Posts Tagged ‘elisabeth rhyne’

Picturing Impact: “Microfinance Miracle or Myth” Session Summary

posted: 2010-05-23 @ 1:22 pm EDT

To the 30 or so people who came together to talk about microfinance impact, I posed the question: “What do you hope to achieve through your work in microfinance?” Not surprisingly, the first thing shouted out was “Lifting people out of poverty.” The list continued: women’s empowerment, stabilizing incomes, smoothing consumption, creating and saving jobs, building businesses, opening the financial system to everyone, promoting  a just and equitable society and more. I was moved by aspirations reflected in this list. The people in the room bring their best hopes for making a difference in the world to their work in microfinance.

"Microfinance Miracle or Myth" session participants sketched out their definitions of microfinance impact

In the lunchtime session, we noted the variety of ways that the group learns about the impact of their work, from talking with clients, to tracking their performance, to carrying out surveys.  As an international microfinance practitioner, I was struck by how much easier it is to get reliable information about client status in the U.S., where business records are more formal than in developing countries. We briefly discussed the randomized control trials that have been garnering great attention. The trials are the only method with a claim to demonstrate causality.

I likened the various ways of learning about the effects of microfinance  to painting a picture, with each method adding details to our emerging understanding.  I gave each table paper and markers and asked them to create their own picture of the impact of microfinance.  After a brief, painful silence, the room burst into a series of noisy conversations.   As I listened, I was struck by this:  the kind of information people want to use depends on their role. Investors asked for financial accountability and assurance of conformity to social standards.  Board members wanted direct consumer feedback. Managers wanted to monitor performance indicators like default rates and repeat loans.  The only people asking for proofs of causality were those who had to decide how to allocate subsidies.

Participants were reluctant to take up their markers and start drawing, though most tables eventually produced some kind of sketch.  A woman from Mexico reported that Compartamos had once given art supplies to the young children of clients and asked them to draw a picture about how Compartamos influenced their lives.  One youngster drew a box and a bed, saying, “I used to sleep in a cardboard box, but now I sleep in a bed.”  Anecdotal, to be sure, but what does it prove? That 6 year old children can sometimes express the essence of things better than a roomful of grown-up microfinance professionals.

Elisabeth Rhyne is Managing Director of the Center for Financial Inclusion (www.centerforfinancialinclusion.org) and a founder of The Smart Campaign (www.smartcampaign.org).

Painting the Impact Picture: Which Method is Best?

posted: 2010-05-10 @ 9:42 am EDT

By Elisabeth Rhyne, “Microfinance Miracle or Myth” panelist

At next week’s Microfinance USA conference, I have the honor of leading a session on one of the hottest topics in microfinance these days: impact. Interest in impact has surged recently because of the big press coverage garnered by the researchers associated with MIT’s Poverty Action Lab and their new randomized controlled trials. At the session we’ll talk about how these new studies work (in layman’s terms – I’m no econometrician) and what their results are showing about microfinance.

To start off, I’d like us to consider all the ways we can learn about the impact of microfinance. Like these:

  • The seeing-is-believing method – otherwise known as talking to clients or anecdotal evidence.
  • The market method – if customers pay for the services, they must value them.
  • The institutional method – sustainable institutions that serve the poor are prima facie contributions to more inclusive societies.
  • The anthropological approach – talking intensively to clients in a structured way that allows inferences to be drawn. Recently the Financial Diaries approach has done this.
  • The simple quantitative survey approach – used for years despite suffering from many design flaws.
  • And finally, the experimental design approach a statistically rigorous model patterned after medical drug trials, which is capturing today’s headlines.

I think we learn from all of these methods.  It’s like we are painting a picture using different kinds of paint and brushes.  Gradually, our picture takes on shape, color and texture, and ultimately all these elements come together to convey meaning.

At our session, I want to move beyond the often divisive arguments about which research method is better than others and look instead at the emerging painting, which is complex. The title of the session is Microfinance: Miracle or Myth.  Of course you can guess that my answer is, something else.

Elisabeth Rhyne is Managing Director of the Center for Financial Inclusion (www.centerforfinancialinclusion.org) and a founder of The Smart Campaign (www.smartcampaign.org).