With under 40 days to go, the 17th Microcredit Summit is rapidly approaching. CFI’s Josh Goldstein will be speaking during a plenary session focused on new innovations for microfinance and other financial inclusion interventions to more effectively reach the excluded. With the theme “Generation Next: Innovations in Microfinance,” this should be a great opportunity to explore what is on the horizon to achieve full financial inclusion. In this post, Josh discusses industry context surrounding the Summit, and what he hopes he and those in attendance will be able to take away from the event.
I am a sometime skeptic about the proliferation of microfinance conferences, but the upcoming Microcredit Summit in Merida, Mexico seems particularly important and timely. Personally, I am very excited about it. (In the spirit of full disclosure, I should add that I will be a speaker, and of course piqued vanity can certainly lead to bias, but I don’t suspect this is the case here.)
After reading the recently-released 2014 Microfinance Banana Skins report, which I think is excellent, I couldn’t help but come away with the feeling that the practitioners, regulators, and investors who listed the 19 risks confronting microfinance, leading with overindebtedness, missed a most important risk. Not that the risks like poor governance, overindebtedness, and staff competence that are enumerated in the report are not incredibly important; they certainly are. But I would argue that a failure of vision for a better world is the mother of all risks and that without vision, stagnation and decline inevitably set in.
I believe that financial services that MFIs provide are instrumental in helping the poor have better lives, but I also believe that they should never be seen as an end in to themselves. The Microcredit Summit Campaign shares this client-centric outlook. While sustainability and profitability are certainly important measures of an MFI’s success, it is of precious little importance if the poor client, “the end user” does not achieve a better quality of life – or at least have a chance for such.
Of course I am well aware that the advent of randomized control trials (RCTs) as discussed in the new Banana Skins eviscerated some of the triumphalist claims of the 1990’s and 2000’s of microfinance as the sine qua non of poverty alleviation tools. The extravagant claims of some in the industry do us no favors when they boast of “lifting millions of people out of poverty,” or putting “poverty in a museum,” as Muhammad Yunus once proclaimed. But as one of the RCT doyennes Esther Duflo (of the Poverty Action Lab at MIT) says, this does not mean that microfinance is not making an important difference in the lives of the poor.
Indeed, if poverty is made more bearable, if children of our clients have slightly better prospects than their parents, that is an achievement to shout about from the rooftops. Incremental change, not utopian change, is still change and is far better than sitting on our hands doing nothing. We live in an imperfect world and very few reforms in any realm lead to conclusive slam dunks – whether it’s in education, health delivery, or poverty reduction.
But back to why I am enthusiastic about the upcoming Microcredit Summit. To put it simply, more than any other microfinance conference I know of it keeps the idealism of the industry’s founding mothers and fathers alive. It is not afraid of having a vision for a better world and holding microfinance practitioners accountable as change agents.
Indeed, at the 2013 Summit in Manila the Campaign asked for Campaign Commitments from attendees to improve the lives of the poor in some concrete, tangible way. In line with the mission of the Campaign and the Summits, commitments declared the ways that the attending institutions and organizations would help 100 million families lift themselves out of extreme poverty and thereby make a major step forward in ending poverty by 2030.
For our part, the Center for Financial Inclusion committed to publishing a series of disability inclusion tools and trainings, developed with our strategic partners Fundación Paraguaya and Handicap International, for use by MFIs around the world. We also committed to customizing the Center’s Roadmap for Disability Inclusion for the Indian MFI market, implementing it at three MFI partners, and then disseminating these findings around India.
We have taken this commitment seriously and are doing our best to fulfill it by the end of the calendar year.
Other commitments included:
- Microfinance Council of the Philippines: By 2014, conduct and capacitate the Council’s members on social audit and client protection tools including standards on social performance management.
- BRAC Tanzania: By the end of 2014, double the number of both clubs and participants in the Empowerment and Livelihood for Adolescents program from 180 clubs reaching 7,600 girls to 360 clubs reaching 14,800 girls.
- The Arab Gulf Program for Development (AGFUND): Open an AGFUND bank in the Sudan by the end of 2013, as well as two new AGFUND banks in Palestine and the Philippines by the end of 2014.
If the Summits’ rhetoric sometimes seems a little grandiose, I personally quibble with the language of “lifting themselves out of extreme poverty,” as you might guess. Though to me this is a venial not mortal sin. What would a mortal sin be? Being so weighed down by cynicism that a dream for a better world becomes a subject of quiet irony or outright derision.
The Microcredit Summit Campaign reminds all of us that the success of our MFIs is ultimately measured by whether they extend responsible financial services to more of the unbanked so that they have a chance to improve their lives. It is the wellbeing of the client that must always come first. If we lose sight of that, we might as well go out of business.
Click here to learn more about the plenary session “Reaching the Excluded” and other topics presented at the Summit.
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