To be read with your 3 o’clock coffee.
Below is a round up of this week’s microfinance news. We thank our colleagues for the wonderful work they do in advancing our knowledge of best practices and innovations, as well as challenging us all to remain true to our social mission.
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…the World Bank Group has adopted two new goals: end extreme poverty by 2030 and boost shared prosperity by maximizing income growth for the poorest 40 percent in every country. Two key groups can play a central role to help achieve these goals: the private sector and civil society.
The private sector has an essential role to play if we are to end poverty by 2030…we must leverage precious aid dollars to spur new private investment in the developing world. The potential is enormous. There are trillions of dollars invested in low-yielding assets in high-income countries, such as U.S. Treasuries or German Bunds. Imagine what could be achieved if even a small portion of that money were instead invested in developing countries, where potential rates of return are far higher, and where partnerships between the public and private sectors could bring crucial infrastructure and other goods and services to those who need them most.
What is the Evidence of Microfinance Impact? A Review of Microfinance Impact Evaluations in Latin America and the Caribbean
Sep 2011, Microfinance Gateway
By Gutierrez, C. & Soares, F., published by Inter-American Development Bank – Multilateral Investment Fund, @fominbid
Summary provided by the Microfinance Gateway
This paper analyzes published evidence of microfinance impact in Latin America and the Caribbean (LAC) over the years of 1999-2011, for the direct benefit of practitioners. It aims to summarize the most relevant findings of impact evaluations about microcredit, savings, and new technologies used by low-income people and micro-entrepreneurs in LAC. It also aims to identify knowledge gaps and insufficiently substantiated theories concerning the effectiveness of financial products, in order to guide future research and evaluations.
NEW YORK, JUNE 21, 2013 — Moody’s Analytics announced today that it has completed its first Social Performance Assessment (SPA) of a microfinance institution, as part of its commitment to develop an independent and globally consistent standard for the microfinance industry. Moody’s had previously announced a commitment to develop a comprehensive, global standard for measuring the performance of microfinance institutions as part of the 2010 Clinton Global Initiative.
“The completion of our first Social Performance Assessment marks a milestone in our commitment to bring an independent source of information and analysis to the microfinance sector,” said Jody Rasch, Senior Vice President, Social Performance Group at Moody’s Analytics. “As we continue to assess the effectiveness of these institutions, investors and others involved in this sector will have an independent source of information to help compare the social performance of different institutions on a global basis.”
Can Financial Education Be the Engine for Savings Growth? A Case Study
June 2013, Microfinance Gateway
By Women’s World Banking, @womensworldbnkg
Summary provided by the Microfinance Gateway
This case study presents lessons from a financial education program implemented by India’s Self Employed Women’s Association (SEWA) Bank and Women’s World Banking. This program aimed at enabling SEWA’s clients to better use their savings accounts towards their goals.
The program, launched in 2011, hypothesized that a comprehensive financial education strategy tied directly to women’s aspirations could help increase both the regularity of savings and the amount clients save.
Crunching the numbers: What can microfinance achieve?
June 24, 2013, Myanmar Times
By Maria Danmark, @Maria_Danmark
Microfinance may not be the magic bullet to fight poverty after all, some experts are saying…In Myanmar the sector was small and operated in a legal grey area until 2011, when a microfinance law was approved by parliament.
“The best studies we have aren’t suggesting a big impact on poverty one way or the other. The impact is approximately zero. What really reduces poverty is industrialisation and emigration. Both have been more important in Bangladesh for reducing poverty than microcredit,” says David Roodman, a senior fellow at the Center for Global Development who focuses on microfinance, debt relief and aid effectiveness. ”However, financial services such as loans and savings accounts are extremely important. We all need ways to set aside money for the things that are important or to obtain funds in emergencies,” he said.
Response to such criticism:
“It’s very unlikely that half a million people are borrowing from us, repaying their loans regularly and investing in their business, if they are not getting any benefit out of it,” Mr Bhuiya said. ”We should not only look at the financial gain. It is much more than just reducing poverty,” he said.
And microfinance in Myanmar:
While an India-style crisis may be far away, there still is a clear shortage of experience and knowledge of best practices in Myanmar, he said.
“A better way is for regulatory authorities to monitor expenses and surpluses generated by financial institutions to ensure that borrowers are not being exploited. However, that is a more difficult task, requiring international knowledge and experience that MMSE freely admits it does not have.”
Mr Bhuiya said he believes Myanmar is already a step ahead. “I personally think the situation in Myanmar is more secure. It is under legal control and surveillance. It is very unlikely that anyone can get away with manipulative behaviour.”