Advocating for balanced research on the delivery of financial services

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By Sharlene Brown, Executive Director, Microfinance CEO Working Group

It’s been just over ten weeks since I took the helm as executive director of the Microfinance CEO Working Group (MCWG) and there’s been a lot to learn about this coalition of CEOs promoting responsible practices in the microfinance industry.

What strikes me most is that conversations in our industry around the value of microfinance services are fairly stagnant. As with any social justice issue, the possible solutions always have pros and cons. The naysayers, who cite harms of microloans often focus only on when lending practices are not strong, and fail to recognize practitioners who give voice to their clients and offer other services that comprise modern microfinance, including savings, insurance, and skill-building tools.

There are no perfect solutions to end poverty and empower low-income families and communities. However, microfinance offers strong and useful tools to help deal with the day-to-day challenges of living without the means to provide food, education, and a safe home, among other things. In Jamaican culture¹, as in many communities, people use traditional mechanisms to help deal with these challenges. In Jamaica, many people participate in savings groups called partners (pronounced pa-dner in Jamaican patois)². A partner represents a self-selected group of people who save together, typically using the funds to help pay for big expenses like school fees, building a house, and expanding a business, or to have in the case of an emergency.

Here is a list of helpful terms to understand the basic features of a partner:


The person who organizes the partner

A hand

The amount you pay, generally weekly, to participate. An individual can have more than one hand

A draw

The total sum of all the hands

If I have a partner with 10 hands at $10 per hand, then the draw each week is a $100. Each week, one of the members of the partner receives their draw. From the draw received, the member will give the banker a fee (often discretionary and generally does not exceed the value of one hand – in this case $10). The power of this system is that it relies on trust among the participants who often know each other and there is an embedded social pressure to ensure that everyone delivers their hands when it is due. The vast majority of the time, when partners are run well with good selection processes (you recommend only those you trust and believe are responsible), everyone is happy. However, there are instances when someone gets an early draw and begins paying their hand late, which causes issues within the group and particularly for the banker who has the responsibility to ensure that the draw is paid on time. In Jamaica, I’ve heard stories of people running off (leaving the local area) when they receive an early hand with no real recourse available for the banker and members. For Jamaicans living in the U.S., in the rare instance that this happens, the member is often threatened with legal action given the strength of the U.S. legal system.

I share this to demonstrate that no intervention is perfect. The more relevant questions, from my perspective, are: do the benefits outweigh the risks, and do the members of the community experience value from it?

Microfinance services, as interventions to help low-income communities, are not perfect, in the same way that traditional self-directed interventions like partners are not perfect. As we move forward with the delivery of responsible financial services, we need to embrace and demand quality research using strong methodologies that allow us to be honest and transparent about what is and isn’t working. Information and feedback loops are key to driving adaptation and innovation in the delivery of responsible financial services.

For those wanting to learn more from balanced perspectives on the delivery of microfinance services, here are a few studies to get started:

  1.  Measuring the Impact of Microfinance
  2.  A New Report Looks to the Future of Measuring our Impact ³
  3.  The Evidence Project
  4.  Wrap-Up of The Evidence Project—What the Evidence Tells Us



¹ I was born in Jamaican and moved to the U.S. in the 1980s
² Academics bundle this model and similar models into what they call rotating savings and credit association (ROSCAs). According to Wikipedia, a ROSCA is a group of individuals who agree to meet for a defined period in order to save and borrow together, a form of combined peer-to-peer banking and peer-to-peer lending.
³ In the spirit of transparency, the Microfinance CEO Working Group contributed to this study.

One thought on “Advocating for balanced research on the delivery of financial services

  1. Excellent blog post and welcome aboard, Sharlene.  Thanks for plugging Kathleen Odell’s two excellent, balanced and well-written reports that look to the entire gamut of impact research on microfinance and financial inclusion.  I think you will take MCWG far — good luck !

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