What’s the End Goal of Microfinance?
>> Authored by Santiago Sueiro (Program Director, La Ceiba and Executive Director, Month of Microfinance)
Microfinance isn’t just about poverty. Microfinance isn’t just an industry. Microfinance is about people. At a moment when microfinance is redefining itself, we need to question its purpose. What’s the end goal of microfinance?
It would be a mistake to stop at “microfinance plus” and mobile banking. The social outcomes of our efforts should play a bigger role in our understanding of microfinance because, whether we admit it or not, our presence in foreign communities has social consequences.
We live in a context. Our actions and interventions have consequences that ripple through the communities where we travel and work. It’s possible that our biggest impact as practitioners is not economic but social. During the time we spend first designing a loan product, then testing and measuring its impact, we forget about the relationships that we develop in the process.
We should let clients define their poverty. Foreigners have no idea what poverty is and we should stop trying to define it. The definition can change from country to country, region to region and even person to person. The person, their history, their character, their ambitions and hopes, are what define their situation.
There is room for us to charge interest, be sustainable, and make a profit without sacrificing the goals and dreams of the client. It starts with a discussion, its fueled by empathy, and it requires faith in the potential of the client.
Clients appreciate patience and understanding. They are willing to work with you if you take the time to get to know them, be a part of their community, let them speak for themselves and not speak for them, and give them room to fail and succeed. It takes a commitment to a community, not just for a year but for the long haul, and it takes the humility to understand that we aren’t a solution to poverty, but instead an ally in a slow struggle.
We fail to treat clients with dignity and respect by assuming that every poor person needs credit because it takes away the clients power to choose for themselves. Respecting the client must allow for room for them to experiment and fail without crippling them. Respecting the client requires that we trust their ability to learn from experience and choose whether to work with us or not.
When we dismiss the need to charge interest on credit, when we take a clients appearance to mean they are helpless victims, when we do for them what they can do for themselves, we erode the clients power. We should expect more from clients and trust that they can work and fight for themselves. We assume too much and expect too little.
I think microfinance can be a movement. We can set the standard in development. We can prove that being empathetic isn’t naïve and that seeking sustainability and profit isn’t criminal. We can prove that there is another way. Where we constantly question our place in the fight against poverty, where we place a premium not only on the financial well being of the client but also on the dignity and power of the client, where we engage in meaningful discussion with each other, where we forgive mistakes and encourage experimentation, and where we work to serve clients in their struggle to achieve their goals.
I don’t know what the answer is for my organization and our industry. I know that we won’t gain answers overnight. Answers are reached through constant discussion, questioning and scrutiny, and in the process perspective is won.
It starts with each and every one of us: from the loan officers to the CEO’s and in between, its up to us to be more self aware, to ask ourselves why we are in this to begin with. What’s our motivation? What do we gain from our efforts? What does the client gain from our efforts? Are we causing more harm than good? Would clients be better off without us? What is the end point of our effort? What is the end point of the client’s ambition?
One thing is clear, there is no silver bullet and microfinance is not one. Its time to ask ourselves: what is the end goal of microfinance?
Santiago Sueiro Bio:
Santiago is the Executive Director of the Month of Microfinance. A graduate from the University of Mary Washington, he has worked with La Ceiba Microfinance Institution for over four years as a student and professional. He was La Ceiba’s Program Director in Honduras for two years. He is currently resides in Washington D.C.