Wither participatory banking?: experiences with village banks in South Africa

Microfinance is widely advocated as a powerful tool to reduce poverty and improve social inclusion. How best to achieve these outcomes has been the focus of considerable debate, between supporters of minimalist finance-only and services-plus approaches, and between the merits of client-oriented models and member ownership. Many approaches to microfinance note the importance of participation within peer groups, the potential for empowerment and the support given by civil society organizations. Few studies, however, have analysed the nature and extent of participation, or whether this participation can be understood as democratic. In this paper, we examine four communities in South Africa that belong to a Village Bank, an organization that promotes member ownership and control. The paper examines members' experiences of participation and, specifically, organizational transparency and conflict resolution. We argue that microfinance holds considerable normative and symbolic appeal for members, but that participation in practice has been limited.