Microfinance Can Change the World

We are claiming April as the month of Microfinance.

All are welcome to join our community: microfinance professionals, researchers, and enthusiasts; chief executive officers and loan officers; small, medium and large-scale microfinance institutions; microfinance institutions that operate in Bangladesh, Bolivia, Pakistan, South Africa, the United States…anywhere. Voices from the mainstream and voices of dissent are welcome. Diversity in our community will be accompanied by a diversity of experiences, beliefs, and narratives regarding microfinance.

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About Month of Microfinance

We have a lot of questions. Some are expansive: When does the pursuit of scale come at the expense of clients? Does microfinance help move clients out of poverty? Others are specific: What is a fair interest rate to charge? Which fees are consistent with client-centered microfinance? Answers are good. But, conversation – nuanced conversation – that allows for ambiguities and explores the tensions at the heart of client-centered microfinance is even better. 

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DISCOVERING THE “WHY”

Why does microfinance matter? It’s not a panacea solution. It doesn’t build global multinationals. It won’t singlehandedly dissolve poverty.

But let’s talk for a second about what it is, what it does, what it can do. Microfinance is about people. It boldly proclaims, “I see where you are today, but I believe in where you can go tomorrow.”

Hearing a woman’s story in Bangladesh a few years ago, I remember the big smile that beamed across her face as she recalled her past and how it looked so different from her present. Having nothing more than a dilapidated shelter, her husband, and her growing family 20 years earlier, this woman took out a loan from a local microfinance organization to open a small store.

Twenty years and numerous local cycles later, this woman owns two small pharmacies, employing everyone in her family, including her husband & sons – something unheard of in her culture when she first started out. She has a stable roof over her head with a latrine inside, and was even able to pay for her children to go to the university.

So why does microfinance matter? This story from Bangladesh is why microfinance matters. Because people matter. Because dignity matters.

It’s true, microfinance on its own isn’t going to drive huge increases in GDP; it won’t create hundreds of jobs per enterprise. But it can increase dignity, promote innovation, and provide economic stability for those who participate in its programs

This focus on people is what gets me excited about microfinance. Very few other development tools have the capacity to uplift men, women, and families in the way microfinance can. It doesn’t promise success, but opportunity is guaranteed. It places responsibility and creativity in the hands of loan recipients. The outcome is transformed communities.

So while microfinance may be but one tool in the development bag, it’s one my team and I are proud to support, discuss, and participate in. We get to see every day how microfinance is transforming lives, not by focusing on handouts or charity, but by challenging men and women around the globe to use business as a means to create a better life.

Opportunity. Innovation. Dignity. Hope. People. This is why microfinance matters.

A BETTER CHANGE MAKER

What do change-makers do?

We sit with the world, see it as it is, and imagine it differently.

We imagine it better.

More just and livable.

More democratic, humane, and beautiful.

We imagine projects that blue the skies, ventures that wildflower the landscapes, and start-ups that cleanse the oceans of plastics. We imagine enterprises that expand access to education, technology and markets. We imagine campaigns that unleash human potential, movements that ease suffering and experiences that deepen dignity.

And, then, we get to work.

We write down our vision, map out our theory of change and set our objectives.

We enumerate the skills and things we’re gonna need to create the change we want to see – website design, social media architecture, impact assessment framework, project management tools and many other things.

We survey what we have.

Normally, we don’t have everything we need.

No matter.

We begin anyways.

We bootstrap. We DIY. We utilize free services, piggyback on pre-existing infrastructure, and look for workarounds. We invest in learning new skills. And, of course, there will be things we need that we cannot do. Should not do. So, we harness our networks, persuade others to join us, and build a team to amplify our agency.

Together, we strategize, pitch our vision, raise funds, mobilize resources and execute.

And, when we assess our impact, more than likely, we’ll come up short.

We’ll make mistakes.

We may even fail.

And, when we do, it’ll hurt.

No matter.

We’ll learn. Iterate. Get better. Repeat.

This is the roar of our work.

This is hustle.

However, there is another aspect of our work that is often overlooked, often the most important, and often the most magnifying; namely, building deep, authentic relationships with our team and the communities with which we work.

And, how do we do that?

We ask questions of one another, listen to each other, and learn about and from one another.

It sounds simple.

It isn’t.

Why?

Well, we could talk about all of the human designed divides that separate us from one another – like race, sex, religion, language, culture, nationality, politics and more. We could also mention the constellation of unearned privileges and unwanted oppressions that go unacknowledged among us. Both are valid reasons. However, ultimately, here’s the thing that keeps us from meeting each other:

Our primal disinclination to saying “I do not know.”

Take a moment.

Try to say it.

It’s not easy.

Why?

Maybe its the insecure little kid inside of us who always wants to be right.

Who knows.

All I know is that it is important to say. Because, when we say it, we tell others that we are ready to learn. And, that is where solidarity begins.

So, how do we get to “I do not know”?

We humble ourselves.

And, how do we do that?

We can “apprentice with” the problem we want to solve by studying the interlocking system of rules, regulations, and cultural constraints in which it exists. We can study its history. And, we can investigate its political-economic context by asking: How will solving the problem disrupt current power dynamics? Who wins? Who loses? Essentially, we can choose to learn how much we do not know about the problem we want to solve.

We can also spend more time staring up at the night sky asking big questions of the universe like:

  • Why am I here?
  • Why is there good and bad?
  • What’s next after I end?

We can surrender to its complexity.

Infinite interconnectivity.

Its vastness.

Our smallness.

Its timelessness.

Our fleeting impermanence.

When we manage to accomplish this kind of work, we exist in the overlap between AGENCYand SOLIDARITY.

It is a place of “confident-humility”.

Here, our relationships are positioned side-by-side.

Not top down.

Here, we do things with each other.

Not for each other.

But, alas, it is hard to stay here.

AGENCY and SOLIDARITY are elusive.

We never have a permanent grip on either of them.

Sometimes we let others take them away from us.

But, let’s be honest.

Mostly, we just give them away.

Our fears erode our confidence. Our self-doubt dissipates our voice. And, some days our insecurities are so sharp that we don’t want to know what we do not know.  We want to generalize, categorize, and put people in their “proper” place.  We want to infuse those around us with simple narratives and retreat into a I know, I’m right, me first, I want, gimme-mine, take-take-take, self-centered world of isolation.

We have to earn AGENCY and SOLIDARITY anew.

Each and every day.

All day.

Until the end of the day.

And, how do we do that?

We go off to a sacred space of solitude, sit in silence, and assess our lifestyle by:

  • Critically reflecting upon the human constructs we have internalized.
  • Measuring the depth of our submersion into the dominant consumerist culture.
  • Questioning our past and reconsidering our upbringing.

And, since we humans are largely at the mercy of what we do not know about ourselves, we go into the deepest, darkest, dampest wilderness of our souls to sit with our demons and ask them “Where does it hurt?”

Yet, this unwinding of our humanity is too big of a job to be done in solitude. We need others. So, we seek out others, gather in circles together, and do it together for each other through dialogue.

We share our hopes. We share our fears. We expose our weaknesses. And, as you can imagine, this takes a lot of trust. But, within this vivacious circle of humanity lies an immense possibility. Namely, that if we remain present for each other and give of ourselves to each other, we may get to know ourselves better, get closer to the “why” of our existence and maybe help each other in the same way.

Together, we can remind each other that the world as we know it – inside and outside of ourselves – is not fixed. It is malleable. And, we are agents of change.

This – all of it – is what change-makers do.

This is the work.

It is not easy.

Most of it is unglamorous.

And, all of it is necessary.

Making change is a roll-up-your-sleeves-lunch-pail-labor-of-love that gives us calluses.

They grow layer by layer each and every day. They harden. They hurt. But, they are a testament to our patience, persistence and commitment to the work.

It is at the intersection of AGENCYSOLIDARITY and CALLUSES that a better change-maker exists.

My notes…

THE JOURNEY OF A MICROFINANCE VETERAN: BRAC’S MD. SHAHIDULLAH

How does one sum up half a lifetime of work to promote financial inclusion for the poor? A career that spans over 24 years, starting from introducing microfinance at the grassroots to being the digital innovation lead in a multinational microfinance provider, to initiating microfinance in a new, and at times, frightening country – Mr ShahidUllah’s story depicts an adventure seeker with unrelenting willpower to achieve his mission.

“I joined BRAC in the year 1993. I was a fresh graduate and started working in a large garment conglomerate. But I was bored after a few months with the routine work and when I saw a job circular advertising a Program Officer position at BRAC I applied instinctively, without even knowing anything about my role and future. Everyone discouraged it but I persisted”, Mr ShahidUllah’s simple confession. And this humble persistence is evident throughout his career at BRAC.

ShahidUllah was commissioned to the field and tasked with the responsibility to bring a new community under the benefit of financial services. Together with his team, he went door to door, developed groups of women borrowers, determined participant selection criteria and oriented the participants of BRAC on how to use microfinance. He became the manager of that branch within a year and steadily ascended to becomea Regional Coordinator of the Microfinance program by 1999. Apart from supervising staff and maintaining a growing portfolio of borrowers and savers, ShahidUllah also monitored activities of other BRAC programs in that region. In 2003, he  was selected to help BRAC set up its first international venture – a microfinance programme in Afghanistan.

 “When I went to Afghanistan in 2003, the country was still trying to rise from the devastation of decades of war. There wasa very limited formal banking system, very limited infrastructure, the concept of microfinance was new, and so we faced a lot of challenges. The most difficult part was to educate the local managers and employees who would become frontline staff about their duties.They had suffered years of trauma and had very limited work experience and management skills. We had to provide constant training and motivation to the staff. ShahidUllah soon took over management of the branches within his province – setting yearly targets, budgeting, cost management, headquarter coordination as well as maintaining liaison with the external stakeholders such as the district government representatives. The results were promising but his stay in Afghanistan was short-lived due to an unexpected incident.

“It was the end of the month and I was out to disburse staff salaries on my motorbike. I was driving through the rough terrain, coming back from the farthest branch, when I suddenly lost control and fell. I was so surprised by the incident that I could not properly register what went wrong. I rolled down from the road and landed on the dirt a few meters below. I looked around, perplexed, trying to figure out what happened, when I noticed a man carrying a rifle slowly walking towards me from the other side of the road. I instantly closed my eyes and awaited my fate. After a while, I felt him removing the bag from my shoulders and then he left. Slowly, I came to my senses and attempted to move towards my bike. But I was met with excruciating pain. It was then when I realised that I was shot in my right hand and leg. I somehow crawled towards my bike and waited for a passerby. Luckily, a police patrol arrived a few minutes later and they took me to the nearest hospital. I was lucky that my wounds were not fatal. With the timely assistance from the head office and my colleagues in Afghanistan, I was released after a few days and returned to Bangladesh”.

After two years of an eventful stay in Afghanistan, in 2006 ShahidUllah returned to Dhaka. Within a couple of yearshe had a new mission: introduce digital financial services to Bangladesh. ShahidUllah was an integral part of the team who piloted and helped scaleup bKkash – BRAC Bank’s mobile money platform, before it revolutionised how the the country conducted financial transactions, and became the largest mobile money provider in the world (in terms of clients and transactions). Now, millions of rural and urban population of the country previously excluded from the financial systemare abler to transfer and deposit money via mobile phone.

AN AGENT ENTRY MODEL FOR DIGITAL FINANCIAL SERVICES

In February, 2014 Liberia’s Trust Savings and Credit Union (TSCU) had been open less than a year and had fewer than 400 members. The credit union was created by the World Council of Credit Unions (WOCCU) in collaboration with the local community as part of a larger project, the MicroLead Liberia Program. Its goal? To build and develop four regional credit unions throughout Liberia with funding from the United Nations Capital Development Fund (UNCDF), bringing much needed financial services to rural areas.

Even after receiving technical assistance from WOCCU, TSCU was still struggling to develop its client base and loan operations. But when a local telecom operator offered TSCU the chance to become a mobile money agent, they leapt at the opportunity.

Becoming an agent is one of the simpler methods credit unions and MFIs can utilize to enter the digital finance arena.  In this model, the financial service provider (FSP) acts as an agent for a digital financial service provider (often an MNO) and offers the provider’s products and services through the FSP’s own branch network.

Not only could acting as an agent provide an easy entry into mobile banking, but more importantly, it could give TSCU the chance to build relationships with new potential members. For any financial institution holding onto other people’s money, trust is an issue. But in Liberia, a country torn by civil war, and more recently devastated by the Ebola outbreak, the trust-building challenge was even greater. Many rural Liberians might have been unsure about putting money in a credit union, but they knew they wanted the ease and convenience of mobile banking.

By acting as a mobile money agent, TSCU was able to:

  • Earn additional revenue;
  • Expand outreach by converting mobile money users into clients;
  • Retain existing members with the new product offerings; and
  • Differentiate itself from its competitors.

Digital finance solutions provided by MFIs and credit unions reduce transaction and transportation costs for the poor living in remote rural area. “Before the credit union came here we used to pay mobile money fees and pay extra money again to the boys who [were] doing the mobile money before we got our money. They use[d] to charge us double for our own money. And sometimes you come, and if they don’t want [to] give you money, they will tell you that the service is not working. But for Trust [TSCU], anytime I come, I get my money and get it correct,” said Michael Tozaye, a Liberian timberman businessman.

TSCU’s path to agent banking was recently detailed in the UNCDF/MicroLead Digital Finance Toolkit #2: Be an Agent.