Co-optation, Cooperation or Competition? Microfinance and the new left in Bolivia, Ecuador and Nicaragua

The past decade has been marked by the resurgence of leftist political movements across Latin America. The rise of the ‘new left’ masks the ambivalent relationships these movements have with broader society, and their struggle to find an alternative to the prevailing development model. Filling the void left by failed public banks, the microfinance sector has grown significantly across the continent in an increasingly commercial form. Analysis of Nicaragua, Ecuador and Bolivia reveals that their new governments share a common distrust of microfinance. Yet, in the absence of viable alternatives for financial service provision, governments and microfinance stakeholders are forced to coexist. The environment in which they do so varies greatly, depending on local political and institutional factors. Some common trends can nevertheless be discerned. Paradoxically, the sector seems to be polarised into two competing approaches which reinforce the most commercially oriented institutions on the one hand, and the most subsidised on the other, gradually eliminating the economically viable microfinance institutions which have tried to strike a balance between social objectives and the market.