Poverty and Business – the case of microfinance

Poverty and Business – the case of microfinance
Lone Søndergaard and Ole Dahl Rasmussen Poverty and Business - the case of microfinance. Copenhagen University

Summary: The case of BancoSol
Products: Credit and savings. Techniques: Proximity, frequent repayment schedule, visits, high interest rate etc. Advantages and challenges of commercialization: Sustainability and growth vs. Social performance. Social performance management gone missing  today: What is poverty. Poverty and Business - the case of microfinance. Copenhagen University

Before we start: Microfinance news
Microfinance gateway News on general microfinance Jobs! Poverty and Business - the case of microfinance. Copenhagen University

Poverty and Business - the case of microfinance. Copenhagen University
Poverty and Business - the case of microfinance. Copenhagen University

Intro to poverty definitions

Why discuss poverty definition?
Policy debate: Why microfinance and for whom? Impact measurment: We are doing well. Are we doing good? Product development: Analyse and understand the situations and lives of the poor. From Agnelsen and Wunder (2006) Poverty and Business - the case of microfinance. Copenhagen University

What is poverty? Write your own definition of poverty down on a card/post it. Poverty and Business - the case of microfinance. Copenhagen University

Definitions of poverty
Opoortunity/security/emp. Post structuralism GDP per capita Income/consumption Basic needs Human development Capabilities Participation (Cash income) Monetary Anthopological Consider to place the student’s definitions on the continuum. Narrow Broad Material Immaterial Easier to measure Difficult to measure Top-down Bottom-up Poverty and Business - the case of microfinance. Copenhagen University

General point: High degree of correlation
A1 is the per capita GDP (PPP$), A2 is life expectancy at birth (years), A3 is the adult literacy rate (percentage), A4 is the infant mortality rate (per 1000), A5 is the number of people per doctor, A6 is radios per 100 people, A7 is televisions per 100 people, A8 is copies of daily newspaper per 100 people and A9 is telephones per 100 ranking, A10 and All are respectively the indices of political and civil liberties constructed by Gastil Poverty and Business - the case of microfinance. Copenhagen University

Monetary definitions Poverty and Business - the case of microfinance. Copenhagen University

Consumption What have you consumed today? Estimate the value. Did you remember: Food Non-food Housing Consumption from income in kind E.g. public services An example of a questionaire (web) Malawi Second Integrated Household Survey See pages 11, 18, 21, 28. Notice valuation. Poverty and Business - the case of microfinance. Copenhagen University

Income/consumption - geographical comparisons
From Ravallion and Chen (2004) Remember: The poor always have income. Poverty and Business - the case of microfinance. Copenhagen University

Income/consumption - geographical comparisons

GDP per capita - over time comparisons

Compare to quote from Chambers ”Hundreds of millions of people are worse off now than twenty years ago” (p. 1) Poverty and Business - the case of microfinance. Copenhagen University

Questions and comments for monetary indicators

Anthropological definitions

Anthropological understanding of poverty / the cultural turn
Introduction to the general critique Poverty measurements are owned, developed and used by the North (compare to PISA). Poverty measurement has negative cosequences ”technification” of societal development ’high modernism’ Prescription of blueprint solutions Planning failures (Chambers) Caused by unsubstantiated trust in planning and rationality. Poverty and Business - the case of microfinance. Copenhagen University

Anthropological understanding of poverty and microfinance
Why is microfinance so popular? Right-wing political spectrum Microfinance is business, entrepreneurship and private initiative Left-wing political spectrum Microfinance is empowering, bottom-up and non-dominating. Is it? Poverty and Business - the case of microfinance. Copenhagen University

Presentation on Escobar

Voices of the poor World Bank asks 60,000 poor
The poor view wellbeing holistically Insecurity has increased. Violence is on the rise, both domestically and in the society. And the poor feel they have been bypassed by new economic opportunities. Gender inequity is widespread, domestic violence pervasive and gender relations stressed. Poverty and Business - the case of microfinance. Copenhagen University

Voices of the poor World Bank asks 60,000 poor
The poor want governments and state institutions to be more accountable to them. Corruption emerges as a key poverty issue. NGOs receive mixed ratings The poor rely on informal networks and local institutions to survive, including the local holy man and the local nurse. More information at the web Poverty and Business - the case of microfinance. Copenhagen University

Question for debate Poverty and Business - the case of microfinance. Copenhagen University

The situation You are employed by UN, in the UNCDF that works with microfinance, to supervise and monitor the organization’s microfinance programme in Africa. A key partner is the microfinance institution PRIMED, which also receives funds from World Bank. In travelling to PRIMED in Sierra Leone, you have to facilitate a workshop together with a World Bank monitoring and evaluation specialist on social performance in PRIMED. Participants will be PRIMED staff and management as well as client representatives. During the flight from the United States you start discussing the contents of the workshop with the World Bank officer. Specifically, you discuss what social performance indicators to use and who should determine what indicators to use. Poverty and Business - the case of microfinance. Copenhagen University

The standpoints A) PRIMED should use the standard World Bank monetary indicators that focuses on income and expenditure for clients. B) The workshop paricipants should establish what indicators to use and they should be as broad and participatory as possible in scope. Poverty and Business - the case of microfinance. Copenhagen University

Pragmatist response Poverty and Business - the case of microfinance. Copenhagen University

Richard Rorty’s response
Attempts to balance the conflict between objectivism and relativism. Liberal ironist. Stop the ”search for foundations” and start redescription toward a liberal society – in the widest sense of the word, as ”uncruel.” ”realize the relative validity of our convictions and yet argue then unflinchingly.” Ask for the consequence: Will there be more or less cruelty if we hold this or that principle. From ”enligtenment rationalism” to liberal ironism because of the inclusive potential. Answer some of the critisism from objectivists against post structuralist. Poverty and Business - the case of microfinance. Copenhagen University

Summary Different people and different situations Different understandings of poverty No definition can be objectively justified. Real arguments can and should be made. Decision of definition is political. Lessons for microfinance You are what you measure. Income and consumption is only a part of what matters. But it matters. Humility is key. Poverty and Business - the case of microfinance. Copenhagen University

Next week Study questions Battle Exam Poverty and Business - the case of microfinance. Copenhagen University

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