Review of ‘Vulnerability’

The Microcredit Summit Campaign welcomes a debate on our new publication, Vulnerability:  The State of the Microcredit Summit Campaign Report, 2013, or, better yet, on the various topics that are covered within. Hugh Sinclair and David Roodman have, so far, given their thoughts on the new report.

There is plenty to discuss, which was recently described by David as a “short, clearly written sampler of current thinking in the microfinance world,” though he found the discussion of mobile money and graduation programs is “subtly asymmetric” (in favor of graduation programs). For David, this “gets things backwards” as he views mobile money as “true to the spirit of microfinance.” He closed his remarks, though, with this:  “As usual, it is the friction of disagreement that most excites me to write. Yet there is much I like in the report and I encourage you to peruse it.” Read his full review here.

Larry Reed, author of the report and director of the Campaign, posted this comment to David’s thoughtful review:

Thanks for your post, David, and for participating in our launch event. Your thoughtful analysis and provocative questions help me think more deeply about this work.

Your post helps me see one of our key areas of difference. You describe the spirit of microfinance as “delivering useful financial services to tens of millions of people in a businesslike way.” I would describe the spirit of microfinance, at least at it was envisioned by those that started its modern incarnation, as “providing financial services in a way that helps people move themselves out of poverty.” The spirit contained an end objective that went beyond delivering services in a business-like way.

This probably explains our more cautious tone on mobile transactions. I agree that they they can deliver financial services to tens of millions of people. What I don’t know yet is whether those services lead to more people moving out of poverty. And that is why the report spends time on things like the psychology of scarcity. Mobile transactions will allow us to deliver more financial services to more people at much lower cost. But we’ve already seen, as you say, that more isn’t always better. If we have the development of financial products that utilize mobile technology to deliver services that help clients address their vulnerabilities and take advantage of opportunities to improve their lives, then we will have something that meets my view of the spirit of microfinance. In some ways, the payment services of M-PESA are beginning to show that ability to do this, but I think there is a lot more potential in the mobile channel that we have not yet tapped.

The report highlights two organizations that employ the graduation model (Fonkoze and Bandhan) and two that use other ways to combine other needed services with finance (Equitas and CARD). The Equitas and CARD models deliver services like health care, education and access to markets through the same distribution system that they use for delivering financial products, and do not require long term subsidies to do this. I think both models show promise for delivering on the spirit of microfinance that provides financial services in a way that helps people move themselves out of poverty.


If you read Vulnerability: The State of the Microcredit Summit Campaign Report, 2013, please let us know what you thought. We will be organizing public events around the report and welcome your input on what you’d like to learn more about.

Contact Sabina Rogers to learn more.