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> Posted by Joshua Goldstein aka Mr. Provocative

There is unfortunately no reliable substitute for family support when it comes to helping a person succeed with their schooling, with their disability, or with their microfinance loan.

Thomas Friedman of The New York Times recently asked educators in Shanghai what made Chinese schools successful, compared to schools in the United States. The unequivocal answer was that while improved teacher training that the U.S. emphasizes was of course important, far and away the key to student achievement was intensive parental involvement; Chinese schools spend time and resources insuring that parents are trained in how to help their children learn.

A heretical Mr. Provocative agrees with conservatives that throwing billions into the latest education reform fad will have extremely limited success as long as family support is anemic or absent. (This is not to say that reformers don’t routinely ask parents to take more responsibility but clearly such a nudge is not enough.) “It’s the parents, stupid,” or, “It’s the family, stupid.”

We have to point at the family as the prime mover even when this is hurtful and it causes “guilt and shame.” Nothing wrong with pricking the conscience. This is a “theory of change” that is millennia old and has long had some success for most religions—in a positive way. But public policy cognoscenti shun the language of judgment and conscience. In not asking more of families are we not party to what George W. Bush called “the bigotry of low expectations?”

My “it’s the family, stupid” sentiment has been reinforced by listening to a recent Ted Talk by Stanford graduate and Rhodes Scholar, Rachel Kolb, who was born profoundly deaf.

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> Posted by Joshua Goldstein aka Mr. Provocative

It is time for an impact study on the value of so many microfinance conferences. What drives and sustains this cottage industry, rife with redundancy, terrible for the carbon footprint, a wound to a poor NGO’s bottom line, and arguably a poor use of staff time, especially when said staff is in charge of putting the conference together?

Yes, I know the arguments for attending and/or putting on conferences: networking with newbies and golden oldies; sharing interesting, even industry disruptive ideas; exploring or deepening partnerships with other kin; raising the visibility of the industry through the media that finally this time will give microfinance the coverage it deserves.

And ABOVE ALL, may the gods be merciful, connecting us with the funders to insure the NGO’s future in perpetuity—or at least until the end of the calendar year.

All these are valid and honorable reasons to attend—in moderation.

As for me, I am a guilty regular at the parties among other guilty regulars, who I am quite sure may harbor some of the same doubts about the number of annual microfinance extravaganzas on the docket that I do—all conferences claiming to be the one indispensable conference that no one can afford to miss. Like me, they surely reflect on how the bucks spent on air fare, four star hotels, lavish meals, and other extravagances could be used directly to relieve a thousand human beings suffering in poverty somewhere with a direct cash transfer. And instead are being used to cosset us like the poverty royals that we are.

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> Posted by Josh Goldstein aka Mr. Provocative

Economic inclusion for persons with disabilities (PWDs) is more possible than ever because of technological innovations that can transform the workplace, by making it accessible for persons with different kinds of disabilities. Screen reading software for the blind is just one example. Furthermore, there are some twenty-first century jobs that may perfectly fit the skill set of certain PWDs.

One recent stellar example of PWDs entering the workforce in a new way was reported by Emma Jacobs of the Financial Times on June 7. She spotlights the achievement of Thornkil Sonne, a Danish businessman (and Ashoka Fellow) who supplies autistic recruits to the IT industry and has shown that people with autism routinely demonstrate superior skills compared to their non-autistic peers. Many persons with autism (but by no means all) excel at data entry, software programming, and other technical tasks. This has persuaded SAP, the profit-driven German business software company to recruit 110 autistic employees to test its software products.

Globally, there are millions of vacant jobs in IT. So this could just be the beginning! Such employment opportunities that capitalize on the strengths of the differently-abled to such a degree that they are actually preferred candidates for certain positions in a competitive marketplace is truly extraordinary, even revolutionary, and is something we can all celebrate. But there is a dark side to technological innovations that may doom PWDs just as new opportunities and new acceptance appear on the horizon.

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> Posted by Josh Goldstein aka Mr. Provocative

The painful crawl toward full inclusion of all citizens in all realms of activity is one of the major storylines in American history. It is a key measure of the success of our democratic experiment that we, the people of the 21st century, continue to work with uneven success to perfect our society. How far we have come from the republic of our 18th century founders when only white male property owners enjoyed the privileges of full citizenship! But the advances toward equal rights and opportunities for women, African Americans, gays, persons with disabilities, and other minorities have come through the hard work over many generations of devoted citizen activists fighting for their causes and constituencies.

The point is that rights are not obtained by one Presidential decree, like the Emancipation Proclamation freeing the slaves in Confederate territory, or one legal remedy, like the 19th Amendment to the United States Constitution that enshrined women’s right to vote. These were essential milestones that secured progress, but they were preceded by decades of struggle and would have proven ephemeral if the generations that followed had not persisted in that struggle. There were many setbacks and detours along the way. Nothing was automatic or achieved without extraordinary persistence and sacrifice.

In pursuing financial inclusion, the Center for Financial Inclusion works toward this ideal of non-discrimination, with a special emphasis on economic equality and opportunity for poor people around the world. Nowhere is this more pointed than in the “Responsible Treatment of Clients” principle, one of the Smart Campaign’s Client Protection Principles for customers of financial institutions.

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> Posted by Josh Goldstein aka Mr. Provocative

The elephant in the room of vulnerable minorities that continue to be excluded in large numbers from microfinance services is the globe’s second largest population after women: men. The vulnerability of men is often overlooked, due to their historic domination of women and their control of wealth in most societies throughout recorded history. Of course for every wealthy landowner or merchant, there were many slaves, landless laborers, and indentured servants, who controlled none of the world’s wealth and were lucky if they scratched out a living.

When microcredit first gained traction and credibility as a poverty alleviation strategy in the seventies, creating self-employment opportunities for women in the informal sector was central to its mission. Organizations like Women’s World Banking (birthed at the UN’s World Conference on Women in 1975) and Pro Mujer (1990) embodied this outreach strategy. There were very sound reasons to focus on women, who are and remain the poorest of the poor. And this emphasis reflected the zeitgeist of the time, as many of the early leaders of microfinance came of age in the women’s movement. Theirs was a struggle for equal rights and equal pay in societies that were patriarchal and discriminatory. It was a logical next step to bring this message of women’s rights to international development work.

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>Posted by Josh Goldstein aka Mr. Provocative

What do we know about gender wage equality at microfinance institutions? Is greater operational efficiency at MFIs achieved in part at the expense of women’s pay? Discrimination against women as employees is pervasive around the world.  For example, in the United States, it was only in 2009 that the Lilly Ledbetter Fair Pay Act became law. Even today, American women continue to earn significantly less than men for comparable work—77 cents to every dollar, according to some studies. I have looked around for evidence that MFIs are conscious of this issue, but my research uncovered no clear insistence for compensation equality for the employees of microfinance institutions from either social investors or industry standard setting groups. In fact, the issue isn’t discussed or even raised.

The highly regarded and influential Social Performance Task Force (SPTF) recently adopted Universal Standards for Social Performance Management, which sets social performance goals for MFIs. The standards are representative of this striking silence on the issue of gender wage equality. While the document includes treating “employees responsibly” as one of the six key areas that must be addressed, it merely affirms blandly: “5a.2 Employee compensation levels constitute a living wage for employees.” It is only in the “Additional Good Practices” annex that the SPTF is more expansive about management standards when it comes to employees, but even then it does not specifically address wage discrimination, see the following: Read the rest of this entry »

>Posted by Josh Goldstein aka Mr. Provocative

It is striking to a regular reader of microfinance books and articles how little  global poverty is analyzed in terms of class differences and “man-made” political inequality. Indeed it appears to be very nearly absent from the literature.

The lack of discussion about the root causes of poverty is surprising but perhaps an understandable backlash against the cold war era when simplistic Marxist analysis of capitalism as the evil behind every planetary woe–including  the great divide between the haves and the have-nots–gave the search for causation a bad name. Is it a mere coincidence that the rise of a “grassroots capitalism” (aka microfinance—the provision of small amounts of capital to the self-employed poor) as a new approach to poverty reduction, came at a time when Marxism as an ideology was increasingly seen as a catastrophic failure? The two great Communist giants, the Soviet Union and China (along with their proxies) had failed to surpass, let alone equal—the living standards of people in the Western capitalist democracies. By the mid-eighties, after a decade of growing disillusionment, a bipolar world had lost one of its poles and the “hegemony” of capitalism seemed beyond dispute.

To the founding mothers and fathers of microcredit in the late seventies (many of them disillusioned lefties, who had morphed into reluctant capitalists) focusing on the “why” of inequality was unhelpful and stood in the way of a pragmatic approach to economic empowerment. Read the rest of this entry »

> Posted by Josh Goldstein, aka Mr. Provocative

The proliferation of smart and cell phones in Haiti is nothing short of remarkable. Even people who seem to be among the poorest of the poor have them. When people at the so-called bottom of the pyramid truly desire a new technology and the price is not outlandish, they find a way to purchase it. Marchands (market women) peddle their wares on Port-au-Prince’s teeming streets under ubiquitous sun umbrellas that Digicel, the largest cell phone provider, has handed out by the tens of thousands.

And Haitians, as I recently learned, often use these phones to text, email, or call relatives in the diaspora to ask them to remit money. Remittance transfers from relatives in the US, Canada, and elsewhere is the one source of reliable income for many of Haiti’s poor. When I visited Fonkoze’s bank in Port-au-Prince, every person in the waiting area was there to collect a remittance — not to save or borrow.

Visitors to the island with any kind of conscience struggle with the enormity of the suffering they encounter. Many provide cash gifts to Haitians they get to know, just to “do something,” hoping to make a small difference in a life or two. There is nothing new about this kind of direct philanthropy in the poorest country of the Western Hemisphere. But today, thanks to the communications revolution, that sense of responsibility for acquaintances (who are not relatives) can persist, and vividly so, after visitors leave the island.

Before departing from Boston for Haiti this spring, I hired a driver, based in Port-au-Prince, whom I will call Hector, to drive my daughter and me around the island.  We had “met” through email, connected by a friend who had used his services in the past. Hector and I exchanged a few courteous emails and telephone calls to take care of logistics (I assumed he was a man of some means because the Haiti I knew in the 1990s was a place where only the wealthy had phones.) Hector wrote me exactly as follows:

my dear friend Johs, the pleasure  is mine to get ur massage today, i think whenever you wanna come in haiti u will be welcome, and i will be glad to spend you my time.i will be happy to receive u may 18th,11 cause it’s haitian’s flag party,my phone number is:xxxxxxxxxxx available anytime

The Hector who met us at the airport was a very nice 28-year-old man, brimming with life and contagious bonhomie. He was available to chauffeur because he was unable to find any steady work — in spite of having some college education.

There are, of course, millions of poor Haitians like Hector, but they usually remain a bloodless, undifferentiated abstraction, and it is hard for most of us to stay emotionally connected to an abstraction for long. It was Hector I got to know as person, who took good care of me and my daughter. I learned about his evangelical minister father, his little brother (a part-time dispatcher for Handicap International), and his fiancée (a nursing student in New Orleans). I met a sister-in-law. Solidly lower-middle class, I suppose, but by Haitian standards. He did not shout his desperation — he had too much dignity for that. He had many dreams, but his frustrated ambition to do something with his life in Haiti was heartbreaking. Read the rest of this entry »

> Posted by Josh Goldstein, aka Mr. Provocative

 What international development interventions truly work? I say, with absolute conviction, mine does. You say, with absolute conviction, yours does. Who to believe? Where does the truth “lie”?

The Center’s recently published report “Opportunities and Obstacles to Financial Inclusion” is highly illustrative of how hard it is for varied stakeholders  to agree on what is actually true—in the case of this study, the top obstacles and opportunities to the expansion of financial services to all who need them. As Gardeva and Rhyne write, “Segmenting the survey responses by stakeholder group [providers, investors, support organizations  and regulators] shows how each group’s priorities in financial inclusion align with its main interests as well as its day-to-day realities.”

This tendency to self-serving perception is hardly limited to the microfinance or even the development arena. What diet really sheds the pounds once and for all? What educational reform really improves the performance of school children? Every approach has its fervent champions. Thus, many contradictory, competing claims over efficacy and impact.  Most advocates for their respective causes are not scoundrels or sociopaths but well meaning “everymen” convinced of what they say, wedded to their viewpoints, because their professional survival depends on it.

Someone must be wrong. Everyone can’t have “God on their side.”

Competing institutional priorities and agendas between organizations or, indeed, within different divisions of the same organization, almost ineluctably lead Team X and Team Y to different versions of reality (competing belief systems). Recently, a new biography of one of the pre-eminent physicists of the twentieth century, Richard Feynman, crystallized in my mind this stubborn and vexing feature of human affairs that slows down communal progress in countless ways.

Illustrative of Feynman’s relentless pursuit of the facts is the role he played in investigating the Challenger Space Shuttle disaster of 1986, which resulted in the death of all the astronauts on board.  As Freeman Dyson writes in the July 14th issue of the New York Review of Books, Feynman was told radically different narratives about the accident by the key teams working on Challenger: “the engineers and the managers, who lived in separate worlds and did not communicate with each other. The engineers lived in the world of technical facts; the managers lived in the world of political dogmas.”   One example: the engineers estimated the risk of catastrophe at 1 in 100 missions; the managers at 1 in 100,000, a shocking disparity.  The engineers, Feynman reported later to the public had it right. Read the rest of this entry »

> Posted by Josh Goldstein, aka Mr. Provocative

In the wake of BP’s drilling catastrophe in the Gulf of Mexico, oil companies are facing a possible revolt by profit-conscious shareholders who fear that these firms aren’t moving aggressively enough to operate safely, according to Ed Crooks, a reporter for the Financial Times.  At the same time, the repercussions from the disaster in Andhra Pradesh continue to send shock waves across the microfinance industry. What are the parallels here?

First, to the BP debacle. Costly as it will be to the bottom line in the short run, good environmental stewardship of the environment will maximize shareholder value — in the long term. In fact, pursuing the maximization of short-term shareholder value arguably led to unsafe practices, and ultimately, disaster. So shouldn’t  profit-driven investors be most alarmed that one more major accident might conceivably drive BP into bankruptcy and render its shares worthless?

What’s also clear is that other companies in the same business share the same risks as BP. As Ceres, the investor network, emphasized to Crooks, “the whole oil industry has an interest in raising the standards of the weakest [industry players] because the consequences of an accident can damage companies that have not made any mistakes.”

In that context, let’s  now turn to microfinance and its muddied reputation in the wake of Andhra Pradesh. Just substitute the word “poor” for the “environment” and the scenarios facing this industry and its shareholders are strikingly parallel. The shortcomings of microlenders (over-indebting clients in a headlong rush for growth) fueled an explosion of bad press and political opportunism that ultimately put all Indian microfinance at risk. The resolution of this crisis in India remains uncertain. More broadly, the global fallout from the crisis in Andhra Pradesh is damaging the reputation of the whole microfinance sector.  Read the rest of this entry »

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Credit Suisse is a founding sponsor of the Center for Financial Inclusion. The Credit Suisse Group Foundation looks to its philanthropic partners to foster research, innovation and constructive dialogue in order to spread best practices and develop new solutions for financial inclusion.

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