> Posted by Meghan Greene
The Microfinance CEO Working Group consists of the CEOs of leading microfinance organizations ACCION, FINCA International, Freedom from Hunger, Grameen Foundation USA, Opportunity International, Pro Mujer, VisionFund International, and Women’s World Banking. In the post below, the CEOs respond to the recent Washington Post article by David Roodman.
This may surprise you. As the CEOs of eight global microfinance organizations, we largely agree with the substance of David Roodman’s March 8 op-ed “Microcredit doesn’t end poverty, despite all the hype.” The headline, however, is just silly.
The hype is long over. The industry agrees that microcredit is not a “silver bullet” to end all poverty, even though it can and has helped many people build better livelihoods. As Roodman says, “Financial services are like clean water and electricity – they are essential to leading a better life.” To significantly improve the lives of the majority of the 2.7 billion people living in poverty, we need a number of essential ingredients: education, health care, basic nutrition, the rule of law, infrastructure – and access to a variety of financial services especially designed for the poor, including credit.
The leaders of the microfinance industry have known this for some time. And the industry has been moving in this direction for many years. Today, the frontiers of microfinance go well beyond microcredit, to include savings, insurance, money transfers and other products that, as Roodman points out, the poor need just as much as the rich to manage their financial lives. These financial services are important tools that help individuals manage their businesses, cope with unpredictable cash flows, build assets, and afford lump-sum expenses, like health emergencies and school fees. Microfinance institutions are harnessing new technologies to expand their reach and to serve clients faster, better and cheaper than before.
Today, microfinance reaches about 200 million clients worldwide, a tiny fraction of the billions whose lives would be better with access to these basic services. We have much more we need to do, but continuing to debate about whether microcredit – by itself – can end poverty is distracting us from the far more important question of what we can do to assist the poor.
The Microfinance CEO Working Group
Michael Schlein, President and CEO
ACCION
Rupert Scofield, President and CEO
FINCA International
Steve Hollingworth, President
Freedom from Hunger
Alex Counts, President and CEO
Grameen Foundation USA
David Simms, Board Chair
Opportunity International Network
Rosario Pérez, President and CEO
Pro Mujer
Scott Brown, President and CEO
VisionFund International
Mary Ellen Iskenderian, President and CEO
Women’s World Banking
Image credit: frontpagemag.com
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March 23, 2012 at 3:36 pm
droodman
Dear Microfinance CEOs,
I of course largely agree with almost all of what you write. Whether the Post headline is silly, though, I am less sure. Do you know their audience better than we do? My blog reply is here:
http://blogs.cgdev.org/open_book/2012/03/maybe-not-so-silly.php
Thank you.
March 24, 2012 at 11:50 pm
saha dev
The objectives of micro finance is not just ending poverty but encompass a larger canvas. Financial inclusion, inculcating thrift, access to hassle free credit are the more important objectives. Micro finance is one essential ingredient in the recipe for progress out of poverty.
April 6, 2012 at 5:12 pm
sd kanu
Thank you working group for the apt response. Poverty has many causes and therefore many solutions not simply access to credit.
MF practitioners have far more work to do than all these debates which neither contribute to putting food on the poor family’s table nor to paying kids school fees.
April 15, 2012 at 5:07 am
massimochiaia
Dear Meghan, I completely agree with the MF CEO Working group. Anyway I would like to focus on the priorities of:
“education, health care, basic nutrition, the rule of law, infrastructure – and access to a variety of financial services especially designed for the poor, including credit.”
You just wrote the right order in my point of view : Education is essential to achieve knowledge, to build hospitals, to produce local food and water, to ensure some fundamental human rights, to build infrastructure and finally to maturely access finacial services. Don’t start the novel from the epilogue, please let’s start from the prologue: Education together with basic financial access as tool to provide education access to more and more children.
Please consider we need more open minded and creative educational paradigmas also in our “rich” western world in order to really address such an NP complete problem like poverty on planet Earth.