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Reflections on the Global Microcredit Summit 2011

Submitted by info on Wed, 23/11/2011 - 15:38

I’ve just come back from the 2011 Global Microcredit Summit in Valladolid, Spain, which was attended by Queen Sofia of Spain, Muhammad Yunus, Founder of the Grameen Bank, and around 2000 delegates from all parts of the globe. This was the 15th summit organised by the Global Microcredit Campaign and it came at a critical time for the world of microfinance. There is a sense of the field being at a transitional point, facing considerable economic, ethical and PR challenges, as well as tremendous opportunities offered by technology and partnership working, between microfinance institutions, with business, and with others.


I thought I’d share some quick reflections on the summit and implications for us as community development workers…

 
Microfinance is now big business! The number of poor families receiving microcredit has over the last 14 years grown more than 18-fold from 7.6 million to 137.5 million. The number of poor women reached between 1999 and 2010 increased from 10.3 million to 113.1 million. There are cases of unscrupulous and poor practice; but despite the media attention they attract, they represent a minority. A new ‘Seal of Excellence’ scheme has been launched, aiming to drive up quality and consistency in the field.


Developments in technology offer exciting opportunities to reach people, especially those in rural areas which have typically been neglected by some microfinance institutions. Mobile banking (in its various forms) and use of ‘cloud’ banking are now widespread; however they are far from being a panacea. Illiteracy in and mistrust of technology can be barriers. Security issues have not been consistently dealt with, and big questions about the potential impact of major environmental or political disruption remain unanswered.

 
Issues of environmental sustainability and food security were touched on during the summit, though arguably not in as much depth as they deserve. One interesting plenary session profiled examples of microfinance initiatives combined with promoting use of sustainable energy sources and local food production… though, like others, this raised as many questions as it answered!

 
I got a sense that microfinance institutions on the whole have real commitment to the fundamental aims of alleviating poverty and enabling people to build sustainable livelihoods, health, well being and self-esteem. But I was struck by how little has been done to measure the impact of these programmes, especially longitudinally. There is for example a dearth of robust research into the impact of microfinance on health and well-being. What quantitative evidence there is shows a mix of positive and negative results; the only well-designed study found there was no impact at all. Anecdotally, of course, there is evidence that ‘failed’ microfinance is much more harmful than non-intervention.


Another theme which came out loud and clear was the need to put people at the heart of business. Microfinance providers were urged to get ‘back to basics’: for example, not to be carried away by technological possibilities, but to remember to put their customers’ needs first. I was surprised that for some, the notion that microfinance will only work if combined with measures to develop knowledge and skills (of both clients and staff) seemed to be new – at best, it needed reinforcement. The importance of building relationships and trust was repeatedly flagged. I was fascinated by examples of schemes in which participants reported that the social interactions and the networks they had formed were even more important than the economic benefits of microfinance. This was balanced by words of caution from some experienced participants, who pointed out that groups do not always operate in healthy, positive or inclusive ways.

 
Microfinance has, as I’ve said, become big business. There is a risk that in the whirlwind of activity around microcredit and entrepreneurship, people forget the end goal, which surely has to be enabling poor people to build and maintain assets. Despite the concerns expressed about over-indebtedness, very little was said about the importance of saving. Moreover, there was open acknowledgement that microfinance schemes had regularly failed to target those at the bottom of the economic pyramid.

 
There is clearly a tension within many microfinance institutions between the social aims of microfinance and the financial implications of running a sustainable business. A similar tension is played out between organisations – between NGOs and microfinance providers, for example. In some cases, community development seems to be seen by some in the world of finance as an irrelevance, or worse: in one summit session, individuals who had led a large national project in western Europe described having to work with NGOs as an ‘obstacle’ to the implementation of their scheme. From the NGO perspective, there are concerns that finance institutions focus too much on commercial gains and too little on real empowerment. These may well be valid, but I am sometimes struck by how some in the community development world – particularly in the global north – seem to regard ‘money’ and ‘finance’ as rather dirty words. Without something in the way of income or financial assets, how is it possible for people to progress up the pyramid and participate fully in communities?

 
It seems to me that it is only by recognising the common ground between the two fields and working together that the problems experienced by each – of financial sustainability, capacity building, exclusion etc – can successfully be solved.


All this raised some questions in my mind: 

  • Can the worlds of community development and microfinance successfully coexist? What more can we do to bring the two together, and can they help each other to achieve the outcomes and further the values of social inclusion, participation and equality which we all claim to support? 

  • How as community development workers can we use our expertise in building inclusive, participative communities to help finance providers who may not have these skills? 

  • Alternatively… is all of this already happening, and is it just that we aren’t articulating and sharing our experiences well enough?

 
We already know of some excellent examples of microfinance working as a force for good in community development. These include SEWA, India, KRC, Uganda, and the work being done in Europe by Indigo partners.

 
We would love to hear others’ experiences too! Please add your comments (by clicking "read more" below), or write to gill.musk@iacdglobal.org if you have something to share.

Gill Musk

22 November 2011

Beyond "Give A Man a Fish"

Submitted by ingrid_burkett on Sat, 21/02/2009 - 03:31

This week's blog is my first attempt at a digital story, a great way to share stories across the internet. The technology used to make digital stories include a digital camera or mobile phone, a computer with access to the internet. There's a great site to check out other digital stories: http://storiesforchange.net/

This story shares some of my reflections about the saying "Give a Man A Fish and he will eat for a day, teach a man to fish and he will eat for a lifetime". You can view the story at the following URL: http://www.youtube.com/watch?v=JBAeGXho0s0

 

 

What can ‘economics’ offer community development…or, what can community development offer ‘economics’?

Submitted by ingrid_burkett on Mon, 09/02/2009 - 21:54
In many places around the world the financial crisis has meant that the economy is at the forefront of media and public debate.  As we go about our daily lives, we hear news about the global economic crisis, how various programs and projects are thought to be ‘stimulating’ “the economy”, or how the government is going to have to ‘tighten’ certain out-of-control segments of “the economy”.  Despite it’s prevalence in the media, however,  it is difficult to relate the concept of ‘the economy’ to our everyday experiences – especially when information about ‘the economy’ is delivered by experts who seem to speak numbers, formulas and statistics.  In reality, however, we all know a great deal about economics – we just don’t know that we know, because “the economy”, we are told, is something which can only be understood after years of studying lengthy equations and strange-looking graphs.  But, as author Mike Greenberg suggests, “While "the economy" of the economists inhabits an abstract number space, the economy of the real world happens in physical space, in the places where you and I and our neighbours interact”.We all belong to a ‘local’ economy, in addition to being part of a national economy and a global economy.  We are currently hearing a great deal about ‘the global economy’ and our various national economies (and we all read with a growing sense of disquiet and a mounting need for action about the impacts of dangerous mixes of politics and economics in places such as Zimbabwe, so aptly described in recent board blogs).Despite the fact that they rarely makes the news, however, our ‘local economies’  are crucial in our lives.  Our local economy is at the heart of our welfare, the welfare of our neighbours and our environment, and it determines, in a large part the quality of life which we all experience.  If the local economy is characterized by a lack of relationships (low social capital), a paucity of locally owned and operated enterprises, services and civil society organizations, a culture of dependency and fear, and a lack of investment and resources, then this detrimentally affects our quality of life and our life opportunities.  If, on the other hand, we create local economies which are rich in relationship, where local enterprises, businesses, services and organizations thrive, where there is a creative, innovative and inclusive culture, and opportunties for local investment, then our quality of life and our life opportunities are also going to be positively affected.   In order to make a difference on the ground we need an analysis that is informed by real life, real stories, real people (not statistics or probabilities of what could happen as the economic situations worsens).  We also need practical methodologies that help us with questions such as ‘how do we ensure that the our local economic systems are open to participation from a broad diversity of local people’?  The challenge of creating strong, resilient and innovative local economies is not one that will be taken on by many traditional economists.  But it could be taken on by community development workers who are willing to engage with some of the core economic questions of our time: How can we truly and sustainably address questions of poverty (in all its many guises)? How can we, in local communities, engage with and build alternatives to an economic system which is resulting in ecological destruction, the fraying of our social fabric, the negation of relationships, the ill-ness of people and ecological systems? How can we move from protest against elements of this economic system towards courageous, innovative and inspiring examples of how things could be more sustainable, more just and more inclusive.    I find myself being surprised by how many community development workers distance themselves from engaging with the field of economics.  How can we not have an economic analysis when at the heart of community development is a commitment to social justice, abolishing poverty and building sustainable futures?  Orthodox economics may be just about numbers, statistics and formulas – and this certainly could be called ‘the dismal science’.  But are we ready to do more than distance ourselves from this dismal science, throw stones at it, lament its failings and complain about it’s impacts?  Are we ready to build examples of how things could be different, to share innovations, to engage in courageous dialogues and to become active participants in designing ways in which local, national and global economies could be just, sustainable and about the well-being of all earth’s inhabitants?    The roots of the word “economy” are interesting in themselves.  “Economy” comes from the greek oikos, the house, and ‘nomos’ or management…so essentially it means management of the household.  Of course the word “ecology” comes from the same root, finishing with logos, or knowledge, so meaning “knowing the home”.  The idea that economics is about considering our world and our communities as a ‘home’ provides us with a wonderful framework for understanding the principles and practices of community economic development: In a home we are concerned not just with the well-being of one or two people, but the well-being of all members of the household; We know, in a home, that if we pollute one room, then that will affect all other rooms of the home; We wouldn’t sit at the dining room table and prepare a feast for only one or two members of the household while the others starve.   Globally we, in the community development field, have championed the notion of ‘people-centred’ development.  We are all agreed that development cannot take place without the full and active participation of the people who are at the centre of any development process.  Now, as we stare down the long tunnel of global economic turbulence and ecological collapse, it is time for us community development workers  to also take a long hard look at how we can promote ‘Community Centred Economies’.  Community Centred Economies are local, human-scale economies and economic processes through which communities can be sustainable into the future, and thereby sustain the equitable well-being of their constituents.  Just as we have participated in developing our understanding and our practice frameworks in the promotion of ‘People Centred Development’, we need to share the principles, processes, methodologies and stories of what it means to develop “Community Centred Economies”.   Over the next few months, and through the IACD conference in June, we hope to explore what it means to promote ‘’Community Centred Economies’’ through this blog, through sharing ideas, through sharing stories.  We invite you to be part of this journey by sharing your thoughts, posting your stories and engaging in the conversation!     See the conference website:  www.CDconference.com.au and find us on Face Book: Building Community Centred Economies for more information and engagement!