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> Posted by Julie Shea
As investors increasingly seek out social impact investing opportunities, microfinance continues to present an attractive opportunity for achieving double bottom line goals.
However, some countries are way ahead of the pack in terms of their social impact investing efforts. Investing in microfinance has gained particular traction in certain European countries, specifically the Netherlands and Switzerland, while investors in the US and UK have been less responsive to microfinance investment opportunities.
One example of social investing in microfinance coming out of the Netherlands is the Dutch Triodos Bank, which as of December 2009 had 236 million euros under management in its four microfinance funds. Read the rest of this entry »
> Posted by Jessie Cronan
Kilimani Chini looks, at first glance, like the backdrop for a “Save the Children” infomercial. With a name literally meaning “the road down” in Swahili, Kilimani Chini is composed of five crumbling brick structures, the remnants of a camp for coffee pickers built in the 1950s. A few women poke their heads out of dark doorways, casting cursory glances at the crowd of toddlers who play in the dust. There are no men in sight.
As a Princeton-in-Africa fellow with the Rift Valley Children’s Village (RVCV) an American-run NGO, I spent 18 months living just down the road from Kilimani Chini. I taught the village children at the local primary school, I lobbied for community support for new educational initiatives, and I encouraged parents to invest in the future of their children. When, a few months into my stay, the organization launched a microfinance program, I tagged along with the microfinance director as he conducted market research, held initial meetings with community leaders, and eventually made the first round of loans. I sat in the back of our crowded Rec hall during financial literacy seminars and attended daylong programs on budgeting. And I waited, with bated breath, for the transformational change that I was certain was just around the corner. Read the rest of this entry »
> Posted by Elisabeth Rhyne
To the 30 or so people who came together to talk about microfinance impact during a session at the recent Microfinance USA 2010 conference, I posed the question: “What do you hope to achieve through your work in microfinance?” Not surprisingly, the first thing shouted out was “Lifting people out of poverty.” The list continued: women’s empowerment, stabilizing incomes, smoothing consumption, creating and saving jobs, building businesses, opening the financial system to everyone, promoting a just and equitable society, and more. I was moved by aspirations reflected in this list. The people in the room bring their best hopes for making a difference in the world to their work in microfinance.
"Microfinance Miracle or Myth" session participants sketched out their definitions of microfinance impact.
In the lunchtime session, we noted the variety of ways that the group learns about the impact of their work, from talking with clients, to tracking their performance, to carrying out surveys. As an international microfinance practitioner, I was struck by how much easier it is to get reliable information about client status in the U.S., where business records are more formal than in developing countries. We briefly discussed the randomized control trials that have been garnering great attention. The trials are the only method with a claim to demonstrate causality. Read the rest of this entry »
> Posted by Elisabeth Rhyne
At next week’s Microfinance USA conference, I have the honor of leading a session on one of the hottest topics in microfinance these days: impact. Interest in impact has surged recently because of the big press coverage garnered by the researchers associated with MIT’s Poverty Action Lab and their new randomized controlled trials. At the session we’ll talk about how these new studies work (in layman’s terms – I’m no econometrician) and what their results are showing about microfinance.
To start off, I’d like us to consider all the ways we can learn about the impact of microfinance. Like these:
- The seeing-is-believing method – otherwise known as talking to clients or anecdotal evidence.
- The market method – if customers pay for the services, they must value them.
- The institutional method – sustainable institutions that serve the poor are prima facie contributions to more inclusive societies.
- The anthropological approach – talking intensively to clients in a structured way that allows inferences to be drawn. Recently the Financial Diaries approach has done this.
- The simple quantitative-survey approach – used for years despite suffering from many design flaws.
- And finally, the experimental-design approach, a statistically rigorous model patterned after medical drug trials, which is capturing today’s headlines.
I think we learn from all of these methods. It’s like we are painting a picture using different kinds of paint and brushes. Gradually, our picture takes on shape, color and texture, and ultimately all these elements come together to convey meaning. Read the rest of this entry »
> Posted by Charlotte Connors
The microfinance community has not shied away from talking about an extremely complex and sometimes sensitive issue: the impact of microfinance. We at the Center for Financial Inclusion are happy to see the tough issues being tackled from all sides and hope to help facilitate further discussion. Below are links to two recent posts by Rich Rosenberg and Chris Dunford.
Different Levels of “Knowing” the Impact of Microfinance
Posted by Chris Dunford, Megan Gash and Bobbi Gray Kotara, Freedom from Hunger, April 30, 2010
http://www.freedomfromhunger.org/blog/?p=34
A Fine Blog on the Impact Debate
Posted by Richard Rosenberg, CGAP, Wednesday, May 5, 2010
http://microfinance.cgap.org/2010/05/05/a-fine-blog-on-the-impact-debate/
> Posted by Kelley Mesa
In case you missed Elisabeth Rhyne’s post as we entered the holiday season, we give it to you again…
The Market as a Measure for Microfinance
> Posted by Elisabeth Rhyne
December 23, 2009
Many thanks to David Roodman for bringing people’s attention to an argument that I have been making for years: that measuring microfinance’s impact is far more complex than finding a one-to-one correspondence between a given loan and a client’s subsequent economic status.
I’d like to take the discussion a step further and consider why this message has been so hard to get across to donors and investors, researchers, and the general public. First, let’s look briefly at the main points.(If you disagree with any of them, I hope you’ll read the longer excerpt on David’s blog, or the chapter available here of The New World of Microenterprise Finance, on which it’s based.) Here they are:
- The causal links between receipt of financial services by individual borrowers and their subsequent economic growth are affected by many factors, finance being but one part of a complex process of decision making by enterprises and households. Clients use finance for a variety of purposes: protection against bad times, facilitation of efficient business operations (liquidity), and financing of investments. And they face a wide range of external forces, like competition, markets, health, weather, security, etc. The effect of finance is not likely to be as clear-cut as the effect of these other factors. Evaluations tend to strip out the richness of these dimensions.
- The service-client relationship is best measured by a market test of demand, or the willingness of clients to pay. If people pay full cost for a service on an ongoing basis, then evaluators can be sure that the service is valued at least as highly as its price.
- Microfinance has been all about building institutions, and more important, Read the rest of this entry »
> Posted by Elisabeth Rhyne
Many thanks to David Roodman for bringing people’s attention to an argument that I have been making for years: that measuring microfinance’s impact is far more complex than finding a one-to-one correspondence between a given loan and a client’s subsequent economic status.
I’d like to take the discussion a step further and consider why this message has been so hard to get across to donors and investors, researchers, and the general public. First, let’s look briefly at the main points.(If you disagree with any of them, I hope you’ll read the longer excerpt on David’s blog, or the chapter available here of The New World of Microenterprise Finance, on which it’s based.) Here they are:
- The causal links between receipt of financial services by individual borrowers and their subsequent economic growth are affected by many factors, finance being but one part of a complex process of decision making by enterprises and households. Clients use finance for a variety of purposes: protection against bad times, facilitation of efficient business operations (liquidity), and financing of investments. And they face a wide range of external forces, like competition, markets, health, weather, security, etc. The effect of finance is not likely to be as clear-cut as the effect of these other factors. Evaluations tend to strip out the richness of these dimensions.
- The service-client relationship is best measured by a market test of demand, or the willingness of clients to pay. If people pay full cost for a service on an ongoing basis, then evaluators can be sure that the service is valued at least as highly as its price.
- Microfinance has been all about building institutions, and Read the rest of this entry »
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