Microfinance and progress out of poverty

Dear Colleagues

I have written a number of times over the years that the popularity of microfinance in the international development assistance arena came about in good part not because it was such a good intervention in terms of progress out of poverty, or anything like that, but that it was so much better than the standard development project structure that used money for two years or five years, or whatever was the project duration, and then folded up and went home, leaving not very much behind. Even though it might not be doing any sustainable socio-economic good, the financially sustainable micro-finance institution was still there and so was the money.

I have heard Dambisa Moyo, the author of Dead Aid remark about development assistance for Africa: "60 years and a trillion dollars and so little to show for it!". Measured against this, microfinance has a high performance!

None of this should come as a surprise to anyone. The primary metrics for performance in the development assistance industry for years was the scale of disbursement ... which in my view and many others who are serious about metrics ... is a guarantee of minimal performance.

Hopefully, one of the outcomes of the dialog about whether or not microfinance performs or not will be some more serious attention to how metrics get done.

Peter Burgess