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16. The chicken and egg dilemma in microfinance: An historical analysis of the sequence of growth and credit in the economic development of the ‘north’
... Thus, for the poor, particularly those with low, irregular and unreliable income, saving is critical iv . Poverty shaped some of their behavior, rendering them often cunning, conservative survivalists, who were forced by circumstances to find myriad ways to deal with crisis, periodic shortages (Dichter, 2007). Research in many countries increasingly demonstrated that the poor really demand saving services, even more than the other category of the population, not in-spite of, but because of their poverty and vulnerability (See also the Morocco Case Study, Box 3). ...
... This is why, for example, traders often prefer expensive private credit to cheap government credit. It gives them more than simple access to capital; it secures a higher position in the flow of trade (Dichter, 2007). ...
This paper presents field findings as to why efficient financial intermediation is not happening at local level, based on an extensive assessment of saving mobilization efforts by twelve microfinance institutions with branch networks distributed throughout different geographies of Ethiopia. Sponsored by DfID, WB and DAI, a total of 60 Focus Group Discussions, and more individual interviews have been conducted with players both on the supply and demand side. It highlighted key shortcomings, especially on supply side strategies which falls short of offering products and services suitable to local contexts, effectively communicated to people living in diverse geographies and cultures, majority of whom struggling to manage livelihoods through complex mix of agricultural and non-agricultural economic systems, and working under established power dynamics at household and community level.
Key words: vulnerability, microsaving, empowerment, product development, marketing, institutional culture
... Thus, for the poor, particularly those with low, irregular and unreliable income, saving is critical iv . Poverty shaped some of their behavior, rendering them often cunning, conservative survivalists, who were forced by circumstances to find myriad ways to deal with crisis, periodic shortages (Dichter, 2007). Research in many countries increasingly demonstrated that the poor really demand saving services, even more than the other category of the population, not in-spite of, but because of their poverty and vulnerability (See also the Morocco Case Study, Box 3). ...
... This is why, for example, traders often prefer expensive private credit to cheap government credit. It gives them more than simple access to capital; it secures a higher position in the flow of trade (Dichter, 2007). xxiii MicroSave (2014) blog have highlighted an interesting story (on old-age Direct Benfit Transfer in India, under a Government to People, G2P scheme) on how poor, not-proper, and sometimes contradictory communication by the " last mile transaction points " (typically the cash in/out agents) led to mass confusion and apprehension amongst beneficiaries. ...
... Besides documenting how social entrepreneurship forms a particular and partial option of social change – since it is de-historicized and de-contextualized – one might counter the self-evident optimism by pointing at the negative effects left out in the narration of social entrepreneurship. To understand the impact of what is presented as a new alignment, initiated after the so-called " lost decade of development " (i.e. the 1980s), we can point to various studies that have come to delineate the far-reaching implications for the subjects and institutions working in the field (Ahmad, 2003;Bhatt, 1997;Brigg, 2001Brigg, , 2006Cook, 2003;Dichter, 2007b, a). For instance, the (counter) narration of microcredit programs points at a social (mainly language-based) practice that intrudes into the social stratum of the poor. ...
... This social positioning is problematic for several reasons. First, it has been shown that loans are often not invested in entrepreneurial activities (which are assumed to allow for returns;Coleman, 1999) but are instead used for consumption (Dichter, 2007b). It is problematic mainly with regard to the observation that the rural and urban poor might be ill at ease with the subject position of the entrepreneur, that is, with the " view of the poor as budding entrepreneurs, who, with access to formal financial services, would pull themselves out of poverty through business development, asset accumulation and wealth creation " (Dichter, 2007a, p. 1). ...
Purpose
Responding to recent pleas both to critically analyze and to conceptually advance social entrepreneurship. The purpose of this paper is to examine how the political “unconscious” operates in the narration of social entrepreneurship and how it poses a limit to alternative forms of thinking and talking.
Design/methodology/approach
To move the field beyond a predominantly monological way of narrating, various genres of narrating social entrepreneurship are identified, critically discussed and illustrated against the backdrop of development aid.
Findings
The paper identifies and distinguishes between a grand narrative that incorporates a messianistic script of harmonious social change, counter‐narratives that render visible the intertextual relations that interpellate the grand narration of social entrepreneurship and little narratives that probe novel territories by investigating the paradoxes and ambivalences of the social.
Practical implications
The paper suggests a minor understanding and non‐heroic practice of social entrepreneurship guided by the idea of “messianism without a messiah.”
Originality/value
The paper suggests critical reflexivity as a way to analyze and multiply the circulating narrations of social entrepreneurship.
... Despite the high rates in Nicaragua, a relatively small number of microfinance loans are based in agriculture worldwide because farming does not meet standard micro-financing requirements: a small quantity of money, a high return on the investment, and little or no delay in repayment (Schreiner and Colombet 2001 ;Harper 2007). Many have argued that microcredit alone is not an answer to economic development but that microcredit may be effective when used in conjunction with other structural changes (Elahi and Danopolos 2004;Lucarelli 2005;Carter, Little et al. 2007;Dichter 2007;Hulme 2007;Ahlin and Jiang 2008;Gehlich-Shillabeer 2008). Other studies have found that microcredit usually helps those who already have access to resources: it is not reaching the poorest of the poor, but creating a wider gap between those with access to resources and those without (Rahman 2004). ...
Microfinance and microcredit are a central aspect of development around the globe. This article argues that the best way to examine microlending is through long-term ethnographic research incorporating a livelihood studies framework. A year-long study in rural Nicaragua illustrates the use of ethnographic livelihood studies as a method for examining the use of microcredit and microfinance loans and their incorporation in people's economic decisions. Combined with political economy, this method for examining household economic strategies provides an in-depth, contextualized understanding of the choices made by household members as they struggle to make ends meet. (Political economy, microfinance, livelihoods, Nicaragua).
This paper explores the growth of BRAC’s microcredit programme in Tanzania and some of
the variety in and patterns of that growth. BRAC’s microfinance programme has grown
dramatically and significantly within Tanzania and serves tens of thousands of women
across large parts of the country. We examine quantitative data from April 2011 to April
2013, and use observation of groups and client and staff interviews from 2012-2013 to
explore that success. We argue that the growth is based upon its effective marketing
strategy and the fundamental usefulness of BRAC’s loans to its clients. But the findings also
show that members were leaving at the time of the research. This could reflect a number of
dissatisfactions that BRAC’s clients have with some aspects of BRAC’s microfinance
products and the performance of its staff. The staff problems are confirmed by the staff
themselves, both senior and junior. They are consistent with failings, across all of Tanzania,
with respect to training and capacity in the finance and microfinance sectors generally. They
also reflect the difficulties of cross-cultural adaptation, and learning to work in Tanzanian
contexts (for Bangladeshi staff), and learning to work in a Bangladeshi organisation (for
Tanzanian staff) that were current at the moment we conducted our observations. The
interesting development, which has happened rapidly after this research concluded, is that
BRAC’s staffing has changed significantly, with many more senior Tanzanian appointments.
This may have considerable implications for the continued development of the organisation.
Microfinance is seen as a key development tool, and despite the current deepening crisis within the industry, it continues to grow in sub-Saharan Africa. We systematically reviewed the evidence of the impacts of micro-credit and micro-savings on poor people in sub-Saharan Africa. We considered impacts on income, savings, expenditure, and the accumulation of assets, as well as non-financial outcomes including health, nutrition, food security, education, child labor, women’s empowerment, housing, job creation, and social cohesion. The available evidence shows that microfinance does harm, as well as good, to the livelihoods of the poor.
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