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  JOURNAL OF WORLD-SYSTEMS RESEARCH 
 

 

 

Banking is for Others:  

Contradictions of Microfinance in the Ghanaian Market1 

 
Irene Pang 

Brown University   

irene.pang@brown.edu 

 

                                                                                                                                                             
1 I am immensely grateful to Joel Andreas for his mentorship and support in this study. My thanks also to Akosua 

Darkwah for her expertise and practical assistance, and to Josh Pacewicz, Rachel Sullivan Robinson, Ghazal Zulfiqar, 

and three anonymous reviewers for comments on the manuscript. I am indebted to Nitsan Chorev and José Itzigsohn 

for their extreme generosity, encouragement, and advice. This study was funded by the Johns Hopkins University 

Institute for Global Studies Summer Travel Fellowship, the Johns Hopkins University Provost Undergraduate 

Research Award, and the William F. Clinger Award. 

ISSN: 1076-156X   |   Vol. 22   Issue 2 Pages 510-541   |                                              

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Vol. 1 |  DOI 10.5195/JWSR.1 

Abstract 

Recent literature on microfinance has observed that commercial microfinance programs that achieve financial 

sustainability largely fail to reach the poor (Hulme 2000; Mayoux 2000; Cull, Demirgüç-Kunt, and Morduch 2007). 

Most studies rely on institutional explanations for this failure (Battilana and Dorado 2010; Pache and Santos 2010; 

Canales 2011). Using a Braudelian conceptualization of a fragmented, three-tiered capitalist world-economy, this 

study examines how Ghanaian market women finance their businesses within the bottom layer of the capitalist 

world-economy, and why, despite the availability of commercial microfinance, they continue to rely on informal 

finance. I argue that commercial microfinance is structurally constrained by contradictions between the profit-

driven logic of the upper layers of the capitalist world-economy and the socially-embedded and subsistence-driven 

logic that organizes the market in which market women operate. I also show that, to the extent that commercial 

microfinance partially penetrates the market, it disrupts the circulation of financial resources and weakens existing 

social and economic networks within the community. 

Keywords: Microfinance, Global Capital, Local Markets, Social embeddedness, Ghana, Braudel 

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mailto:irene.pang@brown.edu


 

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Within the past two decades, microfinance has burst onto the world stage, attracting both publicity 

and recognition as a market solution to poverty. Yet, while it has been hailed as a strategy that can 

“create economic and social development from below” (Nobel Foundation 2006), the eruption of 

microfinance crises around the world has cast a shadow of doubt over its effectiveness and 

sustainability. Indeed, numerous studies have shown that microfinance has failed to deliver on its 

promises of reaching the poor (Hulme 2000; Hunt and Kasynathan 2001; Cull, Demirgüç-Kunt, 

and Morduch 2007), empowering its clients (Goetz and Sengupta 1996; Grasmuck and Espinal 

2000; Mayoux 2000), and bringing about financial integration by replacing unregulated means of 

informal finance (Jain 1999; Tsai 2004).  

This study examines the open-air market in Madina, Ghana, a town less than twenty 

kilometers north of the capital, Accra, where numerous microfinance institutions have sprung up 

within the last decade. While formal microfinance has been put forth as a cheaper and more secure 

alternative to curbside informal finance (Khandker 2000; Robinson 2001; Sengupta and Aubuchon 

2008), traders in Madina Market continue to rely heavily on local, informal money collectors 

despite the increasing availability of formal financial services. However, insofar as formal 

microfinance has unevenly penetrated Madina Market, it has also disrupted the circulation of 

financial resources within the market, leading to market fragmentation and social stratification 

within the community.  

 Adopting a Braudelian conceptualization of the capitalist world-economy as a three-tiered 

structure of capitalism, market economy, and material life (Braudel 1982), which highlights the 

interlocked but fragmented nature of markets, this analysis moves beyond institutional 

explanations for the failure of microfinance—specifically, commercial microfinance—to take root 

in the market. Through tracing in detail how low-income market women selling perishable food 

items sustain and finance their businesses, I observe that while the upper echelons of the capitalist 

world-economy function according to a profit-driven logic, the social and economic interactions 

between market women are still governed by the subsistence-driven and socially-embedded logic 

of material life. These contradictory logics thus pose serious structural constraints on microfinance 

as it attempts to function as a bridge and intermediary between different tiers of the capitalist 

world-economy.  

 

Commercial Microfinance as a Paradigm for Development 

Microfinance, as the provision of small-scale savings, credit, or insurance services to low-income 

populations, has existed in various forms throughout history.2 In its informal articulation, curbside 

                                                                                                                                                             
2 For a detailed overview of the historical evolution of microfinance, see Morduch 1990 and Tsai 2004.  



 

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microfinance institutions, such as rotating credit associations (ROSCAs) and informal money 

collectors or lenders, have long served populations with limited access to formal financial services. 

In its formal articulation, microfinance has been pursued as large-scale subsidized credit such as 

state-sponsored rural credit schemes. 

In the 1970s and 1980s, experimental projects such as Projeto Uno in Brazil and the 

Grameen Bank in Bangladesh introduced innovative financial technologies such as group lending 

in small-scale programs, but these projectshave since been criticized for their chronic dependence 

on subsidies (Jain and Moore 2003). Beginning in the early 1990s with the global neoliberal turn, 

policy-makers began to argue that microfinance institutions should be profitable, giving rise to the 

now dominant narrative of commercial microfinance, which promises “the development of 

sustainable financial intermediaries that capture local savings, access commercial finance, and lend 

these funds to low-income borrowers at interest rates that enable full cost recovery and institutional 

self-sufficiency” (Robinson 2001:xxxvi).  

 More recently, scholars have begun to debunk the “win-win” appeal of the notion of profit-

making microfinance, pointing to considerable trade-offs between commercial and social 

objectives (Morduch 2000; Battilana and Dorado 2010; Pache and Santos 2010). Yet while many 

studies have analyzed the institutional logics of commercial microfinance within local contexts 

(Anthony 2005; Sanyal 2009; Canales 2011), this study seeks to understand the day-to-day 

operations of commercial microfinance within the broader context of global capitalism. In doing 

so, it highlights the deep, structural tensions between global and local capital in which the trade -

offs between commercial and social objectives are rooted. Furthermore, while much of the existing 

microfinance literature focuses on micro-lending, this study examines both savings and credit 

services, paying attention to the impact of commercial microfinance on feedback linkages between 

the two in order to illustrate the disruptive effects commercial microfinance can have on existing 

local networks of financial resources. 

 

Microfinance in the Capitalist World-Economy 

While microfinance has variously been attributed to its socially embedded nature (Sanyal 2009; 

Roy 2010; Khavul 2010), the term “socially embedded” sometimes confuses more than it 

illuminates. Clarifying and distinguishing between the different meanings of the term, as I shall 

illustrate, is crucial in highlighting the internal contradictions within commercial microfinance. 

 In a thorough discussion of the etymology of social embeddedness, Krippner and Alvarez 

(2007) posited that the concept references two distinct intellectual projects. The first draws upon 

the seminal work of Granovetter (1985), who put forth “embeddedness” against the problem of 

atomism by pointing out that individual behavior is “so constrained by ongoing social relations 

that to construe them as independent is a grievous misunderstanding” (Granovetter 1985:482). 



 

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More specifically, Granovetter observed that economic transactions do not always occur between 

individuals who make rational, self-interested decisions in isolation from other social actors, but 

are often embedded in networks of personal relationships. Building on these initial observations, 

subsequent research has shown that social relationships between exchange partners can enhance 

economic performance (Uzzi 1996; 1997). The initial successes of microfinance functioned 

precisely on this logic. By introducing such financial technologies as group lending, early 

microfinance programs actively made use of social ties between borrowers to stimulate screening 

and monitoring within loan groups, as well as to enforce repayment (Stiglitz 1990; Besley and 

Coate 1995; Ghatak 2000; Wydick 2001; Chowdury 2005).   

The other intellectual project of social embeddedness stems from the work of Polanyi 

(1944), whose argument of embeddedness is made against an analytically autonomous economy. 

Polanyi argued that market society, which is driven by motivations of profit and which gives rise 

to the Homo Economicus—the self-interested, utility-maximizing agent— is not a universal but a 

historically specific phenomenon. While modern capitalist society is socially disembedded and the 

market has emerged as a singular organizational logic, existing as a separate institution from social 

institutions by “subordinat[ing] the substance of society itself to the laws of the market,” this was 

not always the case (Polanyi 1944[2001]:75). Earlier societies have historically been socially 

embedded, such that the logic of economic action corresponded with social logics, such as that of 

kinship or worship, and economic ties and social ties were “mutually constituting” (Krippner and 

Alvarez 2007:222).  

 If Granovetter’s embeddedness captures the logic underlying non-capitalist economic 

action within capitalist contexts, Polanyi’s embeddedness concerns the logics underlying the 

socio-organizational contexts—capitalist and non-capitalist—within which economic action 

occurs. This distinction is critical in highlighting how, even if they appear similarly embedded in 

social relations, the specific operation and meaning of economic action, and indeed, capital, can 

vary according to the embedded or disembedded socio-organizational contexts in which they 

occur. Understanding the nature of microfinance thus requires not only an appreciation of the 

social embeddedness—in the Granovetterian sense—of its particular strategies and technologies, 

but also the identification of the level of social embeddedness—in the Polanyian sense—of the 

markets in which it operates. 

 Where Granovetter and Polanyi converge is in their implicit teleological assumption of 

capitalist development as the sequential procession through various distinct forms of social and 

economic organization, from pre-capitalist societies to mature capitalist societies. Braudel, in 

contrast, is in the minority in suggesting that, even in its mature form, the capitalist world-economy 

is fragmented into different tiers; specifically, a three-tiered structure of capitalism, market 

economy, and material life, each dominated by different norms and relations of production. At the 



 

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uppermost tier of capitalism, capital seeks to maximize both its scale of operation and its mobility 

across space in its hunger for profit, taking on the character of “great predators” roaming under 

“the law of the jungle” (Braudel 1982:230). Below the murky layer of capitalism is the layer of 

the market economy, characterized by “many horizontal communications between the different 

markets” and “a degree of automatic coordination usually [linking] supply, demand and prices” 

(Braudel 1982:229). In this middle layer, capital functions at a smaller scale of operation and 

enjoys a lower degree of mobility across space, but is still driven by profits. 

Particularly pertinent to this study, however, is the bottom layer of the capitalist world-

economy, described by Braudel as “the stratum of the non-economy, the soil into which capitalism 

thrusts its roots but which it can never really penetrate” (Braudel 1982:229). Here, capital functions 

at a subsistence scale of operation, and is constrained to a specific, local space. Despite the “truly 

fantastic” volume of economic activity which takes place within this layer of the capitalist world-

economy, the mechanisms of material life are “often hard to see for lack of adequate historical 

documents” (Braudel 1981:23). As such, the rules and norms which govern “this infra-economy, 

the informal other half of economic activity, the world of self-sufficiency and barter of goods and 

services within a very small radius” (Braudel 1981:24) remain unwritten and unknown to outside 

worlds, even if they are well-understood by the economic actors operating within it. 

A Braudelian framework of analysis is novel to the study of microfinance, and affords a 

particular sensitivity to macro-micro linkages in two ways. First, Braudel’s insights regarding the 

macro structure of the capitalist world-economy draw attention to the variation in the behavior of 

capital depending on the micro contexts in which it operates. At the upper layers of the capitalist 

world-economy, even if economic transactions are socially embedded in the Granovetterian sense, 

capital nonetheless follows a profit-driven logic. In contrast, within material life, which 

commercial microfinance is attempting to penetrate, economic transactions are socially embedded 

in the Polanyian sense, and capital follows a subsistence-driven logic rather than a profit-driven 

logic. As such, the mechanisms by which capital is circulated through such financial intermediaries 

as commercial microfinance institutions cannot be assumed to be universal, and must be studied 

vis-à-vis their local, micro contexts. Conversely, Braudel’s insights also remind us that local 

markets do not exist as isolated spaces, but are situated within the fragmented capitalist world -

economy. Thus, commercial microfinance cannot be analyzed as capital that is indigenous to or 

circulating within self-contained local markets within the layer of material life, but must be 

understood as capital attempting to traverse the global and the local, and to transit between 

different layers of the capitalist world-economy. A Braudelian framework of analysis thus allows 

us to trace the roots of the difficult trade-off between the institutional goals of maintaining 

profitability and reaching the poor to the macro-structural constraints presented by the fragmented 

structure of the capitalist world-economy.  



 

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Research Site and Data 

The site for this study is Madina Market, the central open-air market in Madina, a large town about 

twenty kilometers north of Accra, the capital city of Ghana. Located at one end of the Accra-

Madina Road near a junction where major roads from various regions of the country converge, 

Madina has evolved from a small village to a bustling town with a population of nearly 80,000 by 

the early 2000s (Ghana Statistical Services 2002). Surrounding Madina Market, the streets of 

Madina are lined with small restaurants and shops selling electronic items and household products, 

as well as mobile hawkers selling a variety of products ranging from clothing items and cosmetics 

to counterfeit DVDs. Over the past decade, the expansion of businesses in the area has motivated 

many formal financial institutions, ranging from high street banks to commercial microfinance 

institutions, to set up branch offices in Madina. Additionally, providers of informal finance, most 

notably susu collectors (money collectors), also operate within and in the outskirts of Madina 

Market.  

Roughly 600 traders of foodstuff and household items, mostly women, sell their wares within 

Madina Market. Most traders operate at a fixed location. Large-scale traders, usually selling non-

perishable items, have stalls within fixed structures. Small-scale traders, usually those selling 

perishable items, often operate under makeshift structures, or simply spread out their goods on the 

ground. Those who have yet to obtain a suitable fixed spot often operate as mobile traders, walking 

through the market, carrying goods on their heads. While small-scale shopkeepers and restaurant 

owners operating around Madina Market also form part of the clientele of commercial 

microfinance institutions and other formal financial institutions that have branches in Madina, this 

study focuses on small- to medium-scale female traders who purchase from wholesale markets and 

sell at Madina Market such perishable food items as vegetables, fruits, fresh fish, and dried fish. 

These traders include some of the poorest in the market, and are exposed to the greatest market 

volatilities because of the perishability of the products they sell. More importantly, they lie 

squarely within the category of small-scale female entrepreneurs that commercial microfinance 

purports to target (Cull, Demirgüç-Kunt, and Morduch 2009; Morduch 1999; Robinson 2001), and 

for whom access to formal financial resources might otherwise be limited. 

I conducted fieldwork at Madina Market over a period of four weeks in 2008. I selected a 

geographically representative sample of 60 market women by systematically sampling about every 

tenth female trader throughout the market for a questionnaire survey. The survey data provides a 

general demographic and financial profile of these women. Based on their scale of operation, 



 

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utilization of financial services, as well as self-identified financial autonomy, 24 market women 

of different characteristic profiles were selected for follow-up in-depth interviews.3  

The interviews were conducted in a mixture of English and local dialects with the help of 

interpreters, and lasted between 40 to 60 minutes. To minimize the disturbance to the women being 

interviewed, the interviews were conducted at their stalls during the off-hours of the market, 

usually during early afternoon. The interviews were semi-structured and focused around the 

financial resources of market women.4 I began the conversation by asking market women to 

recount their experience of establishing their business. Central to this stud y is the existing 

landscape of material life within which market women operate, as well as the linkages between 

formal and informal finance. Accordingly, I asked questions about the challenges they faced in 

starting and sustaining their businesses, as well as their strategies to overcome them. In particular, 

I asked about the types of financial resources upon which they relied for their businesses 

specifically and for their livelihoods more generally, as well as their perceptions of the 

effectiveness of different types of financial resources. Among those who had been operating in the 

market prior to the entry of formal financial institutions, I also asked their opinions on how the 

emergence of newer forms of finance had affected the market. In addition, I also conducted in-

depth interviews with three informal susu collectors (money collectors) who operated within and 

around the market, referred to me by the market women I surveyed. Finally, I also interviewed 

officials of the two formal microfinance institutions that had branches within the vicinity of the 

market. 

Table 1 summarizes the profile of the market women surveyed in this study. The median 

age of the women was 38.6, and most of the women had been selling in the market for more than 

a decade. The majority of women was married (57%), and had received only primary education 

(68%). Interestingly, although only 28% of the women professed to be the head of household, 

almost 82% reported financial autonomy, that is, autonomous control over income earned from 

their businesses, allowing them to make decisions regarding household spending, healthcare, or 

their children’s education. 

 

                                                                                                                                                             
3 “Scale of operation,” measured by the value of monthly stock, was operationalized as four categories—very small, 

small, large, very large—by quartile range. “Utilization of financial services” had four possible outcomes: no 

utilization of formal or informal financial services, utilization of informal financial services only, utilization of both 

informal and formal financial services, and utilization of formal financial services only. “Self-identified autonomy” 

was a dichotomous yes-no variable. The combination of these three variables yielded a total of 4*4*2=32 distinct 

theoretical ideal types of characteristic profile. Survey respondents were sorted by ideal types, and two respondents 

were subsequently randomly selected within each ideal type sample for in-depth interviews. 20 theoretical ideal types 

were blank categories with no survey respondents fitting those ideal-typical characteristic profiles. 

4 Please see annex for full survey. 



 

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Table 1. Basic Characteristics of Surveyed Market Women 

Mean age (Years) 38.6 

Marital Status (Percent, N)  

Never married 16.67  (10) 

Married 56.67  (34) 

Divorced/Separated/Widowed 26.67  (16) 

Education (Percent, N)  

Up to Primary 68.33  (41) 

Up to Secondary 30.00  (18) 

Tertiary 1.67  (1) 

Head of Household (Percent, N)  

Self 28.33  (17) 

Other member 71.67  (43) 

Financial Autonomy (Percent, N)  

Yes 81.67  (49) 

No 18.33  (11) 

Scale of Operation (Value of monthly stock, US dollar 

equivalent) 

Minimum 

At the 25th percentile 

Median 

At the 75th percentile 

Maximum 

 

 

300 

1,200 

3,000 

5,625 

15,000 

Monthly gross income (Total cash received from sales per month, 

US dollar equivalent) 

Minimum 

At the 25th percentile 

Median 

At the 75th percentile 

Maximum 

 

 

600 

1,050 

1,950 

3,150 

16,500 

Mean years in business 13.34 

 

 



 

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However, freedom to make financial decisions does not necessarily equate to freedom from 

poverty. As can be seen in Table 1, both the distributions of monthly stock value and monthly 

gross income5 are right-skewed, an artifact of a few outlier traders who operate at a scale far above 

median. What is important to note is that, apart from the traders operating at the extremes of the 

distribution, the monthly stock value of the women’s businesses by and large exceeds their 

monthly gross income, meaning that the amount of money they pay per month to buy their stock 

is more than the cash that they receive from selling their goods. In other words, many of the women 

operate at an extremely low profit margin, or even at a loss, and may depend heavily on various 

forms of credit to maintain liquidity in their businesses. I discuss this finding at length later. 

 

The Logic of Maternal Life 

Open-air markets in Ghana have a long history dating back to the 15th century (Peil 1974). While 

they were once dominated by male traders, British colonial conquest at the turn of the 20th century 

drove men into the more profitable cocoa farming trade and consequently the market has gradually 

come to be seen as “a timeless, ‘traditional’ female occupational sector” (Clark 1994:6). Over time, 

a wide variety of strategies for survival has emerged, resulting in a vibrant system of informal 

finance, which crucially include the development of dense networks of interpersonal relations. 

Not only do traders regularly draw on existing social ties for non-commercial resources to 

enter the market, such as by acquiring starting capital and location rights through kin, but, once in 

the market, traders’ daily business activities also continue to be facilitated by their social relations 

with others in the market. For instance, traders frequently watch each others’ goods, take messages, 

and placate customers for each other. Furthermore, credit is also widely extended between traders 

in the form of goods advances among retailers, wholesalers, and farmers. Such arrangements are 

essential for economic survival, and are made possible by the foundation of strong social ties 

among traders. To be sure, traders do each other favors or pass on helpful information because 

they trust that such acts will be reciprocated. Similarly, credit is extended among traders because 

they know each others’ buying habits, credit histories, and financial positions, and because traders 

act collectively as monitors on one another and can be expected to cooperate in penalizing 

defaulting behavior.  

Social relations within the market likewise buttress susu, one of the most widespread and 

resilient savings institutions and strategies in Ghana (Bortei-Dorku Aryeetey and Aryeetey 1996). 

                                                                                                                                                             
5 Different market women restock goods at different frequencies. To facilitate more accurate recall and estimations 

ofstock value and income, market women were first asked how often they restocked goods. They were then asked 

how much money they spent each time they restocked goods (cash and credit), and how much they received during 

the period between restocking (cash and credit). Each market women’s stock value and gross income were first 

calculated per stock period, and subsequently converted to monthly stock value and gross income for uniformity and 

easy comparison. 



 

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Introduced to Ghana around the early twentieth century by migrant Igbo traders from Nigeria, susu 

was originally used to depict a “savings institution based on cowrie shells, prior to the introduction 

of British currency” (Bortei-Dorku Aryeetey and Aryeetey 1996:5). Susu has come to refer to 

various forms of rotating savings and credits associations (ROSCAs), and by the late 1990s, was 

estimated to be responsible for mobilizing “about 50 percent of total financial savings in Ghana” 

(Bortei-Dorku Aryeetey and Aryeetey 1996:7). The typical susu consisted of members who agreed 

to make regular contributions to a fund which would be given, in whole or in part, to each 

contributor in rotation, either randomly or according to members’ needs. Like credit relations, susu 

groups are formed through existing social relations between members of the group, and make use 

of these to create disciplinary pressures for each member to contribute regularly to the savings 

pool, which in turn safeguards the economic interests of all within the group.  

 While at first glance this reliance on social relations to enhance economic positions  

within the market might lead us to conclude that the market is socially embedded in the 

Granovetterian sense of the term, a closer look at the logic underlying economic transactions 

within the market might lead us to more accurately identify it as being socially embedded in the 

Polanyian sense of the term, based on two distinguishing characteristics.  

The first distinguishing characteristic is that economic relations and social relations are 

mutually constitutive within the market. Indeed, consistent with Polanyi’s (1957) description of 

societies in which the economy is submerged in the social, mechanisms of entering into and 

maintaining credit or group savings relations among traders also conform to the logic of kinship 

and friendship. While financial ties can develop out of social ties existing a priori, such as in the 

case of ROSCAs, whereby traders who trust each other enter into relations of financial 

interdependence by saving jointly as a group, economic transactions arguably also produce social 

relations that will reinforce and sustain them. Relations within the market frequently begin as 

economic ties between wholesalers, retailers, and customers who buy from and sell to each other. 

Through repeated economic interactions and transactions, these ties develop extra-economic 

dimensions, such that traders are no longer simply bound to each other through economic 

exchanges, but are tied socially as colleagues, friends, and counterpoints through which their lived 

experiences in the market make sense. To the extent that economic ties overlap with social ties, 

such that traders make decisions not only “to safeguard [her] individual interest in the possession 

of material goods,” but also “to safeguard [her] social standing, [her] social claims, [her] social 

assets” (Polanyi 1944 [2001]:48), the distinction between social and economic becomes blurred 

and fuzzy. 

The second distinguishing characteristic is the non-profit-driven logic underlying 

economic activities. To be sure, even if market women do harbor aspirations for accumulation, 

empirically, their businesses function according to a subsistence-driven logic, not a profit-driven 



 

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logic. Indeed, while market activities for profit and those for subsistence may appear similar, 

Braudel’s conceptualization of a fragmented capitalist world-economy urges us to carefully 

distinguish between the everyday acts of buying and selling within the upper layers of the capitalist 

world-economy and within material life (Braudel 1982:62-64). While economic transactions 

within the upper layers of the capitalist world-economy follow a M-C-M’ profit-driven logic, 

whereby merchants start with money (M) and buy commodities (C) in order to sell for more money 

(M’), within the layer of material life, economic transactions follow a C-M-C’ subsistence logic, 

whereby traders come to the market to sell commodities (C) for money (M), but only as a means 

of acquiring other goods (C’). The critical difference between the two types of market dynamics 

is that the former is driven by an endless pursuit of monetary profit, such that accumulation 

becomes an end in itself, and the latter is not. Within the market, market women’s businesses by 

and large do not generate monetary profit. Rather, money is only a means by which market women 

transform one set of commodities, namely the goods that they sell, into other sets of commodities, 

such as goods consumed for everyday sustenance. As such, the transactions occurring within the 

market are perhaps more appropriately understood as forms of barter, except that they are mediated 

by money. 

As the market is socially embedded in the Polanyian sense, that is, not organized around 

the principle of profit maximization, there are serious implications for the types of financial 

services that operate there, particularly in terms of the scale of profit margin, time, and space. First, 

practices and institutions of informal finance, ranging from the extension of credit among traders 

to susu savings groups, are not instruments through which traders make profits off of each other, 

but are rather means of pooling resources to ensure a basic, subsistence level of liquidity and 

financial stability among community members. Second, the forms of financial services found in 

the market address short-term concerns of liquidity and not long-term goals of accumulation. The 

courte durée that structurally bounds credit and savings relations, as well as their informal and 

socially embedded nature, allows financial institutions to respond flexibly to varying conditions in 

the market, such as market shocks and volatility, seasonality. This also caters better to any sudden 

household or individual crises that users of financial services may face, since the term of any 

relation of financial dependence or interdependence is shorter, and conditions looser. Third, the 

system of informal finance functioning within the market is entirely local in that it draws on local 

resources to service the community, and does not provide linkages to external resources or 

channels for external institutions to enter the local market. Credit relations within the market are 

largely extended among traders, or between traders and customers, such that the sharing of 

liquidity remains local and the network of credit relations is closed to the local community. 

Likewise, susu performs the crucial function of pooling and mobilizing local savings, but also 

redirects these savings to meet the most urgent local needs. Thus, in order for commercial 



 

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microfinance to succeed as global capital functioning within material life, it must overcome 

structural constraints stemming from the differences in the logics underlying each layer of the 

capitalist world-economy. 

 

Banking for the Others? 

Since the early 1980s, the Ghanaian government has pursued financial reforms to create spaces for 

such institutions as non-governmental organizations (NGOs) and credit unions, which operate 

within the interstices between formal and informal financial institutions.6 In particular, the passage 

of the Financial Institutions (Non-Banking) Law (PNDCL 328) in 1993 provided “a flexible means 

of regularizing […] microfinance institutions through the transformation of NGOs into licensed 

financial intermediaries, [the] formalization of actual or potential informal money-lending 

operations, [and the] establishment of small private banking operations serving a market niche” 

(Steel and Andah 2003). Nine specialized categories of non-bank financial institutions were 

created under the PNDCL 328, among which savings and loans companies became an important 

channel through which a commercial microfinance sector developed.  

Yet the creation of a regulatory niche for middle-tier financial institutions and the 

numerical expansion of commercial microfinance institutions (that is, microfinance institutions 

that explicitly profess goals of financial sustainability and profitability) should not be equated with 

commercial microfinance successfully penetrating material life in Ghana. Around Madina, while 

commercial microfinance institutions have become more accessible, their clientele has been 

concentrated among shopkeepers operating in the outskirts of the market. Within Madina Market, 

while market women have begun utilizing formal savings services, they simultaneously retain their 

dependence on informal savings services, and are unreceptive to credit services provided by 

commercial microfinance institutions.  

Table 2 shows the various kinds of credit services utilized by market women in Madina 

Market. As can be seen, they continue to rely heavily upon informal sources of credit. Of the 60 

women surveyed in Madina Market, only 3 (5%) had ever taken a loan from a formal financial 

institution. Most market women were aware – but also highly skeptical – of formal microcredit 

services and the associated rhetoric that claims such services are a means of poverty alleviation 

targeted towards small-scale clients. 

 

 

 

                                                                                                                                                             
6 For the analytical purposes of this study, I shall group formal and semi-formal financial institutions into a single 

category of “formal institutions,” as they both fall under the jurisdiction of the Bank of Ghana. 



 

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Table 2. Utilization and Provision of Credit Services 

  Yes No 

Advance of capital/goods (%, N) 76.7 23.3 

  (46) (14) 

Support from kin (%, N) 46.7 53.3 

  (28) (32) 

Loan from formal financial institution (%, N) 5 95 

  (3) (57) 

Extension of capital/goods advance (%, N) 60 40 

  (36) (24) 

Extension of capital advance (%, N) 35 65 

  (21) (39) 

 

  

When asked about their perception of the effectiveness of formal microfinance, particularly 

microcredit services, in improving the well-being of market women, women frequently referred 

to, but distanced themselves from, a generic and nameless “other” who allegedly benefits from 

these services. One woman put it, “as for the banks, yes, they have helped. Of course they have 

helped. I have heard they give money [loans] to many women. But as for me myself, I don’t use 

the banks” (Interview #4, 2008). When asked whether she would consider taking a loan from a 

formal financial institution, another woman responded, “As for the banks, they give it [the loan] 

to you, but they take it all back again. Oh I don’t know. I don’t need their help. Yes, others have 

been going for the money [loans], but as for me, the small that I have is enough for me. [...] I would 

rather pray to God to provide” (Interview #6, 2008). 

In order to understand the aversion to formal microcredit services, it is necessary to clarify 

the nature of credit services actually offered by commercial microfinance institutions to market 

women. As the branch manager of one microfinance institution operating in Madina Market 

explained (Interview #25, 2008), the high costs and labor-intensive nature of community-centric 

products, such as group loans, have pushed commercial microfinance institutions towards offering 

credit services which are effectively down-scaled versions of high street financial products. Their 

smaller size aside, microcredit loans are granted to market women on an individual basis 

depending on their credit-worthiness on paper, demonstrable by a regular track record of making 



 

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savings deposits, and are secured by collateral and no different in principle from personal loans 

granted by banks. As this manager further explained,  

 

We have to watch our operations. We need to make profit, and we are aiming to 

expand. It is too risky to grant loans without collateral, so we need to take 

something, savings, [borrowers’] properties, or [borrowers] have to find a personal 

guarantor. Group loans are for beginners. You send an [loan] officer to help these 

women form groups, you teach them how to save, you monitor their progress and 

make sure they are paying on time. But our goal is that, after some time, instead of 

us going to the women, they come to us. We cannot keep sending officers out. We 

don’t have enough staff, and it is too time-consuming (Interview #25, 2008). 

 

Given the pressures for profit and commercial microfinance’s corresponding model of 

operation, market women’s underutilization of formal microcredit services can be attributed to 

variegated manifestations of the same problem: scale. First of all, although they are marketed as 

being designed “to meet the financial services needs of women and other entrepreneurs in the 

micro/small business sector” (Women’s World Banking Ghana 2008), it is tremendously difficult 

for most market women to qualify for microcredit services. One woman commented that “banks 

come and advertise and educate market women, but they do not give loans” (Interview #12, 2008). 

Another explained that although she saved at a formal financial institution, she would not take a 

loan “because of the long process—they need collateral and there is too much paperwork” 

(Interview #11, 2008). For market women living from hand to mouth, requiring scales of surplus 

through such conditions as collateral, or the ability to maintain a minimum savings balance and to 

display a good track record of regular savings, effectively excludes them from obtaining 

microcredit loans. 

Secondly, to insure against the risks of lending to market women—who are often viewed 

as less than credit-worthy clients given the volatility of their businesses—as well as to maintain 

profitability, commercial microfinance institutions often charge high, if not usurious, interest rates 

on microcredit loans, sometimes exceeding 25% per loan period.7 Consequently, many market 

women are deterred from even considering microcredit services. One woman pointed out, “if I 

borrow from the bank, I have to pay interests. But if I buy on credit and use susu savings, I do not 

have to pay interests” (Interview #1, 2008). Another woman admitted to having considered taking 

                                                                                                                                                             
7 The interest rate for a 30-week loan of 500 Ghana Cedis (equivalent of about USD 500 at rates in July 2008) from 

Women’s World Banking Ghana, for example, is 29.0%, with a weekly repayment of 21.49 Ghana Cedis.   



 

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a microcredit loan, but ultimately decided against it: “I just don’t have enough money to pay back” 

(Interview #8, 2008). 

Thirdly, in order to streamline operations, microfinance institutions have introduced 

regular, weekly loan repayment schedules that do not allow for the market fluctuations to which 

market women are susceptible. As a result of the obvious discrepancies between the temporal scale 

of a loan cycle and that of market women’s business cycles, many market women find it too risky 

to take on a loan. One woman described the stress of financing a loan: 

 

I don’t take loans from the bank, because paying back is too difficult. Every week 

you have to pay—every week. If the market is not good, you can’t pay, but the 

banks will come and harass you. If you cannot pay, they will come and take you 

away to the police station, and they will lock you there. Yes, the banks, they give 

you money, but they take it all away from you again. They will make you pay down 

to the last pesewa [cent] (Interview #3, 2008). 

 

In this respect, the experience of the few women who took out microcredit loans might 

serve as a cautionary tale. Only three out of the sixty women surveyed ever took out a microcredit 

loan. One was the top trader in the sample, who operated a fruit and vegetable store out of a fixed 

built structure—the largest in the sample both in terms of physical space and operational scale—

and who had received starting capital from both her father and her husband. The second trader also 

operated out of a fixed built structure, with a small store selling tomatoes and onions. She, too, 

received starting capital from her husband, and continues to rely on his financial support in 

maintaining her store. The third trader was a single mother who had a fixed make-shift stall selling 

dried fish. Of the three women, the first two used the loan not to expand their businesses, but 

rather, on home improvements. These two women were able to repay their loans on schedule, but 

only because their husbands made significant contributions towards loan payments. The third 

woman had intended to use her loan to expand her business, but when her son unexpectedly fell 

ill and was admitted to the hospital, she used the loan to pay for medical bills instead. Having had 

to take time off her business to care for her son, she exhausted her savings and fell behind on loan 

repayments. Now, burdened by an outstanding loan that was still accumulating interest, she lost 

credibility within the market, and faced significant difficulties in accessing sources of informal 

credit to revive her business. For those market women whose sole source of income is their 

precarious business, and cannot rely on diversified financial resources, microcredit loans in their 

particular commercial form can easily prove too risky. 

 



 

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Table 3. Utilization of savings services %  (N) 

Yes   88.3 (53)  

 Informal only 54.7 (29)  

 Informal and formal 28.3 (15)  

 Formal only  17.1 (9)  

 Subtotal 100 (53)  

No   11.7 (7) 

Total   100 (60) 

 

In comparison to formal microcredit services, savings services offered by commercial 

microfinance institutions have gained traction among market women in Madina Market in recent 

years. However, even as more market women have begun utilizing formal savings services, their 

reliance on informal savings services persists. Table 3 shows market women’s preferences for 

formal and informal savings services. Of the 88% of market women surveyed who reported a 

regular habit of saving, only 17% did so solely through formal financial institutionIt must be noted, 

however, that, like informal credit, the modes of informal savings services have changed 

drastically over time. As Madina Market expanded over the years, with more and more market 

women originating from different parts of the country, ROSCA-type susu groups have become 

scarcer. Whereas it was once easier to establish a susu group comprised of traders selling the same 

good, of the same tribe, and speaking the same dialect, it is now more difficult for market women 

to assemble a homogenous group, or find time to operate a susu group.  

By far the most prominent form of susu now present in Madina Market is the susu collector, 

who is usually male, and visits market women at their stalls or their homes at agreed times on a 

daily basis, and collects funds towards individual savings plans. Market women deposit a fixed 

amount of cash, determined in consultation with the susu collector, for an agreed period of time, 

usually not exceeding one month. In case a market woman earns more than expected on a particular 

day, she may make a larger-than-usual deposit. Similarly, if a market woman makes less-than-

expected sales, she may deposit less than the fixed amount without penalty. Since the purpose of 

this savings plan is to achieve a reasonable sum of savings, market women are discouraged from 

making withdrawals within the savings period. In case of emergency, however, market women can 

request a withdrawal, in which case the susu collector would deliver the amount to her stall or her 

home. In rare cases, susu collectors may even give out small, short-term loans to market women. 

At the end of each savings period, market women’s deposits are returned, less an agreed-upon 

amount that goes to the susu collector as a commission or a service charge.  



 

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Essentially a form of mobile banking, the susu collector scheme is similar to ROSCA-type 

susu groups to the extent that market women rely heavily on local information to identify reliable 

susu collectors with whom they can trust their hard-earned money. Saving with the susu collector 

is, however, fundamentally different from being part of ROSCA-type susu groups in that market 

women no longer develop horizontal economic and social ties with each other through pooling and 

managing their financial resources, but rather develop individual and vertical relations with the 

susu collector. Whereas those in ROSCA-type susu groups supported and kept each other 

accountable in meeting savings targets, market women are now disciplined by the susu collector’s 

daily visits.  

 While these changes precede the entrance of commercial microfinance into the market, the 

evolution of informal savings services begs several questions. In particular, if the mode of informal 

saving has evolved from an egalitarian group-based model of collective saving to a hierarchical 

banker-client model of individual saving that resembles formal financial institutions, why would 

market women still choose to save informally, given newly available access to formal finance? 

Given the option of saving at a licensed, regulated formal financial institution where interest could 

be earned, why would market women continue to take the risk of handing their savings to an 

unregistered and unregulated susu collector who charges a monthly commission? Explanations 

provided by market women reveal that the continued reliance on informal finance is not only a 

matter of habit or inertia, but an exercise of agency based on rational calculations concerning the 

problem of scale.  

 Table 4 shows market women’s utilization of various types of savings services according 

to their profile characteristics. I performed statistical tests to examine whether the types of savings 

services utilized by market women are correlated with their profile characteristics. Results show 

that women’s choice of savings services were not significantly correlated with their age, level of 

education, whether or not they identified as the head of household, or whether they were the 

primary source of financial support for their household. The only two factors that were 

significantly correlated were the scale of operation of women’s businesses and their income level.8 

Beyond the feeling of “shame” (Interviews #5, #7, 2008) and “embarrassment” (Interviews #7, 

                                                                                                                                                             
8 Chi-squared tests of independence were employed to test the statistical significance of the relationship between 

women’s choice of financial service and women’s level of education, status within the household, and source of 

financial support for their household. ANOVA tests were performed to test the statistical significance of the 

relationships between women’s choice of financial service and age, scale of operation and income. The relationship 

between women’s choice of financial service and the scale of operation of their business was found to be marginally 

significant (p < 0.1), and the relationship between choice of financial service and income level was statistically 

significant (p < 0.05). 



 

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#14, 2008) for depositing miniscule amounts at a formal financial institution, the problem of scale 

manifests itself dually as issues of time costs and liquidity. 

 

Table 4. Utilization of Savings Service by Profile Characteristics 

  Type of Savings Services Utilized 

Characteristic of Market Women 

Informal 

Only 

Informal & 

Formal Formal Only 

Age (Mean) 38.7 39.7 38.9 

Education (%, N)    

Up to Primary 54.3 (19) 31.4 (11) 14.3 (5) 

Up to Secondary 58.8 (10) 23.5 (4) 17.6 (3) 

Tertiary 0 0 100 

 (0) (0) (1) 

Status within Household (%, N)    

Self as head of household 42.9 50.0 7.1 

 (6) (7) (1) 

Other Member as head of household 59.0 20.5 20.5 

 (23) (8) (8) 

Financial Support for Household (%, N)    

Self 57.1 35.7 7.1 

 (16) (10) (2) 

Other household member 52.0 20.0 28.0 

 (13) (5) (7) 

Scale of Operation (Mean Monthly Stock   Value, 

US dollar equivalent) 2130* 3238* 4762* 

Mean Monthly Income (Total cash received from 

sales per month, US dollar equivalent) 1991** 3560** 5850** 

Total 54.7 28.3 17.0 

 (29) (15) (9) 

* p < 0.1, ** p < 0.05 

 

 

 Given the limited hours of operation of formal financial institutions, market women can 

only access formal financial services by taking time off their own businesses during the work day. 

Furthermore, the tedious and sometimes—especially for illiterate market women—“humiliating” 



 

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(Interview #5, 2008) process of form-filling, long lines, and formal financial institutions’ distance 

(however short) from market women’s stalls mean that every trip to make a deposit or withdrawal 

may take up to hours, resulting in decreased sales and money lost. In contrast to the rigid mode of 

operation of formal financial institutions, susu collectors offer flexible, door-to-door, and efficient 

services on demand, leading market women to more often choose the more time-conserving option 

at a minimal price. One market woman remarked, “the banks, you walk there, and you get asked 

questions before they give you money. So when I need money, I just call my susu collector any 

time” (Interview #12, 2008). 

The time costs of utilizing formal savings services compound the liquidity pressures felt 

by market women. Since it is costly to make deposits and withdrawals, money saved in formal 

financial institutions reduces the already scarce liquid capital on which market women rely for 

their businesses and households. Furthermore, although most formal financial institutions do not 

require minimum balances for savings services, such requirements do exist for interest returns. 

The financial benefits of formal savings services can therefore only be enjoyed if market women 

can set aside enough money for their account balances to accumulate sufficiently. As one market 

woman explained,  

 

The reason why you cannot withdraw money every day is because then the money 

in your account will be too small. When you put money in the bank, you should 

wait one, two or three months. You can withdraw every day, but it is not in your 

interest, because you can’t get interest that way (Interview #14, 2008). 

 

Taken together, unless they operated at a considerable scale, and could afford to save a 

sizeable sum for a period of time, it makes far more economic sense for market women to save 

with a susu collector rather than at a formal financial institution. While many women interviewed 

acknowledged the risks associated with informal susu collectors and expressed at least a theoretical 

preference for formal financial institutions, the transformation of theory into practice is 

nonetheless constrained by the nature of market women’s small-scale businesses. As one market 

woman remarked, “I know that the susu collector may run away with my money, but my money 

is not enough to save at the bank” (Interview #2, 2008). Overwhelmingly, market women shared 

the sentiment of “if I had spare, I would save in the bank” (Interview #6, 2008), but as one woman 

somberly noted, “my capital is too small to put in the bank. Once I put it in the bank, my business 

will have nothing to rely on” (Interview #16, 2008). And as another piercingly observed, “we all 

know it’s [formal financial institutions] very good, but unless you get big money, you cannot go 

there” (Interview #13, 2008). 



 

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This finding is consistent with other studies, which have also observed the difficulties of 

commercial microfinance in taking root in local markets (Grasmuck and Espinal 2000; Hunt and 

Kasynathan 2001; Chowdhury et. al. 2005). Yet, to the extent that commercial microfinance 

services have been adopted unevenly within the market, or more specifically, that it is only savings 

services that have been adopted by market women operating at larger scales, the effects of 

commercial microfinance on the local market warrant closer attention.   

In Madina Market, commercial microfinance has disrupted the local system of informal 

finance in two important ways. First, commercial microfinance has contributed to the weakening 

of the social relations network within the market, which began with the decline of ROSCA-type 

susu groups and the emergence of the susu collector. The replacement of groups by individual 

collectors has reconfigured the dense network of mutual cooperation and interdependence among 

market women into a sparser network whereby market women are dependent on the susu collector, 

and are connected to each other not directly, but only indirectly through the susu collector.  

With the entrance of commercial microfinance, the vertical structure of social relations 

between market women and providers of financial services is replicated, but the nature of those 

relations is fundamentally different. While the economic relations between market women and the 

susu collector are sustained on the basis of trust, friendship, and because the susu collector is a 

member of the local community, economic relations between market women and formal financial 

institutions are disembedded from social relations and sustained bureaucratically. This transition 

from a social network characterized by a sense of solidarity and an intimate knowledge of others’ 

financial position to a looser network characterized by more vagaries and uncertainties is felt and 

articulated by women who have been in the market long enough to witness such changes. One 

older woman who has been operating in the market for more than twenty years noted,  

 

before, we all gave money to the susu collector. He comes every day, and you know 

how much everybody is giving. Now, people still give money to the susu collector. 

But if they have spare, they can go to the bank. Sometimes I also go to the bank. 

Yes, other people also do it, but I don’t know [who does it] (Interview #17, 2008). 

 

Second, commercial microfinance has also disrupted the circulation of financial resources 

within the market. Local institutions of informal finance have historically served as an effective 

way to direct financial resources toward community needs by transforming local savings into local 

credit. For instance, through informal credit arrangements between traders, the personal savings 

of one market woman is redirected to another as credit. In ROSCA-type susu groups, members of 

the group pool their savings to condense the time necessary for each individual to accumulate a 

given amount of savings, such that the lump sum going to the designated member of the group 



 

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functions effectively as a short-term loan. Similarly, in addition to maintaining the liquidity of 

market women by providing withdrawal-on-demand services, insofar as susu collectors extend 

small loans to market women in emergency situations, they also serve as a channel through which 

the collective deposited savings of the community can be re-directed towards local need for credit.  

Commercial microfinance, however, disrupts the savings-credit cycle. Since market 

women must bear considerable transaction costs to make cash withdrawals from formal financial 

institutions, once deposits are made, their savings become trapped and illiquid. Additionally, since 

market women typically only utilize formal savings services but do not take out microcredit loans, 

savings deposited at formal financial institutions do not get recycled into the market as credit to 

other traders. As such, by holding community savings and hindering its recirculation into the 

community, commercial microfinance imposes considerable liquidity constraints on the market as 

a whole. Furthermore, as commercial microfinance services are utilized only by richer market 

women, the disruption of the savings-credit cycle might also be understood as fragmentation 

within the market based on financial position. If the financial resources of richer market women 

are systematically apportioned into a distinct sphere separate from the rest of the market with its 

own set of disembedded economic relations, the disruption of the savings-credit cycle leads not to 

an overall decrease in financial resources within the market felt equally by all market women, but 

rather, to the systematic deprivation of poorer market women whose liquidity was already more 

constrained to begin with, and who, due precisely to liquidity constraints, cannot access the 

financial resources now trapped within formal financial institutions.  

The disruption in the circulation of financial resources occurs not only on the demand side 

in relation to market women, but also on the supply side in relation to providers of informal 

finance. Certainly for susu collectors, the competitive pressures exerted by commercial finance on 

their businesses are strongly felt.  One susu collector offered this perception of the “financial food 

chain:” 

 

Nowadays there are more and more banks. They didn’t use to come here to the 

market, but now they are here. They take away our clients. […] They usually take 

the customers with the growing business. As [the customers’ businesses] grow, they 

go to the bank. But without us, they cannot rise up to the level of the bank. Without 

us, banks may not even see their customers. […] But they don’t even come and 

thank us for raising such customers for them. We train them [market women] to 

save, and they go to the bank. Banks should join hands with us, so they don’t take 

our job away from us (Interview #26, 2008). 

 



 

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 By diverting their largest and most reliable sources of working capital, commercial 

microfinance leaves susu collectors with only the small-scale deposits which market women 

cannot afford to deposit at formal financial institutions. In response to this, all three susu collectors 

interviewed for this study have begun to streamline their operations, with the articulated intention 

of “becom[ing] more like the banks” (Interview #27, 2008). Thus, the susu collectors have begun 

to operate out of fixed offices, and decreased the frequency with which they go from stall to stall 

within the market, thereby reducing the very kind of mobile banking services which formal 

financial institutions fail to provide, and on which market women depend. 

 Furthermore, while there have been attempts at a hybrid model of commercial 

microfinance, as suggested by one of the susu collectors, their success has been dubious. In 2005, 

for instance, Barclays Bank Ghana launched a microbanking program whereby loans were made 

to susu collectors for on-lending to their own clients. While the program was launched with much 

fanfare, with a Barclays official writing in The Guardian of the prospects for a profitable business 

situation in which “everybody wins” (Derban 2008), by 2010, Barclays had begun to partner with 

two international non-governmental organizations to reform the program into a community savings 

and loans project (Yeboah 2010), and currently lists the project as one of its not-for-profit 

“Community Sustainability Programme[s]” (Barclays 2013). Lending to susu collectors for further 

on-lending might seem a viable model, one that saves formal financial institutions administrative 

and labor costs but still allows capital to penetrate the lowest layers of the market through the 

expertise and connections of the susu collector. However, other transaction costs associated with 

the process of subcontracting could pose serious constraints on profitability. 

 

Discussion 

In his evaluation of the history and evolution of microfinance, Jonathan Morduch comments that 

“the idea for [microfinance] did not come down from the academy, nor from ideas that started in 

high-income countries and then spread broadly” (1999:1573). Rather, the innovation of 

microfinance lies in its use of socially-embedded financial technologies “long used in traditional 

[…] modes of informal finance” combined with the “scale advantage of a standard bank.” In the 

case of Madina Market, when social networks close in upon themselves and become insular, social 

embeddedness becomes a liability by reducing the flow of information from outside the network, 

and, by allowing “the social aspects of exchange supersede the economic imperatives” (Uzzi 

1997:59), the pressure for profitability ultimately pushes commercial microfinance institutions to 

abandon these financial technologies, and to, instead, adopt standardized bureaucratic structures 

of organization.  

Such institutional arrangements, exemplified by fixed business hours, standardized forms, 

and regular loan repayment schedules, enable bureaucratic efficiency, but result in rigid and 



 

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inflexible financial services that do not meet the needs of market women. Thus, paradoxically, by 

eliminating the elements of interpersonal relations which introduce variability and uncertainty into 

financial transactions, commercial microfinance disembeds itself from the very networks of trust 

on which its success is to be based. 

The structural contradictions inherent in the logic of commercial microfinance can be 

understood as a problem of scale, in terms of profit margin, time, and space. With regards to profit 

margins, this study of Madina Market illustrates that commercial microfinance faces a lose-lose 

situation of either extracting profits within the layer of material life at a level that is not sufficient 

by the standards of the upper layers of the capitalist world-economy, or increasing profits by 

cutting costs and forfeiting the means of penetrating the lowest layers of material life.  

With regards to time, in attempting to move between the various layers of the capitalist 

world-economy, commercial microfinance must also reconcile differences in the temporal 

structures of savings and credit cycles. Whereas savings within the upper layers of the capitalist 

world-economy are usually held for a time period long enough to facilitate accumulation, within 

the layer of material life, savings deposits are frequently withdrawn within such a short time period 

that accumulation does not occur, as we have seen in Madina Market. Likewise, credit cycles 

within the upper layers of the capitalist world-economy tend to occur over a longer time period 

than those within the layer of material life. Credit instruments such as loans perform the function 

of compressing time, such that financial resources that would otherwise take time to accumulate 

are made available in the present. Within the upper layers of the capitalist world-economy, the 

scale of temporal compression is generally greater, as reflected by the larger size of loans as well 

as longer repayment terms, whereas within the layer of material life, temporal compression takes 

place on a much smaller scale, as evidenced by the smaller size of loans that are often settled within 

a matter of days or weeks.  

With regards to space, commercial microfinance also embodies the paradoxical double 

meaning in David Harvey’s (2001) notion of the “spatial fix.” Insofar as commercial microfinance 

promises a new channel for the reinvestment of surplus capital from the upper layers of the 

capitalist world-economy in the layer of material life, it arguably offers a “fix” to global capital’s 

problem of over-accumulation. Yet in its attempt to plant global capital firmly into the layer of 

material life, commercial microfinance also “fixes” capital within specific spatial localities. 

Whereas in the upper layers, capital constantly seeks to expand beyond the boundaries of existing 

markets and to replicate itself across geographic spaces, within the layer of material life, success 

within the market is predicated on capital’s ability to adapt to the particularities of local contexts.  

 Microfinance thus seeks to resolve the contradictions between profitability and 

subsistence, and long-term and short-term modes of operation, as well as the tendencies towards 

spatial expansion and concentration. These are not simply the artefacts of contrasting institutional 



 

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priorities stemming from differing normative attitudes towards commercial and social objectives 

(Pache and Santos 2010; Battilana and Dorado 2010; Canales 2011). Rather, they reflect the 

structural fragmentation of the capitalist world-economy into different tiers governed by 

conflicting norms and relations of production. Indeed, our venture into Madina Market reveals 

that, even within a broader context of global capitalism, there can remain a market layer that 

remains socially embedded in the Polanyian sense. In order for commercial microfinance to 

function as a financial intermediary between global and local markets, and cross between different 

layers of the capitalist world economy, it must overcome the contradictions between the logic of 

profit maximization, which dominates the upper layers of the capitalist world-economy, and which 

gives microfinance its distinctive “commercial” flavor, and the logic of subsistence, according to 

which the layer of material life is organized. 

Yet the difficulties which commercial microfinance has experienced in overcoming these 

contradictions do not mean that it has not had a noticeable impact on the day-to-day life within the 

markets that it tries to penetrate. Indeed, as Braudel noted, 

  

In a context where other structures were inflexible (those of material life and, no 

less, those of ordinary economic life) capitalism could choose the areas where it 

wished and was able to intervene, and the areas it would leave to their fate, 

rebuilding as it were its own structure from those components, and gradually in the 

process transforming the structure of others (Braudel 1981:562). 

 

 It is precisely this kind of incomplete and uneven penetration of commercial microfinance 

that has transformed Madina Market. Commercial microfinance has consolidated the 

reconfiguration and disembeddedness of social relations that began with the replacement of 

ROSCA-type susu savings groups with susu collectors. Whereas the former facilitated horizontal 

linkages between market women, the latter cultivated vertical linkages between individual market 

women and the susu collector. This vertical structure of social relations is replicated in commercial 

microfinance, yet while vertical linkages between market women and susu collectors were 

embedded in trust and friendship, economic ties between market women and microfinance 

institutions are disembedded from social relations and bureaucratically sustained. Perhaps more 

significantly, by re-directing only better-off market women towards commercial microfinance 

institutions, and more specifically, towards savings services and not credit services, commercial 

microfinance not only disrupts the circulation of financial resources within the market by trapping 

savings and hindering its recirculation into the community as available credit, but also creates 

fragmentation by systematically apportioning the financial resources of richer market women into 



 

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a sphere distinct from the rest of the market, the access to which is obstructed for poorer women 

given their liquidity constraints. 

The trade-off between the commercial objectives—maintaining profitability—and the 

social objectives—reaching the poor—of commercial microfinance has been well-documented in 

the existing literature. Yet by adopting a Braudelian framework of analysis, this study traces the 

roots of commercial microfinance’s failure in this setting to structural contradictions inherent 

within the fragmented capitalist world-economy. Braudel’s insights about the fragmented nature 

of the capitalist world-economy direct us to carefully distinguish between market activities and 

dynamics that may appear similar, but are driven by conflicting logics. While the every-day 

activities of buying and selling may appear similar across time and space, our venture into Madina 

Market reveals that unlike the kind of buying and selling for profit maximization and capital 

accumulation which takes place in the upper layers of the capitalist world-economy, activities of 

buying and selling within the layer of material life are driven by a subsistence logic, and are more 

akin to barter exchange mediated by money.  

Likewise, although commercial microfinance and traditional institutions of informal 

finance both appear to be rooted in a socially embedded logic in that both rely on social relations 

to ensure or improve economic performance, closer examination shows that commercial 

microfinance is better understood as being socially embedded in the Granovetterian sense, in that 

social relations are factored into economic transactions to facilitate profit maximization in the long 

run. Markets where traditional institutions of informal finance operate are better described as being 

socially embedded in the Polanyian sense, where social and economic relations are not organized 

by the purely economistic principle of profit maximization.  

Scholars have expressed hope that the development of better financial technologies (Cull, 

Demirgüç-Kunt, and Morduch 2007), better institutional practices and monitoring mechanisms 

(Hunt and Kasynathan 2001; Knight, Hussain, and Rees 2009), and improved regulatory 

environments (Knight et. al. 2009) may allow commercial microfinance to better achieve its dual 

goal of reaching the poor while maintaining profitability. Yet unless the challenges faced by 

commercial microfinance are understood not only within the localized contexts of the markets in 

which they seek to penetrate, but more appropriately with a view of how local markets functioning 

within the layer of material life are situated within the global capitalist world-economy, the 

structural constraints inherent in the very idea of commercial microfinance are likely to remain 

unresolved.  



 

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About the Author 

Irene Pang is a PhD candidate in the Department of Sociology and a Graduate Trainee under the 

Graduate Program in Development at Brown University. Her current research studies how 

processes of capitalist transformation affect the understanding, expression, and contestation of 

citizenship, particularly among low-income internal migrants in China and India. 

 

 

Disclosure Statement 

Any conflicts of interest are reported in the acknowledgments section of the article’s text. 

Otherwise, authors have indicated that they have no conflict of interests upon submission of their 

article to the journal.  

 

 

 

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Annex 1: Questionaire 

(I) PERSONAL INFORMATION 

(1) Name: _________________ 
(2) Name of Business: 

___________________ 

(3) Age: _____ 
(4) Ethnicity: 

______________ 

(5) Language(s): 

_____________________ 

(6) Religious Affiliation:    □Muslim   □Christian (Denomination: _____________________ ) 

(7) Marital Status:   □Never married      □Married     □Divorced    □Widowed    □Separated   

If married: Does your husband live…  

□ within the same house   □in a different house, but in the same town   □in a different town 

(8) No. of children: ______ 
(9) No. of people who have been eating from the same pot as 

you over the last 6 months: __________ 

(10) Who is the head of your household: □Self   □Husband   □Other: 

_____________________ 

(11) Who supports your family financially? (check all applicable) □Self   □Husband   □Other: 

_____ 

(12) Are you a member of any community organizations? (Church groups, Susu’s etc) 

      □No  □Yes (specify): 

_____________________________________________________________ 

(13) Level of Education:  □< Primary   □Primary   □Secondary   □Tertiary: 

____________________ 

 

(14) Location: (Mark on map) 

 

(II) BUSINESS/ FINANCES 

 

(15) Years in business: _____       

  



 

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(16) Goods sold: (17) Value of 

Stock              

(Cost Price) 

(18) How often 

do  

        you restock? 

(19) How much do you 

purchase each time you 

restock? (Specify: 

cash/credit) 

    

    

    

    

    

    

 

(20) How much do you earn on… 

        A good day? (Cash) ________ (Credit) ________ 

        A bad day?   (Cash) ________ (Credit) ________ 

(21) Do you usually save?  □Yes   □No 

        If yes, do you keep the money…    

 □ At home/in a safe place    □In a bank    □Susu  □ Other 

        If you save in a bank, which bank? _________________________ Since when? 

______________ 

        Other: 

_________________________________________________________________________ 

(22) How do you get the money to sustain your business? 

 i) Has anyone ever given you their money to trade with?  

 □ Yes: _________________________________________________  □No 

 ii) Have you ever got a loan or a bank overdraft? 

   □ Yes: _________________________________________________  □No 

 iii) Have you ever subscribed to a susu? 

   □ Yes: _________________________________________________  □No 

 iv) Have you ever received goods on credit? □Yes   □No 

(23) Have you ever helped others sustain their businesses? 

  i) Have you ever given money to someone else to trade for you?  □Yes   □No 

 ii) Have you ever given people your goods on credit?  □Yes   □No  

 

(III) FINANCIAL AUTONOMY 



 

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The following questions are about finances within your family. 

(24) Do you talk with anyone in the family about what to spend money on? □Yes: ___________  

□No    

(25) Are you able to support yourself and your family with the money that you earn? □Yes   □No 

        Is there someone else you could rely on for support? □Yes: ___________________  □No 

(26) Do you usually give the money that you earn to somebody else in the family?  □Yes   □No 

        If yes, to whom? _______________________ 

(27) Do you get any cash in hand to spend on household expenditures other than food? □Yes   

□No 

(28) If you wanted to buy yourself a small item of jewelry, such as a pair of earrings, would you 

feel free to do it without consulting somebody else in the family?   □Yes   □No 

(29) If you wanted to buy something for your parents or other family members, would you feel 

free to do it?  □Yes   □No 

 

This is the end of the survey. Thank you very much for your time! 

 

Annex 2: Interview Guide 

Thank you for doing the questionnaire for us a few days ago. Now we would like to ask you a 

few more questions, in order for us to better understand the story of your business. This 

interview should take no more than 40 minutes, and we greatly appreciate your help. 

1) Could you tell me how you started your business? What made you decide to go into this 

business, and what did you have to do to get started? 

2) What were the greatest difficulties that you faced trying to start your business, and how 

did you overcome these difficulties? 

3) Did anyone give you money to start your business? Did you have to pay interest, or 

provide something as collateral? Was it difficult to pay back? 

4) If you wanted to expand your business, or needed help to stay in business, how would 

you find the money to do so? Who might be likely to help you do it? Have you ever 

considered borrowing from (family members/ susu’s/ money collectors/ banks)? Why or 

why not? 

5) There are more and more banks opening up around here. Do you know about the services 

that they offer? Do you think you can benefit from those services? Why or why not?  

6) What are the greatest difficulties that you now face in keeping your business running? 

What do you do to try to overcome these difficulties?