You are currently browsing the monthly archive for March 2012.
> Posted by Holly Padgett
“Does Microfinance Work?” This question represents a very popular topic of discussion both inside and outside the microfinance industry.
One major milestone in the debate over this question has been the publication of David Roodman’s new book, “Due Diligence: An Impertinent Inquiry into Microfinance”.
For anyone who hasn’t been able to follow the conversations surrounding the book, CGAP recently posted, in Microfinance Gateway, a very interesting selection of blog posts, videos, and articles that were created in response to Roodman’s book. These response pieces not only raise questions about Roodman’s analysis, they also, more importantly, put forth ideas about the future of microfinance and the need for a more financially inclusive world. Read the rest of this entry »
> Posted by Chris Wolff, Senior Director of Corporate Partnerships, Accion
Many people who, like me, have crossed into the social sector from a for-profit background, want to see nonprofits take advantage of business principles to generate ever better outcomes. Continuous improvement is one such tool.
To oversimplify, continuous improvement involves capturing crucial performance data in ongoing feedback loops so staff can make enhancements to better serve customers. This process is best known in manufacturing, but the principle has been applied broadly. In service industries, where products are not purchased, cycles of market research and satisfaction tracking can still shape how companies iterate in delivering benefits to customers. Read the rest of this entry »
> Posted by Center Staff
In her latest article for Huffington Post, Elisabeth Rhyne addresses an important question raised in David Roodman’s new book Due Diligence: the contribution of microfinance in institutional development.
The post begins:
David Roodman’s book, Due Diligence, shapes today’s public conversation about microfinance. Time magazine, The Washington Post and others, have picked up on the book and its message. With, as his subtitle says, an impertinent but serious, approach, Roodman’s book attempts to answer a basic question: Does microfinance work? Read the rest of this entry »
> Posted by Center Staff
The posts in this edition of Top Picks cover a variety of topics including the importance of a comprehensive unique identification system for India, World Water Day, environmental impact investing, and social entrepreneurship.
- A recent post from CGAP, “The biggest social experiment on the planet – Is unique ID a unique opportunity for India’s poor?” presents the idea that unique government-issued IDs can be crucial for financial inclusion and for significantly improving the delivery of welfare services in India.
- In celebration of World Water Day on March 22, Acumen Fund compiled an intriguing selection of photos related to water from several different countries. Check out the compilation in their recent post, “Capturing the best for World Water Day 2012”.
> Posted by Danielle Donza
As the European Union presses ahead with plans to impose quotas that would increase the proportion of women on company boards, I am reminded of a recent conference call where a participant expressed frustration with a similar investor-imposed quota that required at least two women to serve on the board of a microfinance institution. Citing a lack of qualified board members in the microfinance industry, let alone qualified female board members, he said, “I can go out and ask two of my female friends to sit on the Board but they aren’t going to contribute anything.”
This “checking the box” perspective is not only unjust; it also represents a bad business decision. Studies reveal that “firms with equal representation of women on their boards had 56 percent higher operating profit compared with companies with all-male boards.”
Women comprise 51 percent of the population, control approximately 80 percent of household spending, and yet only make up 15.7 percent of Fortune 500 boards of directors and less than 14 percent of board members for Europe’s biggest companies. Read the rest of this entry »
> 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. Read the rest of this entry »
> Posted by Shari Berenbach, Director, Office of Microenterprise Development at USAID
This post is part of the Center for Financial Inclusion’s Expert Exchange: Building A Movement Toward Financial Inclusion by 2020, cultivating conversation around the goal of reaching full financial inclusion by 2020. For further questions about this series, write to , Fellow, Center for Financial Inclusion at ACCION International.
There is a wonderful Dr. Seuss book that I used to read to my daughter when she was little. I think the spirit of the book captures the critical place that microfinance finds itself in right now. It’s called Yertle the Turtle and other Stories.
When I was CEO of the Calvert Foundation, I began to read the book as a metaphor for my own work, and I see that even more strongly now from my vantage point as Director of the Office of Microenterprise Development at USAID.
In the book, Yertle plays an eponymous king whose kingdom is the size of a small pond. He convinces the turtles in his pond to stack themselves underneath him so that he can see further and expand his kingdom. At each height, Yertle looks around and declares, “I’m ruler of all that I see.” His world continues to expand, and his vision for his kingdom grows to fit that world. Read the rest of this entry »
> Posted by Julie Shea
Large scale commercialization of microfinance institutions (MFIs) has led to an increased focus on profitability and with that a growing fear of “mission drift.” In an industry facing increased demands for both social and financial performance, how can investors in microfinance funds ensure that both of these “bottom lines” are appropriately balanced? One way is to create incentive structures that measure and compensate fund managers and the managers of the microfinance institutions (MFIs) in which they invest in accordance with the stated mission of the fund.
Paul DiLeo of Grassroots Capital Management, in his recently published paper, Re-Positioning Microfinance with Impact Investors: Codes of Conduct and “Social First” MFIs, argues that investors should do a better job of articulating their fund’s priorities. Rather than promoting a single, standard model, DiLeo promotes a framework, developed by the Monitor Institute, that more clearly positions funds along a spectrum from “Social First” to “Financial First”. In adopting this framework, investors are encouraged to provide transparency and to attract likeminded investors that support the mission of the MFI. Read the rest of this entry »
> Posted by Brian A. Clancy, Chair, CFI Advisory Council
It’s impossible to know in advance if a trip will really move us – that is disrupt our expectations and breach our emotional defenses. Some trips with great promise are barely recalled a month later, while others with modest goals can change the way we see the world. In many cases the difference comes down to a single moment – a deep experience of authenticity that’s somehow both highly specific and universal. But before I get any further into that, I have some self-centered complaining to do.
Heading into a recent trip I just wasn’t in the mood to board another plane. However I was on the very threshold of acceptance when I heard the bad news. I would be in the air for the kickoff of pro football’s “game of the year” – the playoff between my local team (the Patriots) and the Tebowmania-fueled Broncos. For all my efforts to keep a stiff upper lip, my mood turned decidedly dark. Sure, our gracious host, award winning Ecuadorian MFI Banco D-Miro, was doing important work, but didn’t the world being flat mean we could do this whole thing by video conference and reduce our carbon footprint to boot? And come to think of it, isn’t the weather in Guayaquil this time of year hot, humid and wet? My inner curmudgeon (who is a big football fan) had clearly gained the upper hand. Read the rest of this entry »
> Posted by Damian von Stauffenberg, Founder, MicroRate
This post is part of the Center for Financial Inclusion’s Expert Exchange: Building A Movement Toward Financial Inclusion by 2020, cultivating conversation around the goal of reaching full financial inclusion by 2020. For further questions about this series, write to , Fellow, Center for Financial Inclusion at ACCION International.
Why is it that microfinance has grown at such an explosive pace while other development initiatives, which originally looked just as promising, have languished? What’s different about microfinance?
In development, we too often see efforts that look good, but that lack life. Let me offer an analogy in which a tree symbolizes a development project. In this example, a development agency could decide to simply build the tree. To do so, it finds some leaves and pastes them on branches. It then pastes these branches onto a stump, and finally it drills holes for some roots into the stump. If it is skillfully done an impressive tree will result that can be inaugurated, photographed and featured in the agency’s newsletter.
The problem is of course that this tree, though beautiful to behold, is not alive. We have created something that will not grow. To the contrary, eventually it will disappear. All of us have seen such “trees” in the world of development. Read the rest of this entry »
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