I very much agree with some of this … but not all. The trouble with much of the work on metrics has to do with the inherent conflict between statistical rigor, accuracy, usefulness and cost in the analysis of a complex system. I want more understanding of causality and not just mere “correlation” to emerge from the studies that are done. The fact that evaluation studies are inconclusive about the performance and value of microfinance is not surprising … in fact, I would argue any other result would be surprising.

Socio-economic performance is a function of many factors in a community, of which financial access is just one. Where there are five factors constraining community socio-economic progress and performance, of which finance is one, then there will be some reduction in the constraining factors when microfinance is introduced, but there will still be four constraints left. In this situation, progress and performance in the community may well not change very much. Where there are parallel initiatives that reduce all the constraints, then socio-economic progress can be made.

Community Analytics (CA) recognizes this characteristic of socio-economic progress and performance. CA goes beyond money profit performance to a broader set of value performance measures, and using multiple baseline time series it is possible to track and understand socio-economic progress in a community as different initiatives are implemented. This can work for microfinance just as it does for other interventions like health and infrastructure improvement.

The market test is not, in my view, a good way to get the right allocation of resources unless the market metrics are about value more than they are about money measures … and even then I am not so sure. The market measure needs to be handled with care … and is quite capable of delivering bubbles and busts with nobody really appreciating what has happened. The work done by some eminent economists in recent years points out that starvation happens not because the suppliers are not supplying, but that those that need cannot afford. This is an important subject … and there is a lot more to be said.

Peter Burgess