Crisis in Nicaraguan Microfinance: Between the Scylla of Business for Profit and the Charybdis of Clientelism

From the being a poster child of microfinance development, Nicaragua became one of the nightmares for the industry. The negative influence on the countries' repayment culture of the Non-Payment Movement, ambiguously related to the new Sandinista government, is typically blamed for the crisis. A closer analysis, however, reveals that features of the mainstream microfinance policies in Nicaragua are possibly more to blame for the crisis than the political turmoil, which opportunistically seems to have taken advantage of the underlying problems. Overfunding of regulated MFI-banks and promotion of excessive competition, in particular of these banks with the non-regulated MFIs, led to reckless lending and created over-indebtedness. Gradual professionalization and conventionalization also led to the erosion of social embeddedness –once at the core of the Microfinance revolution- and left MFI weak in the face of political challenges. And the obsession with profitability and 'finance only' implied higher interest rates and left many poorer clients with little or negative impact, lending credibility to the accusation of usury. While the Non-Payment Movement could be understood as a Polanyian countermovement to the problems created by market development, its ultimate political objectives however seem to offer only dubious perspectives for future inclusive economic development.

Political arenas around access to land: a diagnosis of property rights practices in the Nicaraguan Interior

Land property issues remain firmly on the agenda in Nicaragua. Revolutionary land reform, followed by additional land redistribution and overnight liberalisation of land markets, are assumed to have caused severe insecurity of land tenure. Dominant received wisdom is that only significant state intervention through full-scale legal titling cum registration can put an end to the ongoing struggles that cause insecurity as well as injustices against poor agrarian reform beneficiaries. This view, inspired by economic and legal engineering perspectives on land rights, has however successfully been challenged in other development contexts, particularly Africa, where a legal pluralist view turned out to be more adequate to describe the complex social processes that define land rights. This view argues for a need to understand the detailed land right practices where legitimacy (and thus security) of land access and tenure is socially constructed by calling upon state as well as non-state sources of land rights. Policy conclusions do not call upon state intervention to remedy allegedly chaotic and unjust informal land practices, but rather calls for an institutional reorganisation that contributes to a greater synergy between different sources of rights, thereby reducing insecurities and injustices due to prevailing incompatibilities. Inspired by the legal pluralism view, our paper provides an attempt at interpretation of the real world land rights practices in an agricultural frontier region in Nicaragua.

Poverty, institutions and interventions: a framework for an institutional analysis of poverty and local anti-poverty interventions

At a time when technological innovations are making our world increasingly smaller and our production systems are becoming increasingly more efficient, the benefits of economic growth and development as a whole have not been able to reach all of society. Indeed, many poor countries, characterised by their disadvantageous position in the global society and continuously plagued by weak governments, internal strife and natural disasters have missed out on many of the benefits of growth and development. Within countries that do gain advantage from the various developments of globalisation, significant groups continue to be excluded from the benefits of this new-found prosperity. It is quite significant that a generalised conclusion such as this is still a reality at the turn of the century, despite decades of national and international effort to promote development and combat poverty.

Institutional Embeddedness of Local Willingness to Pay for Environmental Services: Evidence From Matiguás, Nicaragua

The concept of Payments for Environmental Services (PES) has gained increasing popularity in the conservation literature as it offers the potential to reconcile opposing social and ecological objectives by paying land owners for the positive environmental externalities they generate on their land. Based on extensive fieldwork in Matiguás, Nicaragua, this paper aims to complement the literature on locally-financed PES schemes in agricultural watersheds. Using both qualitative and quantitative research approaches, it inquires into the under-researched demand-side potential by assessing local willingness to pay (WTP) for water and watershed services in an upstream-downstream setting. Our results show a significant WTP for improved water services and a clear local consciousness about upstream-downstream interdependencies, suggesting potential for a ‘Coasean’ water-related PES scheme. Contrary to expectations, the feasibility of such a locally-financed PES system is however undermined by prevailing local perceptions of agricultural externalities and entitlements, questioning the fairness of such payments. Also low levels of mutual trust seem to undermine the credibility of the PES framework. The viability and acceptance of locally-financed PES mechanisms will thus also depend on the prior social production of cognitive synergies and improved collective action.Payments for Environmental Services; Watershed; Willingness to pay; Fairness; Externalities; Institutions

The Potential and Limitations of Markets and Payments for Ecosystem Services in Agricultural Landscape Restoration Critical Reflections Inspired by an Assessment of the RISEMP Program in Matiguás-Río Blanco, Nicaragua

During the last two decades the concept of Payments for Ecosystem Services (PES) has gained ever-increasing attention among a wide public of scholars as well as conservation and development practitioners. The main premises of this innovative conservation approach are appealing: private landowners, which in normal circumstances -i.e. in absence of any direct incentives- are poorly or not motivated to protect nature on their land, will do so if they receive direct payments from environmental service (ES) buyers, which at least cover part of the landowners’ opportunity costs of developing the land. In this paper, however, we warn for an overenthusiastic adoption of the PES approach. Based on an extensive literature review and a field study of the Nicaraguan component of the ‘Regional Integrated Silvopastoral Approaches to Ecosystem Management Project’ (RISEMP), one of the main GEF-World Bank funded pioneering pilot projects of PES in Latin America, we argue that the concept still has to deal with several theoretical and practical lacunae. We argue that the concept of PES rests on loose foundations, mainly because of (i) a simplistic view on ES as discrete, quantifiable and marketable entities; (ii) an abstraction of the required landscape approach to conservation and the corresponding collective action precondition; (iii) a simplistic and arbitrary one-sided approach to the externality problem with important implications on the desirability of different policy instruments; (iv) a simplistic perception of socio-institutional reality and negligence of institutional effects on human behaviour and environmental morale; (v) the problematic character of transaction costs and a misleading justification of the approach based on the efficiency criterion; and (vi) a potential continuation of regressive financing of global commons with important fairness and sustainability implications. As such, we argue that the concept of PES could distract the attention for environmental problems away from the more complex underlying causes, which generally require broader locally embedded political action for their solution and not merely market creation. We think more debate about the desirability and conceptual clarity of the PES conservation tool is necessary.

The new territorial paradigm of rural development: theoretical foundations from systems and institutional theories

In recent decades, a new paradigm for public policies in rural areas has made headway. This new approach aims to support economic and institutional transformation processes designed and implemented by local rural actors themselves. It argues for the building of local partnerships as atoolfor the governance of rural change. This paper reflects about the governance of development and change in rural areas. It builds a conceptual framework from two complementary theoretical sources: (a) complexity theory views on the governance of resilience and (b) institutional theories. Given the impossibility to predict and plan social change in a top-down fashion, it stresses that change requires that actors of a social system construct a sufficiently shared vision of a desired future state and manage to act together in order to ‘navigate’ the pathway towards that aim. Capacity for territorial governance is also critical in rural governance of resilience. System resilience refers to the capacity of actors to adjust the desired pathway whenever external shocks threaten its viability, or in certain cases, impose the need for a more fundamental change in the prevailing system and the desired pathways of change. We argue that these theoretical inspirations provide a useful substantiated underpinning for the territorial paradigm of rural development and allow us to show why and how the local partnership has the potential to improve the governance and the resilience of rural territories. We also develop a number of further reflections about the challenges of such partnerships, in particular the difficulties emerging from heterogeneous interest and power of local actors.

Organic farming and fair trade in developing country as a new agribusiness paradigm: Evidence from Mali

Organic farming and fair trade certified chains have emerged in West-Africa since the 1990s in answer to new alternative markets in developed countries. These chains, involving actors from North and South, are seen as an opportunity to sustainably valorise the small peasants agriculture in Africa and include the smallholders in global markets. Certification and labelling systems accompany these chains in developed countries. The aim of this article is to analyze the challenges for smallholders of this new North- South trade regime established by certificates and labels. This article uses the theory of Global Value Chains as theoretical framework. The empirical framework consists of four cases (organic sesame; organic- fair sesame; fair cotton and organicfair cotton) in Mali and in Belgium and France. It focuses on data that are gathered during our inquiry based on a questionnaire with the chains stakeholders in the south and in the north. The chains upstream inquiry was conducted in Mali with individuals producers, producers organizations, exporters; and the downstream inquiry was conducted in Belgium and France with European importers, distributors and certifications bodies. The results show that the new North- South regime established by organic and fair certificates and labels has a potential impact on the negotiation power and value distribution between chain participants. Lack of adequate local institutions in Southern countries, and increasing complexity of the “cahiers de charges” imposed by the North however may cause exclusion of many smallholders in these new North-South trade networks.organic farming, Fair Trade, smallholders, North-South trade, Certificates, Labels, Global markets, Value chains, certification scheme, local institution, Agribusiness, International Relations/Trade,

The effect of microcredit on women's control over household spending in developing countries: a systematic review

Background: Over the past three decades, microfinance activities have spread across the globe, reaching tens of millions of poor households with tailored financial services. Microfinance can best be described as a field of intervention rather than a particular instrument. Initially, microfinance usually meant microcredit for working capital and very small investments, but increasingly it has been broadened to include savings/deposits, a limited range of micro-insurance and payment services (including micro-leasing) as well as a somewhat broader range of credit products for more substantial investments. In this study we focused on microcredit activities, constituting the bulk of microfinance activities across the globe. Microcredit activities have affected the lives of clients and others in multiple ways. The most frequently reported types of effects of credit at individual, enterprise and household level are the following: income, expenditure smoothing, and poverty alleviation effects; business growth and employment effects; schooling effects; and effects in terms of women's empowerment. Despite the diversity in microcredit schemes, many share two characteristics: they target poor women and often rely on some type of group-based lending. Women's empowerment in relation to microcredit has been studied extensively within the context of this type of microcredit scheme. Most of these studies have been carried out in the context of microcredit group schemes in South Asia. It has been argued that access to microcredit can foster changes in individual attitudes of women (e.g. increased self-reliance), power relations within the household (e.g. control over resources) and social status. An important dimension of empowerment concerns women's control over household spending. The main assumption is that by providing credit to poor women, their direct control over expenditures within the household increases, with subsequent implications for the status of women and the well-being of women and other household members. Women's control over household spending is a frequently recurring aspect analyzed within the context of microcredit interventions, which allows us to study whether microcredit targeted at women affects women's control over household spending decisions and the circumstances in which this occurs. Despite the central and recurrent role across studies of this aspect of women's empowerment in relation to microcredit activities, there has been no previous review on this topic. The growing importance of microcredit has resulted in a vast number of research and evaluation studies, including impact studies. Consequently, the microfinance literature harbors a substantial number of synthesis studies which discuss a set of microcredit interventions and aim to generate overall conclusions on their effects. However, most of these studies face limitations in terms of depth of empirical assessment and the extent to which the identified effects can be attributed to microcredit. Moreover, methodological principles regarding comprehensive searches and principles of selection, coding, extraction and aggregation are often lacking in review studies. Partial exceptions are three recent systematic reviews which all differ in scope from the present one (Stewart et al., 2010; Duvendack et al. 2011; Stewart et al., 2012). The reviews respectively focus on microfinance (credit and savings) in Sub-Sahara Africa, microcredit worldwide, and microfinance worldwide (credit, saving and leasing). Overall, these reviews suggest that the effects of microcredit on women's empowerment are at best mixed. In part this can be explained by the heterogeneity in microcredit interventions, contexts and target groups. However, the existing reviews did not use statistical meta-analysis to synthesise evidence of effects, nor context-mechanism-outcome synthesis to understand the variation in effects. Objectives: The main objective of this study was to provide a systematic review of the evidence on the effects of microcredit on women's control over household spending in developing countries. More specifically, we aimed to answer two related research questions: 1) what does the impact evaluative evidence say about the causal relationship between microcredit and specific dimensions of women's empowerment (women'ss control over household spending); and 2) what are the mechanisms which mediate this relationship. We prioritise depth of analysis over breadth, thus the scope of this review is narrower than previous systematic reviews on microfinance (Stewart et al., 2010; Duvendack et al. 2011; Stewart et al., 2012). We focused on specific aspects of women's empowerment which allowed us to combine statistical meta-analysis and realist (context-mechanism-outcome) synthesis. Criteria for considering studies for this review: We included studies that analyzed the effects of microcredit schemes targeting poor women in low and middle income countries, as defined by the World Bank. Studies that did not include analysis on microcredit and the effect on one or more dimensions (specified in main body of the report) of women's control over household expenditures were excluded. Studies which gave evidence of addressing the attribution problem either through randomised design, quasi-experimental matching, or regression analysis, were included. In practice, women's control over household spending (as a key dimension of empowerment) is influenced by many different factors. By focusing on those studies which explicitly addressed the challenge of separating the effect of microcredit from other influencing factors, we developed what we consider to be the most credible evidence base for drawing conclusions about the effects of microcredit on women's control over household expenditures in different contexts. SEARCH STRATEGY We conducted a comprehensive search covering all relevant academic databases, internet search engines and web sites with published and unpublished research, and also carried out extensive manual searches of books and additional journals not included in electronic data bases (searches were concluded on December 31, 2011). We used back-referencing from recent studies as well as citation-tracking to identify additional relevant studies. Finally, authors of studies which we were unable to retrieve were contacted. In addition, we contacted experts on microcredit and women's empowerment for additional references which we might have missed. Search strategies in databases and journals were adapted for each source. Where possible we used the existing keyword indices of particular databases. In addition, we applied our own list of combinations of keywords covering all relevant terms relating to the independent variable (i.e. credit and its variations) and the dependent variable (i.e. dimensions of women's control over household spending, empowerment). Data collection and analysis: From the different searches we identified an initial number of 310 papers that were selected for full text examination. Eventually, 29 papers were retained for further analysis, corresponding to 25 unique studies. These 25 independent findings were included in the synthesis. However, based on a systematic risk of bias assessment we found that more than half of the included studies had high threats to internal validity. Moreover, only about half of the studies show a clear and coherent link between a theoretical framework on microcredit and women's control over household spending and empirical data analysis. It should be noted that reviewing and synthesizing quantitative results from studies is only one side of the coin. The other side is to understand what makes them work, or what prevents them from working. Consequently, we conducted a qualitative synthesis of the included studies, which focused on identifying the mechanisms which underlie the causal relationship between microcredit and women's control over household spending. RESULTS The results of the meta-analysis indicated that the effect sizes from experimental studies examining effects of microcredit on women's control over household spending are not statistically significantly different from zero. The effects from quasi-experimental studies are statistically insignificant overall, and at best of small magnitude for those studies assessed of being of high risk of bias. We conclude that there is no consistent evidence for an effect of microcredit on women's control over household spending. In the qualitative analysis, using Coleman's (1986, 1990) typology of mechanisms, we identified five different situational mechanisms and eight different action-formation mechanisms. Due to the combination of substantial heterogeneity in contexts (e.g. existing gender relations) and interventions (e.g. microcredit versus microcredit and additional services), and the lack of information in the studies on this heterogeneity, it was not possible to go beyond the identification of mechanisms, in terms of generating empirically tested articulated theories of change which are representative beyond a specific study context. Authors' conclusions: In line with three recent other reviews on microfinance (Stewart et al., 2010; Duvendack et al., 2011; Stewart et al. 2012) we found that the microcredit evidence base is extensive, yet most studies are weak methodologically. From those studies deemed comparable and of minimum acceptable quality, we concluded that overall there is no evidence for an effect of microcredit on women's control over household spending. Women's control over household resources constitutes an important intermediary dimension in processes of women's empowerment. Given the overall lack of evidence for an effect of microcredit on women's control over household resources it is therefore very unlikely that, overall, microcredit has a meaningful and substantial impact on empowerment processes in a broader sense. While impacts on empowerment may appear to have occurred in particular studies, the high risk of bias of studies providing positive assessments suggests that such findings are of limited validity. Our conclusions on the effects of microcredit on empowerment are also in line with previous systematic reviews by Duvendack et al. (2011) and Stewart (et al. 2010) who report to a limited extent on empowerment effects. Consequently, there appears to be a gap between the often optimistic societal belief in the capacity of microcredit to ameliorate the position of women in decision-making processes within the household on the one hand, and the empirical evidence base on the other hand. However, our review markedly differs from previous reviews in two regards. First, we specifically focused on microcredit and women's empowerment captured through women's control over household expenditures. Second, as a result of this narrower focus, we were able to conduct statistical meta-analysis and extract behavioral mechanisms which can help to explain why and how microcredit can make a difference. The advantage of our approach was that the identified mechanisms all stem from studies which show evidence of addressing the attribution problem. Consequently, we can be quite confident of the insights that they provided on the effects of microcredit on women's control over household spending for particular populations of microcredit female clients and their families. Those studies that showed evidence of addressing the attribution problem were relatively weak on underlying theory. Moreover, they often lacked essential information such as the nature of the intervention and how it related to empowerment (e.g. how solidarity groups affect empowerment processes) or the slowly evolving gender relations in different contexts (e.g. the evolution of societal norms and the relationship with power relations in the household). A next logical step would be to undertake a systematic review of qualitative studies which often provide rich and context-specific information on microcredit and women's decision-making power in the household. Such a review should ideally build on the mechanisms identified in the present review and would bring us closer to uncovering credible theories of microcredit and the circumstances in which it may change women's decision-making power

Household-microenterprise – the missing link in gendered value chain analysis: lessons from an analysis of dairy chains in Nicaragua

In Nicaragua, gender analysis in value chains is usually restricted to a study of men and women as producers or workers within the chain itself. This overlooks many relevant dimensions of gender struggles. We therefore propose a gender analysis in value chains that pays attention to the interrelation of the value chain with intra-household dynamics in microenterprises and the broader community. We apply our approach to two dairy chains, not to compare which is better for women producers but to show the gender complexity in both that needs to be considered in value chain analyses. Based on case studies, we identify gender differentiation overlapping with conflictual-cooperative relations between men and women within the sphere of economic and family relations in the two dairy chains