By Peter van Dijk, BSD City, Indonesia

Microfinance Focus, March 30, 2011: The popular uprisings that have engulfed North Africa and the Middle East started by a desperate individual act in Tunisia. Mr. Muhammad Bouazizi was a young man with no alternative in life then to sell fruit from his cart. As he did not have a license to do that the police upend his cart and spit in his face. Out of desperation he burned himself to death.

Tunisia was ruled long by the dictator Ben Ali who many called “enlightened”. Many foreigners, in the region and further away, supported him. They also copied his Presidential Microcredit Fund. The supporters copied whilst not being interested in the facts of continuing very high unemployment, especially for young people, and widespread corruption, especially by the presidential family.

And there lies the sadness of Microfinance still being dominated by Microcredit as an act that on its own will never change poverty or in other ways help transform a country into an inclusive social democracy in a sustainable manner. Poverty and dictatorship (by one person or by a minority of wealthy people) are complex challenges to overcome but it is easy to understand that credits from the wealthy to the poor are a clever way to maintain the dictator(s) in power. Maybe even Mr. Bouazizi was once happy when receiving a microloan and maybe a picture of his smiling face hangs on the walls of a micro-credit supporter in New York, Washington or Paris.

Only when citizens agree that no one should be in absolute poverty (no sustained access to food, water, shelter, health services, security, education, transport etc.) and that they develop a culture in which being too wealthy is embarrassing (in modern terms, where the Gini Coefficient is too high), is there a chance for building inclusive societies.

The teachings of another Tunisian come to mind, those of the historian and maybe world’s first economist Ibn Khaldun.  In 1377 AC he finished his book Al-Muqadimma. In this book Mr. Khaldun combines his knowledge about the history of many (mainly Mediterranean) countries and peoples with his understanding of agriculture and economic development. With their Work, Ibn Khaldun explains in Chapter V “Al-Ma-ash” (how to make subsistence: about profit and jobs), people produce Profit (“Kash” or “Makasih” in Arabic), which provides for their livelihoods (subsistence, “Rizq”). Money functions as a valuation of the results of work but needs to add that the quantity of what that money can purchase is also influenced by market fluctuations. He then continues from this firm basis that stability in a society is essential to allow such specialization and intermediation; in which everyone can earn for his (and her) livelihood. Prudent use of profits include investing in education and culture, which will develop and enhance further sustained inclusive growth. On the other end, the wise Tunisian explains that if work disappears, profit will also and, subsequently, people will leave such societies.

Ibn Khaldun succinctly and strongly argues that money is a matter, a good, (minerals as he calls it, “gold and silver”) that only functions in real inter-play in a society where the economy produces the means to live and prosper. People who are better educated and civilized, meaning able to read well and appreciate other art forms, will also work for the sustenance of such inclusive society. Only the social revolutions in Europe (18th and 19th century) so far demonstrated that the dictatorship of wealth and the objective of profit on its own is not sustainable for a society. I hope that the popular revolt of Arabic peoples will be understood as a clear protest against the paradigm of “Getting rich quick or die trying” that the USA promotes and that drives the growth in the BRIC countries (Brazil, Russia, India, China) and that also seems to inspire the wealthy in Asia, Africa and Latin America and that buys off the poor with motor bikes and mobile telephones.

I see it as my task to advocate that the true potential of Microfinance lies in its power to provide all citizens with legally enforceable access and use of basic financial services (I am thus certainly not defending that “Credit is a Human Right”). With other technical support services to train people in jobs, to create and sustain businesses and to support macro-economic development (meaning also that Microcredit do obviously not as such support education, business or macro-economic development), an inclusive financial sector will support poverty eradication. And, finally, as I referred to Khaldun’s words, politicians, academics and artists are needed to bring changes in paradigms on economic growth, enterprise development, education and on Microfinance.