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Measuring impact of microfinance

September 27, 2009

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DRAKE BENNETT’S in-depth look at two studies questioning microfinance’s economic impact gave a fair hearing to voices qualifying and contextualizing those study results (“Small change,’’ Ideas, Sept. 20).

As global microfinance practitioners, we at ACCION International would emphasize one point voiced in the article - that the market will be the ultimate arbiter of microfinance’s value. In the 23 countries in which we operate, we find enormous demand for financial services among the poor. And as the invaluable book “Portfolios of the Poor’’ demonstrates, the poor are generally shrewd stewards of their limited wealth, using financial services to manage their lives more successfully.

Emphasis in microfinance is shifting toward provision of savings, microinsurance, and electronic payment systems in addition to credit. While such services offered in concert can help preserve and generate wealth, many benefits are hard to measure. These include reduced vulnerability to disaster, income “smoothing’’ across troubled periods, vast time savings and reduced risk enabled by prepaid cards and cell phones, and an increase in economic and civic engagement. Microfinance impact studies from Bolivia have reported that clients were more self-confident, more involved in local governments, and more respected within their communities.

The need to develop more robust impact studies is real. At the same time, growing microfinance markets are registering their impact every day.

Elisabeth Rhyne
Managing director Center for Financial Inclusion ACCION Washington

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