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Debate: Moving Financial Inclusion Beyond Microfinance


In-person signups closed for this KDID Event

Location

QED Group, LLC
1250 Eye St., NW
11th Floor
Washington, DC 20005
United States

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Presenter(s):

David Roodman
Center for Global Development

Milford Bateman
University of Juraj Dobrila of Pula

Chuck Waterfield (moderator)
MFTransparency

Date:
January 30, 2012 - 9:00am - 11:00am

Photos of David Roodman and Milford Batement with USAID and FIFO logos.

About the Event

David Roodman, the author of "Due Diligence: An Impertinent Inquiry into Microfinance" and Milford Bateman, the author of "Why Doesn't Microfinance Work? The Destructive Rise of Local Neoliberalism" participated in a modified parliamentary style debate moderated by Chuck Waterfield, founder of MFTransparency.

Both participants addressed the audience selected question below. Questions were submitted by the community and USAID.

Winning Debate Question

If microfinance has not achieved its objective in substantially reducing poverty, what are the pathways to financial inclusion that will contribute to this objective?

Presenter Bio:

David Roodman
Center for Global Development

David Roodman

David Roodman is a research fellow at the Center for Global Development currently focusing on microfinance. His book, "Due Diligence: An Impertinent Inquiry into Microfinance," asks bottom-line questions about the benefits of microfinance, and what they imply for how microfinance should be supported. He has been architect and manager of the Commitment to Development Index since the project’s inception in 2002. He has written several papers questioning the capacity of common cross-country statistical techniques to shed light on what causes economic development. In 2011, Roodman ranked in the top 10 on the RePEc list of top young economists in the world.

David Roodman previously worked at the Worldwatch Institute, where he wrote three monographs on environmental issue, and one on debt, “Still Waiting for the Jubilee: Pragmatic Solutions for the Third World Debt Crisis.” He also authored the book, “The Natural Wealth of Nations: Harnessing the Market for the Environment.” Roodman holds a BA in Theoretical Mathematics from Harvard College and was a Fulbright Fellow in Vietnam.

Milford Bateman
University of Juraj Dobrila of Pula
Milford Bateman

Milford Bateman is a freelance consultant on local economic development policy and, since 2005, a Visiting Professor of Economics at Juraj Dobrila University of Pula, Croatia. After spending two years conducting field work in the former Yugoslavia, he returned to the UK in 1990 to complete his PhD at the University of Bradford, UK, on the subject of small business and local economic development policies. A year later, Bateman moved to the University of Wolverhampton, UK, to take up the tenured position of Lecturer in East European Economics. In 1996, he was appointed an Associate Professor and Head of the Local Economic Development in Transition Economies Unit (LEDTEU). In 2000, Bateman moved into full-time consulting, first at the OECD in Paris working as an advisor on SME policy to the Investment Compact, before moving to Croatia to open the Western Balkans office of a major UK economic development consulting company.

He is the author of numerous articles and book chapters, including "Why Doesn't Microfinance Work? The Destructive Rise of Local Neoliberalism." His most recent work was editing "Confronting Microfinance: Undermining Sustainable Development," which looks at the impact of microfinance in the Western Balkans.

Chuck Waterfield (moderator)
MFTransparency
Chuck Waterfield

Chuck Waterfield has 25 years of experience in microfinance, with a mixture of practical field experience (six years starting MFIs in both Haiti and Bolivia) and experience leading network strategy development (serving as microenterprise director for both MEDA and for CARE International). He developed Microfin, the most popular financial planning software in the microfinance industry and teaches business planning courses around the world, with more than 3,000 microfinance professionals having been trained in his courses. His current work as an independent consultant includes clients across the industry. Currently on faculty of Columbia University School of International and Public Affairs, he was formerly on the faculty of the Boulder Microfinance Training Program for ten years and Southern New Hampshire University’s Microenterprise Development Institute for eight years. In addition to Microfin, he has a broad range of products and publications including the SEEP FRAME Tool, the CARE Credit and Savings Sourcebook, and CGAP Handbook on Management Information Systems. In 2008, he founded MFTransparency and works as the CEO and President.

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Comments (4)
Jan 30, 2012   15:10

These are some of the questions that were addressed to Milford and we did not have time to ask during the debate:

1. How do you define financial inclusion? It seems contradictory to say you support institutions like credit unions and institutions that offer savings etc. but that financial inclusio is a "farce". Microfinance does include savings, insurance etc. Since you support the latter, it is not illogical to state that microfinance does not work (you need to distinguish between microfinance and microcredit).

2. What do you think about MFIs that provide skill training in addition to savings? Is not this a sustainable source of change?

3. Why do you think that community banks or state banks can do microlending better than MFIs? What evidence do you have to support this?

Jan 30, 2012   15:03

I would like to thank 170 participants who joined us via webinar today and the 75 people who attended this debate in DC. Thank you for your interest and for your questions!

Below are the questions that we did not have time to ask today. David, Milford and Chuck will try to respond to some of these questions within next two weeks.

1. If "politics is local" then isn't it more beneficial to grow local businesses and get local chambers of commerce, business associations etc. involved in supportuing entrepreneurial MFIs?

2. Knowing that microfinance has both good and bad actors and good and bad institutions, does not that impact the "averages"? If so, should we focus on weeding out the bad actors before shifting 100% of the resources away from microfinance?

3. Does not the proper role of public money vis-a-vis microfinance depend on the externalities? If so, should the government focus on activities that generate positive externalities?

4. It had been established that microenterprises are good for helping poor people cope/survive but not for producing economy-wide increases in productivity (i.e. decreases in poverty). In that case, are we evaluating microcredit against the wrong criteria? Let's be specific.

5. Do you have any suggestions for what can be done to assist the very poor in transitioning from the informal economy to the formal economy.

6. Please collaborate more about the alternatives to microcredit (i.e. credit unions seem to be the same model but that is operated by credit unions)

7. To what extend should there be different roles among actors that shape the industry: donors, governments, private investors, MIVs, local investors, lenders and regulators?

8. If MFIs are enabling poor people to better manage their money, then are they not providing a needed service to the poor? Is that not a valid development intervention?

9. Can you discuss sustainability in microfinance? What is impact of sustainability on the clients?

Jan 20, 2012   09:28

Like every loan process the Microfinance chain is in need of an globally advised structure. 
In my opinion we require global advised policy and standards on funding, procedures and processes (on funding process, credit process, approval process, loan disbursement and repayment etc.) to make microfinance a success. Also think of global advised standards on Organization structure of MFI’s and distribution networks. This will make life easier for our end customers in het first place and all other stakeholders. Local government and Central Banks should embed these advised policies and standards within local rules and regulations. World Bank can be initiator of this and advise local government and Central Banks to implement the advised policy and standards.

Jan 9, 2012   14:47

A few weeks before the debate, I attended an official launch of David Roodman's book. As you prepare for the upcoming debate, I recommend reviewing this podcast, an article published in the Guadian and an article published in Time.

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