Hello Srini. Chuck pretty much nails it. The degree to which double bottom-line objectives are equally well-served depends on a regulatory regime that takes its responsibilities seriously (as they do, apparently, in India).. And channelling of social payments through such networks is an unarguable good.
The very fact, however, that to be considered financially included requires linkage to a banking institution says a lot. Maybe we need to broaden the definition of financial inclusion or, as you put it 'we should focus on what financial inclusion is supposed to deliver' – and then who is delivering it.
From: MicrofinancePractice@yahoogroups.com <MicrofinancePractice@yahoogroups..com>
Sent: 29 June 2020 13:36
To: MicrofinancePractice@yahoogroups.com
Subject: Re: [MFP] Debt relief for Cambodians & why legal aid matters
Chuck, Hugh,
Financial inclusion is not too bad in some countries, where they have focused on savings and payments. Inclusion also lays a pipeline to channel benefit payments from government to people without leakages. In the Indian context microfinance - whether through MFIs or Self help groups - has been kept out of the definition financial inclusion. RBI says that linkage to a banking institution (MFIs are not banks in India and prohibited from taking deposits) alone counts as financial inclusion.
May be we should focus on what financial inclusion is supposed to deliver rather than dismissing it as profiteering.
Best regards
srinivasan
On 29-Jun-2020, at 1:00 PM, hugh@vsla.net [MicrofinancePractice] <MicrofinancePractice@yahoogroups.com> wrote:
Spot on, Chuck, that you excoriate the term 'financial inclusion' which has come, solely, to mean that poor people get shoehorned onto a voracious debt-based MF conveyor belt as a definition of success. The day that shareholder return got prioritised these outcomes were inevitable.
Hugh
From: MicrofinancePractice@yahoogroups.com <MicrofinancePractice@yahoogroups.com>
Sent: 28 June 2020 17:03
To: MFP <MicrofinancePractice@yahoogroups.com>
Subject: Re: [MFP] Debt relief for Cambodians & why legal aid matters
Thanks for sharing this, Jami
This is such a tragedy. Cambodia was a poster-child of the "right way to do microfinance" 10-15 years ago. From what I saw in my visits and in the data was MFIs focused on reaching the poor and giving very reasonably price loans. The prices were among the lowest in the world when we collected them at mftransparency.org, especially considering the very small loan sizes.
Help came from the Cambodian regulators. Sleazy practices like flat interest were banned by the Cambodian government almost 20 years ago (in 2001), demonstrating tremendous foresight on how governments and lenders can work together to limit the temptation of self-interested lenders to hide their prices. It took industry actors like CGAP another 10 years to even begin to do anything cooperative with regulators and to respect them as useful and essential agents to help prevent the dismal decay of the industry we have since witnessed.
I originally saw the Cambodian MFI organizational cultures as balancing client and institution, as had been the case at AMK before they got bought out by a different group of private investors with a different set of goals. Then, while publicizing the previous balanced approach by paying authors to write an "independent" book about their ethical practices, they internally reprioritized toward profit making.
The messages sent by the international industry was for everyone to scale up (credit activity, not savings), to push loan agents super-hard to shovel loans out the door, all with the singular goal to maximize profit and allow international investors to cash out. When all this got put into practice. as is entirely predictable, debt saturation occurred. The bad seeds planted by the MFIs in the previous years become apparent, even if the economy is going well.
And then when there is a exogenous shock, the house of cards crumbles. And who has the centralized power in the catastrophic situation? The MFIs have built control of power into their systems. The poor, who weren't doing all that well *with* the vast amount of debt they were encouraged to take on (and shouldn't have), will now have life-altering consequences..
So, yes I'm still in the habit of using that term "microfinance" (and this listserve is MicroFinancePractice) that was in use for 25 years, until in the first wave of bad publicity, the industry dumped the term and replaced it with "financial inclusion" to try and confuse the public. So now when "financial inclusion" becomes an ugly word, what will we call ourselves next?
Chuck Waterfield
No longer associated with what has become the business of tapping the fortune at the bottom of the pyramid
On Jun 28, 2020, at 8:49 AM, Jami Solli jamisolli@gmail.com [MicrofinancePractice] <MicrofinancePractice@yahoogroups.com> wrote:
Dear Group,
I hope you are keeping well during the pandemic.
Sharing an article with you about the state of microcredit in Cambodia:
I hope that any responsible investors in that market will instruct their investees to stop divesting the poor of their homes when they are in debt difficulty.
On a positive note, there is a legal aid organization in Cambodia LICADHO which is assisting borrowers.
All the investors should be thankful too as were LICADHO not present, it is possible you would see either borrower suicides or civil unrest or both.
Best regards,
Jami
Posted by: <hugh@vsla.net>
| Reply via web post | • | Reply to sender | • | Reply to group | • | Start a New Topic | • | Messages in this topic (10) |
No comments:
Post a Comment