Thoughts at the Conclusion of the Microcredit Summit in Spain
Today, the 2011 Microcredit Summit Campaign Global Conference in Valladolid, Spain wraps up. It is a joy to see old friends — like Grameen Bank, Freedom from Hunger, FINCA, BRAC, and Fonkoze — as well as meet new implementers and advocates that can support our work and push us to be ambitious. My greatest take away from this conference is a complete reinforcement of our advocacy on microfinance for the very poor. There is still such an amazing need to ensure financial access for all. Before I leave, I want to make sure to share some of the thoughts that I’m taking home with me.
1) How you reach the most remote populations is still a challenging question, and one that must be answered. Traditional microfinance programs that deal in urban areas, including slums, can’t just simply be transferred to clients in remote areas, e.g., it’s hard to recruit staff, it’s much more costly, clients are simply further away, loan and savings products may have to be structured differently, there is a challenge if you want to integrate health and education. How can donors, like USAID, help to provide some of the capitol some programs may need to support the initial branch opening and staff training, the technology to measure poverty levels of clients, and subsidize health and education training?
2) Fonkoze in Haiti reminded us all that financial access is not a goal in itself. Financial access is a critical means to achieve our real goal: alleviating poverty.
3) One billion people have some kind of disability, either congenital or acquired, and 40 percent of people over the age of 60 have a disability. Yet the disabled make up less than 0.005 percent of clients – yes, that’s the correct number of zeros. There is a challenge of self-exclusion by the disabled, but also exclusion because sometimes people think they can’t do anything, as a colleague from Mali told us, or microfinance programs simply don’t realize they are inaccessible for the disabled: second-story offices, banking counters only at standing height, no ability to work with someone who is deaf. Data collection is a huge challenge – in general, we count women, but not the disabled. The US and about 105 other countries ratified the Convention on the Rights of Persons with Disabilities. USAID has a prominent human rights attorney as the US Disability Coordinator, and all programs are supposed to be sensitive to the disabled. How could and should USAID ensure that our foreign assistance for microfinance goes to organizations that are sensitized and trying to working with the disabled, and how can our funding be used to push more organizations to close the huge gap that exists?
4) Health insurance, as one panelist called it, is still the “holy grail” of the field. How do you make it happen, make it affordable, make it quality care?
5) What’s the real definition of “over indebtedness?” A great definition shared is that it means not the number of loans a client has, but it’s when repaying those loans creates a “serious” burden and the client must take drastic steps to meet their debt, such as going without food or not paying school fees. The challenge continues to be how to prevent over indebtedness, especially when there are not credit bureaus. But one principle all should adhere to: We have to change the measurement of success. It can’t be how many clients a microfinance organization has. Instead of how fast an organization can grow, success should mean the quality of products and meeting clients’ needs.
6) I was struck by the important synergy of all of our work in a workshop on education and microfinance. Grameen and BRAC are leading examples of how to offer educational loans as well as support the children left behind by the public education system – but not by creating a parallel structure of for-profit private schools, but working to support the national education plan and ensure a quality education is available for all. For example, BRAC finds the children who never enrolled or dropped out of primary school, and enrolls them in a BRAC primary school. It’s a 4 year program rather than 5, as they kids are older. Then BRAC transitions the students to the public secondary school. And what did BRAC do when they realized the public secondary school teachers weren’t well-trained? They didn’t start a fee-based secondary school, but trained the teachers. When I was in Copenhagen last week for the Global Partnership for Education’s replenishment conference, a spirited debate occurred between the private sector organizations and NGOs about whether low-cost private schools are really the answer (that’s its own blog post!). Our GCE colleague from Haiti summarized our concerns passionately at the end, when he said that we should not talk about education as a market good that we can buy and sell — it’s a human right.
7) New financial products are needed – more specifically, products that actually meet the financial needs of the poor, not what we think they need. For example: school fees and associated cost are an expected cost. However, most people will take out a loan to pay for school fees. Why aren’t we offering education savings accounts? The financial diaries of the poor are complex, with multiple products from multiple sources (formal and informal). So let’s make sure we meet their needs in a safe, secure way.