Micro-credit loans, an innovative financing vehicle originally designed to lift millions of people in the emerging world out of poverty, have led to some unintended negative consequences in the overcrowded, impoverished South Asian nation of Bangladesh.
Untold thousands of rural Bangladeshis have been forced to sell their organs, particularly kidneys, in order to pay back debts they had incurred from micro-finance lenders. Such loans, which have been widely praised in the West, provide small amounts of collateral-free loans to poor people who would normally not quality for standard bank loans, particularly uneducated rural women, as a way for them to start modest businesses. In many cases, the program was a success, but for many other loan recipients, the project has turned into a nightmare.
According to a report in BBC, the practice of selling organs is nothing new to millions of people across South Asia – however, the emergence of micro-credit loans appears to have created a resurgence in this dreary trade (organ donation is technically illegal in Bangladesh unless the transaction involves a spouse or family member).
BBC followed the sad saga of a 33-year-old villager named Mohammad Akhtar Alam. Not only was Alam forced to sell his kidney because he could not repay a micro-loan, but inadequate post-operative care has left him partially paralyzed and blind in one eye. Alam’s troubles began several years ago when he realized that the money he made from driving a van was insufficient to make the weekly repayments to no less than eight non-governmental organizations which lent microcredit to him to start another business. Like many credit borrowers in the west, a desperate Alam took out loans from one NGO to pay off other existing loans owed to various other NGOs – creating a dangerous web of debt which no end in sight. “I owed about 100,000 taka ($1,293) and I could not return the money to the NGOs,” Alam said. “I used to try and sell furniture and things for cooking to try to repay the money."
Alam was then compelled to sell a kidney after hearing from an organ trafficker he could get 400,000 taka ($5,170). Shortly, thereafter, following an operation at a private hospital in Dhaka, Alam was missing one kidney and did not even receive the full amount of money promised by the trafficker. "I agreed to sell my kidney because I couldn't return the money to the NGOs. As we are poor and helpless, that is why we are bound to do this. I regret it," he added.
Bangladeshi-born professor Monir Moniruzzaman of the Department of Anthropology at Michigan State University in the U.S. told BBC that selling an organ is often the only avenue available to poor Bangladeshis trapped in enormous debts. "A lot of people's debt from NGOs has spiraled out of control. Because they cannot repay the loans, there is only one way for people to get out and that is to sell their kidney," he told BBC. "There is no safeguard as to where the organs are coming from and how safe they are, and on the other hand, the seller's health deteriorates after the operation. That has a huge impact on their earning capacity because they cannot go back to their old physically demanding jobs."
Moniruzzaman has published a study in the Medical Anthropology Quarterly, called "'Living Cadavers' in Bangladesh: Bioviolence in the Human Organ Bazaar," which chronicled the desperation of impoverished Bangladeshis who sold off organs (many of which went to Americans). "They experience numerous physical problems and went through severe psychological suffering," Moniruzzaman wrote, speaking of organ donors who underwent less-than-safe medical procedures. "We are living cadavers," one organ donor told Moniruzzaman. "By selling our kidneys, our bodies are lighter but our chests are heavier than ever."
Another rural Bangladeshi, Mehdi Hasan, told The Global Post, that he was promised 300,000 taka in – a handsome sum of money in his poor village – in exchange for 60 percent of his liver Hasan, a day-laborer, eventually got less than half the amount promised, but his physical weakness as a result of his operation has left him unable to work. “Plowing the land or digging the land is really tough with all this pain,” he said. “I feel like I’ll have to carry this pain throughout my life.”
Moniruzzaman put the blame on Bangladesh-based NGOs like BRAC and financial institutions like the Grameen Bank for pressuring and harassing loan recipients to take such drastic measures. These institutions charge interest rates of up to 27 percent, worsening the crisis for borrowers weighed down by multiple loans and irregular incomes.
As such, micro-finance has become a highly contentious issue. The World Bank’s Agriculture and Rural Development Team claimed that the program has succeeded in spite of the debt accumulated, while the Microcredit Summit Campaign has claimed that 10 million people in Bangladesh escaped poverty between 1990 and 2008 due to microcredit loans. Indeed, in 2006 Bangladeshi banker and economist Muhammad Yunus (who developed the ideas of microcredit and microfinance) received a Nobel Peace Prize for his efforts. On the whole, at least 34 million people in Bangladesh have taken out some form of microcredit since 1997, according to Microcredit Summit Campaign. But the majority of them (26 million) live below the poverty line. The microfinance business reportedly accounts for 3 percent of the country’s GDP.
“Micro credit presents a curious dilemma for Bangladesh,” wrote Sabir Mustafa of BBC Bengali. “It has been one of the most successful tools for social development, but also with a great deal of controversy attached to it.” In theory, Mustafa explained, these microfinance loans are expected to “provide rural families with some seed capital to start and sustain small businesses, thus giving them money to spend which would help stimulate the rural economy. But critics say, in reality the small amounts of loans are not always used to invest in income-generating activities. They are often too small to create any serious capital base, and can force borrowers into a cycle of debt. They borrow more as soon as they have paid off one loan, and often they borrow from a second or third lender to pay off earlier loans.”
Microfinance may also be exacerbating another problem in Bangladesh – domestic violence against women. In a letter to Britain’s Guardian newspaper, Saif Mohammad Moinul Islam, a private sector engagement co-coordinator for Care Bangladesh, an anti-poverty organization, wrote that since poor women are the typically recipient of micro-credit loans, they become vulnerable to resentment and violence from male relatives. “Microcredit is a big cause for domestic violence against women in Bangladesh,” Islam wrote. “Money in the hands of women may not necessarily translate into empowerment.”
Palash has worked as a business journalist for 21 years in New York.