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RFN15 Credit is Not a Right

RFN15 Credit is Not a Right

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Published by John Gershman

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Categories:Types, Research
Published by: John Gershman on Oct 05, 2011
Copyright:Attribution Non-commercial


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 Credit Is Not a Right
We have beneted from conversations with Richard Beardsworth andMarek Hudon, and with scholars convened in Birmingham by Tom Sorelland Luis Cabrera. Morduch thanks the Gates Foundation for fundingthrough the Financial Access Initiative. The views here are not necessarilythose of funders or other scholars. Address: NYU Wagner Graduate Schoolof Public Service. 295 Lafayette Street, New York, NY 10012. USA.
Robert F. Wagner  
Graduate School of Public Service
The Financial Access Initiative is a research centerbased at New York University, ocused on fndinganswers to how fnancial sectors can better meetthe needs o poor households.
New York University
New York University
Credit Is Not a Right
“Every poor person must be allowed a fair chanceto improve his/her economic condition. This canbe easily done by ensuring his/her right to credit.If the existing nancial institutions fail to ensurethat right, it is the obligation of the state and theworld community to help nd alternative nancialinstitutions which will guarantee this fundamentalhuman right. This is basic for the economicemancipation of the poor, in general, and poorwomen, in particular.
—Muhammad Yunus
Muhammad Yunus, the winner o the 2006 Nobel Peace Prize, is the mostvisible leader o a global movement to provide microcredit to world’s poor.Microcredit reers to small loans, usually made to poor women with theaim o supporting their businesses. Yunus urges that we add such credit tothe list o human rights.The notion o “credit as a human right” ows rom the argument that i weare concerned with universal access to ood, shelter, and health, then wemust be committed to providing access to the tools that are most likely todeliver those basic elements o lie. For the sake o argument (and there is,o course, argument), we will ollow Article 25(1) o the Universal Declara-tion o Human Rights, adopted by the United Nations in December 1948,and begin with the idea that access to ood, shelter, and health constitutebasic human rights. Yunus can then be interpreted as saying: access tocredit is so powerul in reducing poverty, that access to credit should be aright itsel.The frst part o the chapter sets the context by describing the “rightsrevolution” and the growing push to depict key anti-poverty interventionsas rights. Here, microcredit joins a list o other possible interventions thatmay help poor amilies raise their incomes and secure health, ood, andshelter. Other strategies on the list include giving access to public hand-outs, acilitating transers between amily members, being permitted
The notion of “credit asa human right” owsfrom the argument thatif we are concerned withuniversal access to food,shelter, and health, thenwe must be committedto providing access to thetools that are most likelyto deliver those basicelements of life.
Credit Is Not a Right
unettered migration, reducing ination, and promoting GDP growth thatgenerates better jobs. Elevating microcredit to the status o a right risksdiluting the urgency o attention given to other interventions. We take seri-ously that such “negative spillovers” rom “rights creep” should be part othe conversation.The second part o the chapter shows evidence that access to credit maybe powerul or some people some o the time, but it is not powerul oreveryone all o the time, and in some cases it can do damage. When viewedin the light o independent empirical analysis, Yunus’s claim loses its urgen-cy. Providing microcredit may be an activity worth pursuing, but its claim tobeing a
human right
is substantially diminished by the empirical results.The third part o the chapter discusses who has the responsibility to ensurerights. Muhammad Yunus takes a critical view o government, and micro-credit is oten depicted as a response to government ailure. We ask: I thegovernment is badly–placed to ulfll rights, does it make sense to createrights in the frst place? I accountability o non-state actors cannot beestablished, is it useul to adopt the rights ramework?The ourth part o the chapter turns instead to the right to non-discrimi-nation in credit access. Here, we see a stronger claim to attention. We puta ocus on combating the lack o access to credit due to discriminationalong gender, economic, ethnic, religious, and social lines.We suggest that Philip Alston’s point about a rights-based approach to de-velopment applies as well to the proposal to regard credit as a human right:Despite the importance o the many versions o a human rightsbased approach to development suggested by a variety o actors,too many o them have tended to gloss over the complexities, toidealize the characteristics o the human rights mechanisms, tobe excessively optimistic as to the extent o undamental changesthat may realistically be expected, and to be poorly attuned tothe need to set operational priorities.
 While we are academics, the questions we raise emerge rom practicalconcerns. We ask whether a rights-based approach to microcredit will inact be eective in making quality, aordable credit more available to pooramilies. More importantly, we question whether it is a constructive stepin terms o the broader goal o global poverty reduction.
We ask whether arights-based approach tomicrocredit will in fact beeective in makingquality, aordable creditmore available to poorfamilies. More importantly,we question whether it is aconstructive step in termsof the broader goal ofglobal poverty reduction.
Human Rights Quarterly

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