Trade-offs, rights and responsibilities in the business of microcredit: A case study from South Africa

This PhD thesis examines the everyday politics of microcredit by drawing on a case study from Limpopo Province, South Africa. Special attention is focused on how the distribution of rights and responsibilities, together with the multifaceted struggles over authority and power, mediate the different actors social agency and opportunities to benefit from the microcredit programmes. The study rests on thematic interviews and participant observation carried out in four villages and semi-urban settlements in May-July 2007.

Drawing on the theoretical ideas of Pierre Bourdieu, and considering microcredit as an arena of struggle, the thesis undertakes a critical analysis of the interpretations of social capital and the associated solidarity and reciprocity based on the conceptualisations of Robert Putnam. In the spirit of the concept of governmentality by Michel Foucault, the thesis also illustrates processes and practices of governance, and the creation of a set of rules and procedures that can govern and discipline microcredit clients to achieve selected goals.

The results of this study illustrate how social relations between the members of the microcredit groups were based on ambiguous forms of co-operation and conflict around diverse interests and multifaceted power relations. There was a tension between co-operation and competition and between solidarity and the power differences in the women s everyday businesses and microcredit groups. While social networks were crucial for the establishment and maintenance of business operations, the structural conditions of poverty and marginalisation placed the women in competition with each other over limited resources and easily saturated markets. The group loan system intensified the anxieties about solidarity lending and the tensions between group members. The study explores the everyday politics, contradictions and tensions at several levels, including the clients, organisation and the wider economy and society.

High repayment rates were secured through strict rules and monitoring procedures; public reprimand in the repayment meetings; extending repayment liabilities to husbands or other relatives; and refusing to let anyone leave the repayment meetings until the money was paid. Although according to the microcredit rhetoric group members take joint liability for loan repayment, in reality the centre, community and kin operate as collateral for microloans. In this kind of system, joint security is a fact only at the institutional level.

In the everyday politics of the clients, business affairs and the logic of decision-making were tightly intertwined with financial, social and cultural norms and political power relations. The most successful clients were those who were able to utilise various social networks and regular household incomes, as well as take advantage of their social status to create the market.

In terms of the disadvantageous ways in which people are incorporated into economic and social life, the study highlights the contradiction between the idea of a microcredit organisation operating as a linkage between formal and informal economies and borrowers considered as agents of their own empowerment, and the structural obstacles the poor encounter under systematic political inequality. The study calls more attention to the everyday struggles of these poor women caused by the distorting microcredit rules and mechanisms, the weak pillars of the society, and the vulnerability and disadvantageous power relations within which people are caught.