Microfinance: The View From Goa

So after a generally very hectic January for most in the industry we got a chance this week to step back from operational goals and re-access the big picture- where will Indian microfinance be in 5 years? I am in the resort town of Goa on the Indian ocean, known for its laid back locals and cheap cashew liquor- what better place to contemplate India's poor?

Thursday and Friday many of the industry leaders (they didn’t notice me in the back row) in this space gathered for a workshop and two major topics seemed on everyone's mind:

Is microfinance becoming too commercial?

As most people I talk with can attest- I am unabashedly in favor of the trend toward commercialization. While many dissent this viewpoint as a betrayal of microfinance’s roots, as I witness changes in the industry I am discovering that this debate is increasingly becoming academic: commercial microfinance is here to stay. I contend this to be primarily positive simply because increased money allows increased scale. But that is not to say there is no danger in this approach- it can be all too easy to lose sight of the ultimate goal of helping the poor. Which leads to the next question…

How can we better articulate the social benefit?

There is evidence trickling in that microfinance is having real impact, I recently came across this study. The trick is formulating this to stakeholders [read politicians] to create goodwill for the industry.

It is a very peculiar accident that microfinance is held in rather high esteem (maybe too high) in the west but viewed skeptically in many countries where it operates. Indian MFI’s have in the past been victims of political whims, but not since the early 2006 (ancient history in this space) Krishna incident have we seen any major disturbances, the trick is to keep the growth on the rails.

Overall a very productive series of discussions; beaches and balance sheets- I suppose we can't complain too much.