Microfinance Made Better
The article "In Microfinance, Clients Must Come First" (SSIR, vol. 6, no. 1, p. 38) reinforces a lot of the same information in the recently released RESULTS Education Fund USA Microcredit Summit Campaign report for 2007.
Yet the authors state, "No single MFI, to our knowledge, currently implements all of the practices we recommend," apparently unaware of the work of Jamii Bora, a microfinance institution in Kenya.
Jamii Bora was initiated when 50 street beggars were given loans in 1999. It has now grown to more than 170,000 savers and 60,000 borrowers. When borrowers were struggling to make their payments, investigation revealed that most clients had a family member in the hospital and were using their loans to make medical payments. Jamii Bora responded by starting its own health insurance, which costs a family of four $12 per year. It also introduced life insurance that pays the surviving family double the amount borrowed by the deceased member.
Jamii Bora also has a business academy, a counseling program, and a program to help alcoholics and their families. Plus, it's in the process of building its own housing community with its own utilities company. It works with its clients to ensure that no one type of business dominates. This helps everyone recognize that a diverse business community is a successful business community.
But perhaps the greatest reason the Jamii Bora model is so incredibly effective relates back to the main premise of the article: It is client-centered.
Open to Possibilities
Calgary, Alberta, Canada
The article covers many of the aspects important to microenterprise development (MED). But there are three legs to any economic stool. The first (wellknown) leg - and these are not in any particular order - is capital to make a business work The second leg is the social capital, which the article clearly deals with. The authors say they see very little to conclude about the value of MED and thus focus more on the social aspects: skill, knowledge, etc. They correcdy conclude many of the poorest of the poor are not ready to do business, as the social capital is not in place. Clearly, preparing the social capital skills of the very poorest is necessary before they can consider microenterprise. The work extends from developing at least a fifth-grade education to changing their often fatalistic view of life. I discuss these issues in more detail in my book God Is at Work: Transforming People ana Nations Through Business.
But the authors completely ignore the third, most important part of economic development: "spiritual capital," which I also discuss in my book. What is spiritual capital? Simply put, it is the fundamental fabric that makes the relations and business environment work for the good of the whole. There is no spiritual capital in the Grameen Bank's efforts in Bangladesh. As a result, while more microloans have been given per capita in Bangladesh than in any other nation, its economy, and therefore well-being, has not moved one iota in 30 years.
Sadly enough, most MED programs do not spend much time in this third area as part of their teaching. They don't even know it exists (Nobel Prize to the contrary) and fail to embrace it. When they do, however, the confusion alluded to in the article is cleared up and results begin to happen.
Living Stones Foundation Charitable Trust
Menlo Park, Calif.
First of all, I want to praise Laura Silverstein and Erin J. Maher for being brave enough to air their experience, warts and all, in their article "Evaluation Blues" (SSIR, vol. 6, no. 1, p. 23). If more folks would fess up to these kinds of problems regarding research and evaluation, perhaps more would be willing to admit that the emperor has no clothes (or is scantily clad at best). …