28-29 March 2013, U.S. Poverty, Microentrepreneurs and Microfinance: Needs, Responses and Prospects.
The US has been lauded for its highly advanced financial sector, yet has had limited success in providing access to appropriate financial products among the poor. While served by a diverse set of institutions (banks, credit card companies, credit unions, pay day lenders, Community Development Financial Institutions (CDFIs) to name a few), the number of poor families who are adequately served is low. For example, nearly 20 percent of lower income households do not have a bank account. (FDIC , 2009). The central role played by subIprime mortgages in the recent crisis is an example of how efforts seemingly targeted to low income families can go horribly awry.
This symposium seeks to bring together practitioners, policymakers and academics to look across the often "siloIed" parts of the sector to assess both current and prospective access to finance among both households in poverty and microentrepreneurs.
25 April 2012, Leslie Benoliel (EntrepreneurWorks)
With Leslie Benoliel’s talk to the microfinance class and guests, we switched gears to look on our own doorstep at the MFI industry in the US. As executive director of an enterprise development agency and a board member of AEO, Leslie provided us with some context to microfinance as it works in the US, in specific, its size, the different players currently and historically, its challenges in developing a sustainable model, the regulatory environment and the role of technology. She also described the work of her organization here in Philadelphia, EntrepreneurWorks. With its focus on small business development in underserved areas, microfinance is just one of the services they offer. The loan portfolio is small and credit is primarily group based. Interestingly, the clients seem to value the interactions of the group itself as much as the loan.
5 April 2012, Judith Brandsma (formerly WB)
Judith Brandsma discussed the challenge of working in microfinance in the Middle East, especially in the context of the constraints of Islamic banking and the repercussions of the Arab Spring. She showed a short, but astonishing video produced by a Yemeni MFI showing their clients and discussing the MFI’s response to the violence, destruction and turmoil of the situation in their country. More generally she provided explanations for why the sector has remained small and why loans relative to per capita incomes are the lowest among all regions. However, she saw potential in the development of saving products and emerging links to technology in certain countries.
2 March 2012, Leigh Carter & Natalie Damond (Fonkoze)
Leigh Carter and Natalie Damond met with the microfinance class in the more intimate setting of the Multicultural Center. They spoke about the work of Fonkoze, the largest MFI in Haiti and one of the most respected in the industry. Fonkoze has a broad approach to their efforts in poverty alleviation. While they are microfinance focused, they believe that credit, in itself, is not enough. Using the group organization of their lending methodology, they also provide education and other services to their clients. And, they recognize that not all of the poor are in a position to be able to use credit and discuss how their various programs fit in their conception of a stairway out of poverty. Getting into the nuts and bolts of the operations, they spoke of the difficulty in finding appropriate talent for their team, the challenges of balancing mission and sustainability, the hardships and safety concerns of working in the field, the need to constantly assess and analyze programs and client outcomes, etc. What was clear throughout the presentatio was a clear commitment of the organization to its clients and to continually improving its programs to better address their needs.
15 November 2011, Ira Lieberman (Co-founder CGAP)
Drawing on his long relationship with the industry and its leaders, Dr. Lieberman provided perspective on the commercialization strategy that has controversially re-shaped the sector over the last two decades. He laid out the arguments underlying this strategy, that only through commercialization can the sector can move away from the limitations of donor funding, tap private sector resources and grow to a scale sufficiently large to begin to address the huge need for credit among people in poverty. However, he recognized the drawback and spoke about the both the recent crisis in Andhra Pradesh and the backlash from the Compartamos IPO in Mexico.
4 October 2011, Sashi Selvendran, (MEDA)
A young professional who cut her teeth working with Grameen Foundation in its early days, Sashi spoke about her work with MEDA helping MFI clients in the field develop and market new savings products. She also discussed the MF sector within the broader context of AID and its limitations and pointed to a recent area of promise, collaborations between MFI’s and other AID projects, such as sanitation, to help families in poverty find ways to gather funds for large, but high impact purchases such as toilets. 9 March 2011 Jonathan Morduch (NYU, IPA) While Morduch’s talk happened before the launch of MI3, he set the stage for bringing in high quality speakers who are pushing the frontier of our understandings of microfinance. He discussed his research analyzing financial diaries drawn from samples of people in poverty in South Africa, India and Bangladesh. As described in Portfolios of the Poor, Morduch and his co-authors find, to their surprise, that these families rely on complex combinations of financial strategies, including joining savings clubs, buying funeral insurance, and acting as “money guards” for neighbors. The diarists did things that might seem irrational—borrowing in order to save; paying interest on savings. However, taking into account their unpredictable incomes, limited options in financial products and their own economic behaviors, these actions begin to make sense. Referring to this research, Tilman Ehrbeck of CGAP recently noted that perhaps what people in poverty need is “not so much a loan officer as a wealth manager.“