The Politics of Microfinance: A Comparative Study of Jamaica, Guyana, and Haiti by Caroline Shenaz Hossein A thesis submitted in conformity with the requirements for the degree of Doctorate of Philosophy Political Science University of Toronto © Copyright by Caroline Shenaz Hossein 2012 The Politics of Microfinance: A Comparative Study of Jamaica, Guyana, and Haiti Caroline Shenaz Hossein Doctorate of Philosophy Political Science University of Toronto 2012 Abstract The microfinance revolution of the 1980s acclaimed micro-credit as a tool that would improve the lives of economically active people trapped in poverty. The 2006 Nobel prize awarded to Mohammed Yunus and Grameen Bank confirmed for the industry’s advocates that microfinance was a panacea, and billions of dollars have been channeled to financial services for the poor. However, a series of high-profile scandals in 2010 shook development agencies’ faith in micro lending, and support has waned in light of evidence that microfinance alone cannot change structural inequalities and end poverty. I show that politics operate throughout the industry, reproducing inequalities within the process of micro lending. In my political ethnographic study of 460 people in three countries, I find that race and class politics is entrenched in all three countries, yet there are different outcomes related to attitudes of microfinance managers. In Jamaica and Guyana, micro lenders demonstrate that historically rooted racial and class biases go beyond gender to determine the allocation of micro loan resources. Ingrained biases interfere with the allocation of loans to the urban poor because discriminatory practices reinforce pre-existing social divisions. The Haiti case is ii hopeful: lenders, particularly the caisses populaires (credit unions), are made up of socially conscious people who recognize the country’s exclusionary politics. Managers and staff have class origins similar to the clients they serve and view micro loans as a tool to contest class and race-based oppressions. Haiti’s case suggests that collective systems such as those found in the caisses populaires and informal banks are effective because they relate to people’s history; and managers influenced by the masses, organize financial programs that are responsive to their clients and remain free from elite capture. This bottom-up approach in microfinance determines a greater level of social transformation for the urban poor. iii I dedicate this thesis to: My maternal great-grand-mother, Maude Gittens, a susu banker in Trinidad who held onto an African tradition that still continues in the Caribbean. My paternal grandfather from Guyana, Mahboob Hussein, who encapsulated the very business people I write about in this project. iv Acknowledgments The people in this acknowledgement were vital to this project. My husband, Shayan Sen, a PhD mathematician, has helped me navigate this journey and always knew how to be supportive and caring. I returned to graduate school as a mature student with a decade of field experience. After completing my Masters at Cornell, I thought about a doctorate, but as a first-generation university graduate in my family, I opted for the world of work. In the 1990s, I packed my bags and headed to Egypt for a few months, then onto Benin (West Africa), and the U.S. to work in international development, and later to Niger to manage a village bank. While living in Niamey, Niger, in 2004 I emailed Richard Sandbrook, an Africanist scholar (Toronto), about doing a doctorate and his reply convinced me to return to school two years later. I thank those who came before me from lands as far away as India and Africa, who then settled in the Caribbean and later migrated to North America. My family is made up of small entrepreneurs from various parts of the Caribbean, such as Guyana, Grenada, Trinidad and St. Vincent. I thank my mum, Jacqueline (an Afro-Trinidadian-Vincentian), and my dad, Isaac (an Indo-Guyanese), who have given me much love and support. My siblings, Annie and Chris, understand the messy terrain as immigrant children in two (sometimes three) worlds. Other members of my family kind enough to listen to me over these years were Jolanta, Bibi, Rasheeda, Grannie, and the Sen clan in both Ireland and India, especially Ma and Baba. Judith Teichman has been my mentor from the very start, first guiding me to be a teaching assistant, then as my teacher, and later as my thesis advisor. After years of doing, I was finally learning about development, and I am indebted to Judith and my committee for this. Louis Pauly, Chair of Political Science, made me refine my work’s relevance to the discipline and he always did so in a caring way. Njoki Wane, also my teacher, advised me with ease and worked closely with me on perfecting my theoretical approach, methodology and advising me on ways to make my work relevant to policy makers. I also want to thank Joe Wong (my teacher) who was not a committee member but was like one as he spent a lot time on my project discussing its methodology and broader implications. During the past four years, I moved around in three countries to carry out extensive field work. Hundreds of micro business people in Jamaica, Guyana, and Haiti made this project possible by taking risks to speak to me. And I have many generous souls to thank for keeping me safe and informed. Let me start off with my talented assistants in Jamaica: Althea, Ackney, Wayne, Brian, Betty, and Mary; and in Guyana, Shebeca. In Jamaica, my friends made my stay enjoyable and opened up their hearts and homes: Maxine Henry- Wilson, Sharene McKenzie, Brenda Cuthbert, Rhea Alert, Kim-Marie Spence, and Henley Morgan. Much gratitude goes to the Beharry family in Tiger Bay for also hosting me. Thanks to Sankar, Danny, and Michael for teaching me about life in Guyana. In Haiti, my good friends Raoul Jean-Louis and Marie-Marcelle St. Gilles always gave me sound advice. Since 2008, Eric Calpas, Sylvain Luxon and Sergine Pierre assisted me in various stages of my v fieldwork. And I am grateful for the lovely family dinners at Magali and Siniorr Raymond’s home in Bel Air, where we talked politics and microfinance. During my Fulbright program in Jamaica, I was fortunate to study under John Rapley, the then-president of the Caribbean Policy and Research Institute (CAPRI) who gave me detailed comments on my interview tools. I am indebted to the team at the CAPRI team: Orena Hinds, Katrina MacIntyre, and Laura Levy, who organized my seminar Topsy Turvy Microfinance in Downtown Kingston on 26 October 2009. And I could not ask for a better panel: Damian King, Joseph Matalon, and Richard Troupe. I was also lucky to study at the University of the West Indies (UWI), where I grew as a researcher under Anthony Harriott, Chair of the Government Department. Many thanks to Norma Davis at the SALISES library. The good folks at STATIN and Angie Taylor of the PIOJ assisted me in finding data. Many others scholars at UWI were generous with their time, such as Claremont Kirton, David Tennant, Mark Figueroa, Errol Miller, Damien King, Michael Witter for the Jamaica case. I will miss my goat curry lunches with the late Barry Chevannes. In Guyana, Kadasi Ceres, Chair of the Government Department, motivated me in a difficult research environment. Scholars at the University of Guyana (UG)—such as Michael Scott, C.Y. Thomas, and Freddie Kissoon—were generous with their time. I also thank Niebert Paul for all her friendship while I was a visiting researcher at the International Development Studies program. UG’s Librarian Malcolm Williams was most helpful in tracking down obscure sources. I found the staff at the Statistics Bureau in Guyana and the Cartography department resourceful. I thank all the activists in Guyana—many of whom I cannot name because of the possibility I may put them at personal risk—who made me aware of the political environment. In Haiti, Louis Herns Marcelin of the University of Miami and INURED and Suzy Castor of CRESFED coached me well during my visits. My friends are all over the world and yet they manage to stay in touch and support me: Suzette Strong, Kemba Saibou, Ibe Ibeike Jonah, Donna Alleyne-Francis, Chandra Shoomoogum, Karla Bjordammen-Orr, Amina Ally, and Star Thurston. I miss the late Aniko Mesaros. At University of Toronto, this world was a much gentler place with colleagues like George Ojambo (coach), Teresa Kramarz, Jen Catallo, Celine Cooper, Adwoa Onuora, Charmaine Stanley, Sui-Mei Ooi, Danielle Pinto-Levy, Donna Outerbridge, Mark Purdon, and Pauline Beange (read a draft). Special thanks to very good friends Rebecca Sanders (Thai lunch pal), Khaled Ahmed (carrel neighbour) and Sarah Eaton (my big buddy) for always checking in on me. My best friend in the program was Agnes Mochama (read my conference papers). Thanks to Robarts’ librarian Elaine Genius. Several colleagues have been great to me: Radha Rajkotia, Ron Howard, Meagan Andrews, Wendy Koch, Quy Nguyen, Pat Morris, Evelyn Stark, Kim McKeon, Julie Redfern, Corey McCruden (read chapter 1), and Anita Campion. None of this work would have been possible without money for my study. I thank U.S. Fulbright and the U.S. State Department for funding my Jamaica field work (2008– 2009). Special thanks to the IIE’s Cara Wollinsky; UWI’s administration’s Camille Bell- Hutchinson; and the U.S. Embassy in Jamaica’s Bernadette Hutchinson, the late Angella Harvey and my Fulbright colleagues Lynn Washington, Chello Rogers, and Reena Goldthree. Much gratitude to IDB’s Claudia Stevenson, Carina Cockburn, Jempsy Fils-Aimé, Sergio vi Navagas, Mark Wenner, and Navita Aganu, as well as OPM’s development team, Jason Dennis and Dana-Marie Morris, with whom I shared some of my findings in a study.