors

Event though they work in the same field of development aid, the three identified actors (CGAP, BRAC and Grameen Bank) all operate in their own unique way. This chapter will go into the governance of each actor and will outline their different roles within the microcredit industry.

The Consultative Group to Assist the Poor (CGAP)

The Consultative Group to Assist the Poor, also known under its abbreviation CGAP, was founded in 1995, and is housed in the World Bank Headquarters in Washington DC (Roy, 2010: 44). CGAP describes its own mission as follows:

“CGAP is a global partnership of more than 30 leading development organizations that works to advance the lives of poor people through financial inclusion. Using action-oriented research, we test, learn and share knowledge intended to help build inclusive and responsible financial systems that move people out of poverty, protect their economic gains and advance broader development goals” (CGAP, 2018c).

CGAP is not directly involved with microloan provision, but rather sees itself as an “independent platform to exchange knowledge and coordinate financial inclusion efforts” (CGAP, 2018c). The organisation thus positions itself within the global development community as a knowledge platform, which conducts research, tests poverty alleviation systems and creates guidelines for funders who want to get involved with microcredit5_{(Bhatnager et} al., 2003). It has its own online gateway (https://www.findevgateway.org/) where it publishes reports, documents and literature on the topic of financial inclusion (previously on microfinance). CGAP’s biggest funders include the Bill & Melinda Gates Foundation, the World Bank and the MasterCard Foundation (CGAP, 2018a: 37). The ‘leading development organisations’ that it CGAP is made up of, consist of NGOs, charity funds, private organisations and national governments. Many of their partners are ‘development investment institutions’, such as CDC Group and Omidyar Network. The governmental institutions involved with CGAP are all based in Western countries, such as The Netherlands, Norway, the United Kingdom and Japan. 6

Questioning independence

Although CGAP presents itself as an “independent and impartial” (CGAP, 2018a: 13) organisation, it “operates within the World Bank’s legal, financial, and administrative environment” (CGAP, 2018a: 35); CGAP is located in the World Bank Headquarters in Washington and its CEO Greta Bull is also a World Bank director (CGAP, 2018d). The World

5_{See for an example: CGAP (2012).}

6_{For a full overview of CGAP’s members, visit their website:} https://www.cgap.org/about/member-organizations (CGAP, 2018f).

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Bank’s independence, in turn, has often been scrutinised and subsequently questioned (Roy, 2010; Peet, 2009; Swedberg, 1986). Critics of the World Bank argue that the organisation has an ulterior motive to spread and sustain a global capitalistic market-system, instead of alleviation poverty. Haase (2012: 39) summarises these critiques as follows:

“Typically, the World Bank approach has been predicated on mainstream economic principles, which have often translated into policies that favour economic growth over social justice and free markets over social spending”

Another critique the World Bank has endured is related to its implementation of Structural Adjustment Programmes in countries that receive a loan from them. These conditionalities often have strong neoliberal characteristics, and have therefore been accused of imposing a capitalist market system in a country against the will and maybe even benefit of its people (Weber, 2004).

Therefore, CGAP’s close linkages with the organisation have been considered proof of a biased approach towards poverty alleviation. Some critics suggest that CGAP uses development aid to spread, according to World Bank principles, a neoliberal ideology (Delaney, 2010; Roy, 2010; Weber, 2004). Since CGAP functions, as it proudly states so itself, as a global ‘knowledge maker’, this bias could have considerable impact on the microcredit industry and policy-making around the subject.

Building Resources Across Communities (BRAC)

BRAC is an NGO which was founded in 1972 in Bangladesh by Sir Fazle Abed (Roy, 2010). It has been elected, for the third year in a row, the number one NGO worldwide, according to the NGO top 500 (BRAC, 2018c). BRAC is active in over eleven countries worldwide, ranging from Sierra Leone to Pakistan to the Philippines (BRAC, 2018a: 14-15). Microfinance is not its only focus, as is reflected in BRAC’s mission statement:

“Our mission is to empower people and communities in situations of poverty, illiteracy, disease and social injustice. Our interventions aim to achieve large scale, positive changes through economic and social programmes that enable men and women to realise their potential” (BRAC, 2018b).

Thus, BRAC’s approach encompasses more than just microcredit services. However, the organisation has played an important role within the industry of microcredit. The organisation applies a ‘credit-plus’ approach which does not focus solely on the provision of credit and stimulating entrepreneurship, but couples this aspect of microcredit to social challenges. Through its ‘social enterprises’, BRAC strives to combine access to markets for the poor and creating sustainable livelihoods for them, all the while creating surplus that can be invested in other development projects to increase the positive impact of the programme (Ara et al., 2017). There have, however, been some critiques on BRAC’s alleged inability to reach the

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poor in the way that they would prefer, creating a so-called ‘customer gap’ (Chowdhury et al., 2014).

After decades of attempts to reduce poverty in multiple countries, BRAC staff realised they often failed to include people living in extreme poverty into their programmes. Acknowledging that the ‘ultra poor’ are a heterogeneous group with different needs and situations of poverty, BRAC pioneered the Targeting the Ultra Poor (TUP) programme, or Graduation Approach in 2002 (Marston & Grady, 2014). Graduating the ultra poor from extreme poverty was to be reached through a multi-dimensional “development initiative that combines social safety nets with income-generating livelihoods” (ibid.: 5). When poor people are identified as being “too poor and vulnerable to support debt” (BRAC, 2015: 5), BRAC does not provide them with microcredit loans but instead tries to incorporate them into the Graduation Programme.

The Grameen Bank

Established in Bangladesh by Professor Muhammad Yunus, the Grameen Bank is considered the founding institution of microcredit provision (Dowla, 2005). Yunus struggled to establish the organisation in the beginning, finding it difficult to convince both prospective borrowers as well as commercial bankers to participate in his proposals (Matsui & Tsuboi, 2015). Nowadays, the Grameen Bank is, according to itself, “one of the best performing financial institutions of the country” (Grameen Bank, 2018a: 7) and known worldwide for its progress in microcredit services, for which Yunus and the bank were jointly awarded the Nobel Peace Prize in 2006 (Bateman & Chang, 2012). Yunus explored the idea of credit ‘as a human right’, which relates to his approach to poverty being a structural and institutional problem, for which the poor should not be blamed (Grameen Bank, 2006: 13; 21). Another refreshing aspect of the Grameen Bank was that the institution, which was not only business-oriented but also strived to achieve development and poverty alleviation, was created in one of the poorest countries in the world: Bangladesh. The concept of a development strategy originating in a ‘developing’ country, was unique during Grameen’s establishment (Matsui & Tsuboi, 2015: 14).

Well-known for its focus on gender, no less than 96% of Grameen Bank’s nine million borrowers are female (Grameen Bank, 2018c). Loans were originally only given out to groups, which resulted in the bank receiving acclaim for increasing both economic and social capital for the poor, while at the same time stimulating gender empowerment (Al-shami et al., 2017; Dowla, 2005; Young Larance, 2001). Even though group-lending is not a requirement anymore (Grameen Bank, 2018a), it was another unique but essential aspect of the Grameen model. Group-lending created a form of social collateral:

“Only if the first two borrowers repay the principal plus interest over a period of fifty weeks do other members of the group become eligible themselves for a loan. Because of these restrictions, there is substantial group pressure to keep individual records clear.

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In this sense, collective responsibility of the group serves as collateral on the loan”

(Grameen Bank, 2018b).

Considering that these poor borrowers previously lacked any form of collateral, which was what prevented them from being credit-worthy, this new approach was revolutionary (Moyo, 2009).

The Bank is self-reliant and doesn’t receive any funding from donors. However, Grameen Bank states, this doesn’t mean the institution exists solely to make profits:

“We will measure our success not on the rate of return on investment but by the number of people coming out of poverty” (Prof. Muhammad Yunus in his Nobel Price

speech in 2006, quoted in Roy, 2010: 90).

The institution takes pride in being a locally founded enterprise that grew out to be not only very viable, but also one of the most important creators within the microcredit industry. There have been, however, harsh critiques directed towards both Prof. Yunus and the bank itself. Pressures from CGAP, donors and rating agencies led to scrutiny into the Grameen Bank’s financial performances, leading to critics stating that “Grameen’s steady performance was a façade” (Mader, 2015: 60) and that it had actually been “massively subsidized” (ibid.), instead of being self-sustaining through profits.

Concluding remarks

A clearer overview of the institutional background of each actors has now been given. CGAP, first of all, is more of an advising organisation than an active actor in the microcredit and financial inclusion field. It is highly embedded in several Western development organisations, the most important and relevant being the World Bank, and national governments from the Western world. BRAC is an NGO that strives to offer the poor a broad range of development aid. BRAC takes the vulnerability that debt can cause very seriously when deciding whom to give loans to. For empowerment of the ultra poor they have developed the Graduation Approach that strives to lift these extremely poor people out of their impoverished situation. Grameen Bank is the pioneering institution behind the global recognition of microcredit as a development strategy. Originally, Grameen put a lot of emphasis on the social aspect of microcredit that was to be created through group lending programmes. That is no longer a necessity when becoming a borrower with Grameen Bank. The institution has, however, remained its high levels of female borrowers over the years.

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Chapter II – Identifying the frames

Although the three identified actors involved in the microcredit industry (CGAP, BRAC, and the Grameen Bank) share some main assumptions about development aid and how to best approach empowerment of the poor, there are some significant differences that become clear after a detailed and systematic frame analysis of their policies. Each actor and its frame will be discussed separately before relating the frames to each other in the conclusion of this chapter.

2.1 Consultative Group to Assist the Poor (CGAP)

A shift towards financial inclusion

Since its establishment in 1995, CGAP has shifted its mission from promoting microcredit as a legitimate development aid technique, to a financial inclusion approach to poverty alleviation (CGAP, 2018a: 2). The transformation of CGAP’s online gateway of information from the “Microfinance Gateway” into the “FinDev Gateway”7_{just last October is a clear indication of} this shift. The increase of subsidies by funders and donors for the financial inclusion cause can also be seen as an indicator for the shifting importance from microcredit to financial inclusion (CGAP, 2018a: 20). Even though microcredit has been replaced by financial inclusion as CGAP’s main focal point, the former does maintain its place within this new strategy as an optimal credit provision policy (CGAP, 2018a). Transferring to this new approach is seen as progress by CGAP, since financial inclusion can incorporate a wide range of financial services, and not just credit provision. CGAP no longer embraces its ‘microcredit minimalism’8_{approach as a solve-all strategy for poverty alleviation:}

“This move reflects a growing recognition that microfinance is just one entry point among many […] for achieving universal financial inclusion and its associated social and economic development goals” (Burjorjee & Scola, 2015: 1).

The transference of CGAP’s interest in microfinance towards a focus on financial inclusion, can already be detected in its 2006 publication ‘Good Practice Guidelines for Funders of Microfinance’, which advises donors and funders on how to successfully and sustainably get involved with microfinance. The increasing interest in financial inclusion seems to stem from the acknowledgements that microcredit may have its shortcomings:

7_{FinDev stands for ‘Financial Inclusion for Development’. For CGAP’s official announcements of the} website’s name change, see the following blogpost: https://www.cgap.org/news/microfinance-gateway-becomes-findev-gateway-reflecting-its-broadening-scope (accessed 29 November 2018). 8_{‘Microcredit minimalism’ refers to poverty alleviation solely through the provision of credit, without} any additional skill training or savings programmes attached to it. CGAP has been criticised for implementing this strategy in the past (Weber, 2004).

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“The destitute have very limited absorptive capacity for debt and often no income to repay loans. Microcredit thus may not be the most appropriate solution for them”

(CGAP, 2006: 8).

Financial inclusion, on the other hand, is said offer a wide array of financial services to the poor, serving their every financial need. This new approach has gradually been pushed to the forefront of CGAP’s development strategy, knocking microcredit off its pedestal; the updated version of the 2006 Guidelines for Funders of Microfinance, published in 2015, is titled ‘A Market Systems Approach to Financial Inclusion: Guidelines for Funders’ (Burjorjee & Scola, 2015, emphasis added). Microcredit has proved to the development aid community that the poor can be marketable; financial inclusion seems to allow for expanding that market to other financial services as well.

CGAP asserts that including the poor in financial services will help achieve several of the United Nations’ Social Developments Goals (SDGs), like better health, education, gender equality and food security; it is said to increase poor people’s resilience to shocks; shield them from going further down a spiral of poverty and increase their independence (CGAP, 2018a: 22; 2018b: 5). Financial inclusion is thus, according to this line of reasoning, a very helpful tool for empowering the poor. As its main mission, CGAP strives to “[work] toward a world where everyone has access to and can use financial services to improve their lives” (CGAP, 2018a: 1). Likewise, the organisation sees itself playing “a unique role as a donor-coordination mechanism for funders working to improve the lives of poor people through the power of financial

inclusion” (CGAP, 2018b: 12, emphasis added). The underlying assumption behind this

statement seems to be that access to financial services can actually help to improve one’s life.

“Financial services play a critical role in reducing poverty. Permanent access to financial services can help poor people take control of their lives. When good practice is applied, financial services can put power into the hands of poor households, allowing them to progress from hand-to-mouth survival to planning for the future, acquiring physical and financial assets, and investing in better nutrition, improved living conditions, and children’s health and education” (CGAP, 2006: 3).

The idea is that including poor people into formal financial services will not only grant them direct access to tangible economic means, but also that it will increase (with CGAP’s help) their entrepreneurship and financial literacy (Burjorjee & Scola, 2015: 20). How exactly they will be taught this and by whom, CGAP does not explicitly mention. Where microcredit was challenged in the 2006 Guidelines as maybe being not suitable for everyone (CGAP, 2006), CGAP does not express similar reservations about financial inclusion’s implementation in their more recent publications (CGAP, 2018a; 2018b). The poor are then, in a rather homogeneous way, believed to be at their core, highly interested in financial services. This unwavering belief that the poor are hungry for financial services are related by

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Mader & Sabrow (2015) to the increasing promotion of the profitability of financial inclusion projects:

“Financial inclusion as a new mission entails that the microfinance sector broadens its activities beyond credit for enterprise, so as to satisfy poor people’s ostensibly ubiquitous financial needs in all varieties of life situations; a change in emphasis which has gone hand-in-hand with the increasing profit orientation and commercialisation of the microfinance sector” (Mader & Sabrow, 2015: 2).

Forms of capital

Financial inclusion complies with the notion of economic capital in the sense that financial, measurable capital is the most important, if not only, form of capital that should be considered in the development process (see also Geleta, 2013). CGAP’s shift from a microcredit-oriented development approach towards one of financial inclusion, is built on the supposition that access to a broad range of financial services will alleviate the poor not only of their economic, but also of their social burdens. Social and cultural capital are not unimportant in CGAP’s analysis, but they are perceived as being subordinate to economic capital.

In some instances, CGAP seems to promote a focus on other forms of capital instead of economic capital, which could be more beneficial to poor people in particular circumstances:

“financial services may not be the best and only solution for all poor people. The destitute are often in need of other development interventions, such as social protection systems and safety net programs” (CGAP, 2006: viii).

However, these reservations to microcredit’s benefits seem to be limited to the ultra poor, and, interestingly enough, are considered to be of a temporal nature. Increasing social capital for the extremely poor seems only to be promoted in order for them to gain economic capital, so they can get access to financial markets:

“Many of the poorest need non-financial support or safety net services, such as food, skills training, nutrition and health assistance, and asset transfer before they are in

a position to repay loans” (CGAP, 2006: 32, emphasis added).

Here we can detect an aspect of CGAP’s development strategy that becomes more clear in later publications, like the organisation’s Strategic Directions Fiscal Year 2019-2023 that CGAP (2018) recently published. Focusing on social and cultural capital, according to this understanding of poverty alleviation, is (sometimes) necessary in order to prep the poor for financial inclusion. Social and cultural capital are thus seen only as subordinate to the much broader financial inclusion strategy:

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“Social networks, by which the poor often receive trusted information, constitute a key channel to improve poor people’s ability to understand and use financial services”

(CGAP, 2018b: 19).

Apart from social and cultural capital as ‘stepping stones’ for reaching the end goal of economic capital, financial inclusion is presented by CGAP as a means to achieve these other forms of capital as well. As established above, financial inclusion is said to influence a vast array of Sustainable Development Goals that might have more to do with social and cultural capital—like gender equality and access to (good) education. Financial inclusion, “and its associated social and economic development goals” (Burjorjee & Scola, 2015: 1), could ‘trickle down’ to other parts of development. Moreover,

“[financial services] incorporate the need to promote prosperity and people’s well-being, and to reduce inequality, while protecting the environment” (CGAP, 2018b:

4).

Financial inclusion is thus the main goal when wanting to achieve poverty alleviation, or as CGAP presents it “an end in itself” (Burjorjee & Scola, 2015: 6). Social and cultural capital can help prep the poor for receiving and acquiring economic capital; and economic capital can trickle down to increase social and cultural capital. In the end, CGAP believes that economic capital is the main form of capital through which poverty can be alleviated.

CGAP’s approach to poverty

Thus, CGAP’s development strategy very clearly aligns itself with a financial inclusion approach to poverty alleviation, which could be seen as a residual understanding of poverty. Bernstein (1992: 24) argues that, put into practice, a residual approach to poverty results in development strategies that try to integrate the poor more deeply into markets. Accordingly, in CGAP’s updated version of its 2006 Guidelines for Funders of Microfinance, the organisation presents a market systems approach as the optimal way to achieve financial inclusion:

“there is a growing discourse among funders about the relevance and applicability of a market systems approach to financial inclusion. This approach looks at the market system around the delivery and use of financial services. At the core of this market

system, poor and low-income people exist as consumers of financial services”

(Burjorjee & Scola, 2015: 2, emphasis added).

This particular quote represents a remarkable aspect of both microcredit and financial inclusion strategies to poverty alleviation: making the poor marketable (see also Weber, 2004). This strategy is then used to attract private investment to financial inclusion projects, promoting it as a ‘win-win’ programme that can “deliver value for customers, as well as generate more revenue for providers” (CGAP, 2018b: 23). Even the word “customers” signifies a market-based approach to commercialisation of development aid. Approaching

Framing in microcredit : evidence for a changing aid architecture?