“The Hype is Long Over” – Microfinance CEOs Respond to Washington Post Article, “Microfinance Doesn’t End poverty, Despite All the Hype”
The following post was published today on the Center for Financial Inclusion’s blog.
The Microfinance CEO Working Group consists of the CEOs of leading microfinance organizations ACCION, FINCA International, Freedom from Hunger, Grameen Foundation USA, Opportunity International, Pro Mujer, VisionFund International, and Women’s World Banking. In the post below, the CEOs respond to the recent Washington Post article by David Roodman.
This may surprise you. As the CEOs of eight global microfinance organizations, we largely agree with the substance of David Roodman’s March 8 op-ed “Microcredit doesn’t end poverty, despite all the hype.” The headline, however, is just silly.
The hype is long over. The industry agrees that microcredit is not a “silver bullet” to end all poverty, even though it can and has helped many people build better livelihoods. As Roodman says, “Financial services are like clean water and electricity–they are essential to leading a better life.” To significantly improve the lives of the majority of the 2.7 billion people living in poverty, we need a number of essential ingredients: education, health care, basic nutrition, the rule of law, infrastructure–and access to a variety of financial services especially designed for people in poverty, including credit.
The leaders of the microfinance industry have known this for some time. And the industry has been moving in this direction for many years. Today, the frontiers of microfinance go well beyond microcredit, to include savings, insurance, money transfers and other products that, as Roodman points out, people in poverty need just as much as the rich to manage their financial lives. These financial services are important tools that help individuals manage their businesses, cope with unpredictable cash flows, build assets, and afford lump-sum expenses, like health emergencies and school fees. Microfinance institutions are harnessing new technologies to expand their reach and to serve clients faster, better and cheaper than before.
Today, microfinance reaches about 200 million clients worldwide, a tiny fraction of the billions whose lives would be better with access to these basic services. We have much more we need to do, but continuing to debate about whether microcredit–by itself–can end poverty is distracting us from the far more important question of what we can do to assist people in poverty.
The Microfinance CEO Working Group
Michael Schlein, President and CEO
Rupert Scofield, President and CEO
Steve Hollingworth, President
Freedom from Hunger
Alex Counts, President and CEO
Grameen Foundation USA
David Simms, Board Chair
Opportunity International Network
Rosario Pérez, President and CEO
Scott Brown, President and CEO
Mary Ellen Iskenderian, President and CEO
Women’s World Banking