Wednesday, July 28, 2010

Microfinance ... another conference without much on meaningful metrics!

Dear Colleagues

I just got this e-mail about an upcoming microfinance conference in October. Good ... I have saved the date. Bad ... I think it will be all talk about research and data about profit performance, with almost nothing that will serve to make the microfinance sector do a better job of getting sustainable progress out of poverty for the billions of people that need help!
On Wed, Jul 21, 2010 at 10:42 AM, dkarlan wrote
Save the Date!
October 21-23, New York City
Microfinance Impact and Innovations Conference
For researchers, practitioners, policymakers, investors and donors.
More information to come...

Microfinance reaches over 200 million clients globally, many of them impoverished and financially excluded. While the breadth and depth of outreach is impressive, there is comparatively little knowledge of which products and services work best for the poor and why. For over five years, Innovations for Poverty Action, the Financial Access Initiative, and the Jameel Poverty Action Lab have conducted dozens of rigorous studies to fill the knowledge gaps. This event, the Microfinance Impact and Innovation Conference, was created as a unique forum for both communication of accumulated knowledge as well as the generation of innovations in both microfinance product design and research. Sessions will touch on topics including microcredit, interest rates, microsavings and business training, among others, framed by questions of product design, marketing, usage and impact. Questions and issues to be discussed include:
* What is the impact of microfinance on the poor?
* How do interest rates affect the demand for microfinance products?
* How to design appropriate consumer regulation?
* Does business training help microenterprises?
* How to increase savings behavior among the poor?
* Microinsurance - impact and product design
My response to the MicroFinance Practice Group was as follows:
I have saved the date ... but my initial observation about the conference is that it does not seem to be planning on addressing the issue of metrics about microfinance and social value in a way that will ensure that the microfinance sector makes an ongoing contribution to the important matter of socio-economic progress and progress out of poverty.

My experience with microfinance since the 1970s suggests that socio-economic progress and performance depends on a whole portfolio of sector assets and activities ... and in some circumstances microfinance adds money that enables the social eco-system to improve the way it works ... and in other circumstances microfinance adds money but no progress.

The metrics need to have not only an organization focus, but also a community focus ... but I do not see anyone working on this in the academic space or with substantial foundation support at this time. Meanwhile, there are more and more metrics like the SEEP initiatives that seem to be heading us in a direction that turns microfinance into just another financial intermediary service aiming at profit performance more than anything else.

Maybe there are initiatives that I do not know about ... but I don't think so!


Peter Burgess
I am hopeful that soon there is going to be a change in the approach to socio-economic metrics so that value as well as profit is in play. Muhammad Yunus noted the need for value based metrics in his writings several years ago ... but since then the measure of profit has become bigger in the microfinance community and progress out of poverty is less and less prominent in the metrics. Worse ... data seem to show that progress out of poverty is not being helped very much by microfinance.

My own experience suggests that microfinance can be very valuable ... but the externalities are very important. The academic world does not seem to be able to get their work to embrace the multiple variables and externalities that are the norm in the real world ... and I would argue that this is the realm of "management information" more than it is rigorous statistical analysis so beloved by academics.


Peter Burgess

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