poverty and business – the case of microfinance lone søndergaard and ole dahl rasmussen...
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Poverty and Business – the case of microfinance
Lone Søndergaard and Ole Dahl Rasmussen
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University1
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.
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University2
Before we start: Microfinance news
Microfinance gateway- News on general microfinance- Jobs!
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University3
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University4
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University5
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University6
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University7
INTRO TO POVERTY DEFINITIONS
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University8
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.
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University9
From Agnelsen and Wunder (2006)
What is poverty?
• Write your own definition of poverty down on a card/post it.
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University10
Definitions of poverty
10-04-23Poverty and Business - the case of microfinance. Copenhagen University 11
Monetary Anthopological
BroadNarrow
ImmaterialMaterial
Easier to measure Difficult to measure
Inco
me/
cons
umpt
ion
Bas
ic n
eeds
Hum
an d
evel
opm
ent
Cap
abili
ties
Par
ticip
atio
nP
ost s
truct
ural
ism
GD
P p
er c
apita
Top-down Bottom-up
(Cas
h in
com
e)
Opo
ortu
nity
/sec
urity
/em
p.
General point: High degree of correlation
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University12
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
MONETARY DEFINITIONS
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University13
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)
2004-05 Malawi Second Integrated Household Survey See pages 11, 18, 21, 28. Notice valuation.
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University14
Income/consumption- geographical comparisons
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University15
Fro
m R
aval
lion
and
Che
n (2
004)
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University16
Income/consumption- geographical comparisons
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University17
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)
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University18
Questions and comments for monetary indicators
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University19
ANTHROPOLOGICAL DEFINITIONS
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University20
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.
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University21
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?
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University22
Presentation on Escobar
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University23
Voices of the poorWorld Bank asks 60,000 poor
1. The poor view wellbeing holistically2. 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.
3. Gender inequity is widespread, domestic violence pervasive and gender relations stressed.
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University24
Voices of the poorWorld Bank asks 60,000 poor
4. The poor want governments and state institutions to be more accountable to them. Corruption emerges as a key poverty issue.
5. NGOs receive mixed ratings6. 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
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University25
QUESTION FOR DEBATE
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University26
The situationYou 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.
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University27
The standpointsA) 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.
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University28
PRAGMATIST RESPONSE
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University29
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.
10-04-23Poverty and Business - the case of
microfinance. Copenhagen University30
Summary
• Different people and different situationsDifferent 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.
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microfinance. Copenhagen University31
Next week
• Study questions
• Battle
• Exam
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microfinance. Copenhagen University32