Banks Making Big Profits From Tiny Loans

According to an article by the New York Times, micro-loaning, the widely acclaimed process of alleviating poverty cheaply, might be largely ineffective. Ironically, the practice's popularity might be the result of its downfall. An increasing number of large banks and financial institutions have been attracted to the lucrative profits accompanying even the smallest loans, and their presence has hurt the chances of an individual escaping the cycle of poverty. Their dominance has led to skyrocketing interest rates, with some institutions charging 100 percent or more. The practice of profiting off of the misfortunes of those in poverty has received considerable scorn from the people who were initially the biggest proponents of micro-loaning.

"We created microcredit to fight the loan sharks; we didn’t create microcredit to encourage new loan sharks," Muhammad Yunus, the economist who pioneered mic
ro-loaning, said. "Microcredit should be seen as an opportunity to help people get out of poverty in a business way, but not as an opportunity to make money out of poor people."

The looming questions about the practice of micro-loaning are how much interest and profit is acceptable, and what constitutes exploitation. For countries such as Mexico and Nigeria, who are largely impoverished, the answers are particularly important. Though interest rates vary globally, the largest sense of worry concerns these countries, as the demand for small loans by a large population cannot be met by existing lenders. In Nigeria, one lender in particular has raised questions and caused considerable concern-- Lift Above Poverty Organization. LAPO is considered to be the premier micro-finance institution in Nigeria, and engages in the contentious practice of "forced savings". This practice allows the lender to keep a portion of a loan, but the borrower is still required to pay interest for a full loan. Critics of this exercise claim that it is exploitative, as the borrower does not receive the full amount upfront. The appearance of the "forced savings" practice is further degraded by the fact that it is technically illegal. Yet, countless numbers of poor individuals fall prey to its claims of brighter futures that fail to emerge.

The decline of the effectiveness of micro-loaning has dire consequences for Nigeria as well as the world as a whole. The greed of a selective group of financial institutions has the ability to perpetuate the poverty of an entire class of Nigerians. This problem is also a common policy issue, as the welfare of the nation and the degree of poverty is reliant upon the micro-lenders. There is also significant lack of transparency in these institutions, which could possibly result in corruption and mishandling of loans. If the loans continue to be ineffective at elevating individuals from poverty, it is entirely possible that the situation might accentuate the economic disparity in Nigeria.

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#7- Disagreement Arises over Questioning Sharia Law

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A March 25th article on CNN reveals the decision by a Northern Nigerian Islamic court to ban a discussion of amputating criminals as punishments for crimes (usually in the realm of stealing) on the Internet by the Civil Rights Congress of Nigeria. The court decision comes after the Congress created a Facebook group dedicated to talking about Mallam Bello Jangebe, whose right hand was amputated after he was found guilty of stealing a cow in 2000 as well as the use of amputations as punishment in general. However, many people, including the pro-Sharia law group who challenged the Congress, found the Facebook page insulting. The group said "debate on social sites would mock the strict Islamic law as negative issues will be discussed." The pro-Sharia group's concerns are made valid at the end of the article as the lone comment on the Facebook page says "Islam is trying to shut down free speech worldwide." The president of the Congress, Shehu Sani, doesn't believe any harm was meant and plans to challenge the court's decision to ban the page. As this struggle continues, it will be interesting to see how much of a role religion will play in determining public policy and politics in Nigeria.

This article opens up more problems related to the influence of religion in Nigeria. As mentioned in the article, an Islamic court made the decision to ban the Facebook page. Because the case dealt with Sharia law, which is law governed by Islamic beliefs, having a religious court may have been the reason why the pro-Sharia group was favored. This also ties back to the most important aspect of a nation, legitimacy. If religion and state are not separated, at least in the Muslim-dominated north where this case occurred, the legitimacy of the country is compromised. This is especially true in Nigeria where two religions, Islam and Christianity, equally dominate. In addition, the fact that the courts did not want its citizens questioning its methods of punishing its criminals goes back to transparency. Obviously the Nigerian government does not want its people to think otherwise about their criminal system. The use of the Internet in this case draws parallels to two of the other countries in our studies- Iran and China. Nigerians are turning to the Internet to question their government like in Iran and the Internet is now being throughly searched as in China. Denying citizens the right to dissent is a basic human right that is more often than not an essential part to building a democracy. This, along with the dominance of religion in political life, highlights a few of the many changes Nigeria needs to tackle on the road to improving the country.

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