Microfinance under scrutiny!

On Friday (22nd March 2013), I attended a seminar on micro finance entitled "'Evaluating' Microfinance: Academic irrelevance" by Professor Salim Rashid who is the visiting professor of the department of development studies in the Faculty of Economics and Administration in the University of Malaya. In the abstract provided before the seminar, the professor has explained that the choice of Microfinance (MF) by the Millennium Development Goals (MDG) as the primary means of poverty alleviation should have brought clarity to the role and functioning of MF, but instead it seems to have generated a fog. It is desirable to take a fresh look and start from first principles to clear the air. Microfinance is microfinance --- it is finance writ small. If finance works, microfinance works. Much of the difficulty has been created by academics and arises from scholars treating MF as though it is some new economic phenomenon. With a series of specific questions, and with the Bangladeshi case in mind, it will be argued that many of the interesting and constructive questions have not been on the research agenda. Instead, the attempt to rely on randomized controlled trials is serving to distract.

Before giving more details about the seminar, first let me clarify why I have added this text on microfinance here in this blog. When I was working in villages, the micro finance was one of the choices we were focused in certain areas where sustainable livelihood was targeted. However, the way we were working was based on "group initiatives" rather than individual endeavor. In our model, there is always a group as an entity that will be involved in micro finance. As a facilitator of group activities, I think this works better than the individual initiatives for various reasons.

Professor Salimm said that microfinance requires special attention. He also mentioned that it is culture and context oriented. It means that those applying for finance, they have to have certain habits (such as to be organized); without these habits they cannot easily enter business to generate money. He said most of the time, the people use finance as consumption loans. They use the money for other necessary things in their life and then for returning the money, they might apply for another loan. Here the story starts and never ends. Loan after loan. In fact, people have to use the money in an income-generating business with a good profit to be able to return the money and the interest to the Micro Finance Institute. The professor gave a series of examples to clarify the issue. He said that there is not enough empirical data on success of microfinance, especially there seems to be a lacuna in intertemporal research.

To my point of view, group activities (based on group facilitation) where people can share their own experiences and resources - is very important in micro finance, especially when people earn "hot money". Loans are only "cold money" that cannot generate money. They can complete the capital, but what is more important is the "hot money" generated by the group in a well-defined business with defined role for every member of the group.  

Days before the New Year: not a good time for a meeting

New Iranian year starts with the “spring”. That is a good sign for a country of four seasons like Iran where “spring” as a season is a time for flowers to flourish, for trees to boast of their attractive and colorful blossoms, and for the sky to rain on mountains, deserts and plains (we call it "spring rain" or "baran bahari"). For families, the days ending to the New Year is a time for a full-fledged cleaning as we call it in Iran “khaneh tekani”. All family members have to participate in such a tedious work. Families may rush to bazaars to buy new clothes and shoes, suits or other new things; With the new year to start, everything can become new and fresh (I hope people do not fall into a culture of consumerism and try to use and reuse those things are still usable). The municipality cleans towns and cities (not every year, of course). In certain communities, people come together to clean the community too. Also it is the time for planting young saplings. Many environmental NGOs plan sapling-planting programmes starting from two weeks before the New Year when the cold weather gradually finishes.

With all these events and ceremonies, there is always another expectation: this is a time for evaluation. This is a good idea and I really welcome that. However, in practice, the story is different. Why? Because, nobody has enough time for a group meeting. People in villages are busy with their own local activities for the New Year; some people are thinking to have trips to other places; and as I explained many people are involved in pre-Norouz activities; therefore it could be an over-expectation from the members of a group to have meeting before the New Year. As a facilitator, even me, I have always been busy before the New Year and then I could not be in a community or in a village to facilitate a meeting. There is not even a good time for evaluation workshops. Therefore, my suggestion, based on my experience, is to forget all about a meeting before the New Year.

Norouz creates a time of refreshing, and while we take distance from all our group activities, it can be an appropriate time to think about new things, creative ideas and effective changes in the group. All group members may be requested to think about these issues, and the first meeting after the new year, could be a meeting of brain storming about such ideas.

However, when a “year” ends, there is a tendency to produce “annual reports” or "evaluation meetings" and as I told, such reports or meetings are really necessary. This will help to the scale-up of the community empowerment. But they should not be done during the days of “Norouz-busy-time”. The framework could be designed months before, and the information and data to be collected beforehand. Even an evaluation meeting is necessary to be held by the group one month before the year ends. 

In certain cases, where it seems required to have a meeting before the new year, then "facilitating a diachronic meeting" could be a good choice. The facilitator has to dedicate much time for contacting the group members without holding a meeting. The feedback and comments are transferred to the members of the group while it seems a dialogue is on-going. The facilitator has to be much talented to go through this time-consuming process. However, the output may be existing. This is exactly like discussions under a message or an image in the facebook. Those online put their message while others may become online afterwards and read the discussion and give their comments. There might be some synchronized inputs but mostly people contact each other in a diachronic way. In a diachronic process, there is no need for a meeting, while the facilitator tries to manage the interaction.

At the end of this short comment, I would like to say: Happy New Iranian Year 1392.

Go in search of your people, Love them; Learn from them...

Today, I was surfing in the Internet trying to find more about the notion of "neighborhood", I found this famous Chinese proverb. I have seen it in many places - in the newsletters, in offices of NGOs, and in trainers' training slides on community-building:

Old Chinese Verse:

Go in search of your people,

Love Them; Learn from Them;

Plan with Them; Serve Them.

Begin with what they have;

Build on what They know.

But of the best leaders,

when their task is accomplished,

and their work is done,

The people all remark:

"We have done it ourselves."

A leader is not the owner of the whole work, but these are the community members who own the input, the process, and the output. It's their right to decide, and it is with them to say: okay we know what to do; and when they do it, they are the real owners. 

I searched the web to find out who has said these Chinese words : I found it: Lao Tse, but I am not sure. However, when I went after Lao Tse, I found this wiki page: http://en.wikipedia.org/wiki/Laozi; it seems he is an inspiring philosopher. Also I found the following picture : 

Photo：Lao Tzu's "Go in search of your people" drawn by David Werner
courtesy of "http://blog.livedoor.jp/share_jp/archives/51265344.html"

I was trying to see if Lao Tse has been a leader of his own time or not. The only thing I found was from Wiki on his life (taken from Morgan, Diane (2001). The best guide to eastern philosophy and religion (1st ed. ed.). Los Angeles, Calif.: Renaissance Books): 

Lao Tzu was born in the village of Chu Jen in the Kingdom of Ch'u. (He may have been born sometime in the sixth century B.C.E. [Before the Common Era]. Traditionally, he is said to have lived at the same time as Confucius, but recent scholars place him about two centuries later.) Lao Tzu spent most of his life as an archivist in the library of the Zhou Dynasty court, a boring job that gave him lots of time to think. He quit when he saw things were getting corrupt, and then went into exile. Lao Tzu became disturbed by the corruption he saw everywhere around him and decided to take the easy way out- literally, and leave the country. He traveled west on a water buffalo to reach the great desert. At the westernmost gate, a guard who recognized him, demanded that he write down his teachings, unrecorded until this point. The collected teachings became the Tao Te Ching.

 If this is from Lao Tse, he had to have experiences in empowerment of people, something that has been ignored in his life. Maybe he had been in search of his people when he left the country... 

Participation is not a "dream" !

Today, I had a very hard discussion on community-based facilitation. The person, who was challenging me, told me that community-based facilitation is not possible by the time there is a strong centralized system. Without a democratic political system, you cannot talk about facilitation. A decentralized system is needed; democratic institutions are needed; an active civil society is a must; and then you need people with a culture of group activities, active listening and cooperation. When such things do not exist, you cannot even talk about “facilitation”. Since the system will stop you, the institutions and civil society are not there to support you, and people are not cooperative. Without all these, how you can facilitate a group at local level.

That was a very hard question; in response, I raised so many arguments. Here, I refer to one of them and I will try to add my other points in the coming posts. People in Iran have had a strong culture of cooperation and participation. It cannot be denied; during the history, you can easily find many traditional models of participation in villages and even in towns. For instance “Varehgari” is a form of traditional participation. Goats were milked altogether (during milking season) and given to one person or one family (whose turn was to be given the milk). In this way, the person or the family could have enough milk to use or to make cheese or yoghurt. There were certain rules and regulations to manage the process. Also, it has had other functions too; a research paper published in “Ensanshenasi Journal” (Anthropology, vol. 2, No. 4, pages 243-255) in 2003 shows that such tradition has been like a “cooperative” for economizing the process of livestock livelihood. The author claims that this tradition is still being used in certain villages.

There are other forms of cooperation at rural level and some of them are still on-going. When I was working in Freydounkenar, Damgahdari was another form of cooperation and local participation. In Damgahdari, rice cultivators come together to create a secure place for migrant birds to hunt a percentage of the coming birds in Fall and Winter; of course, our project was to work with damgah owners to decrease their hunting and to see if they can use such a cooperation for bird-watching rather than hunting them.  In Ezbaran, and Sorkhroud (in Freydounkenar – near Babolsar), it is more than 300 years that they are doing that. Without a group activity, it is not possible to create such a damgah.

Also, other traditions in villages such as marriage or even mourning were done (and are being carried out) with cooperation, which I think, it needs more research. Parts of this culture still exist in towns too. In fact, I said that "participation" is not a "dream". It was a part of our culture (which was somehow weakened by modernization policies) and still it is there...