It is about remembering your mission in microfinance: Sam Daley-Harris
- Tuesday, April 27, 2010, 18:47
- Featured News
- 5 comments
Sam Daley-Harris
Microfinance Focus, April 27, 2010: Mr. Sam Daley-Harris, CEO of Microcredit Summit, shared frank and candid opinion on the issue of rapid commercialization in the microfinance sector in an exclusive interview with Microfinance Focus. Responding to the question of whether rapid growth in microfinance has caused recent problems like multiple borrowing and mission drift, He said “BRAC (An International NGO) has high rapid growth, but it remembered its mission. Grameen Bank had high rapid growth, but it remembered its mission. So it’s not about slow growth or rapid growth, it’s about remembering your mission. So if I pursue rapid growth for rapid growth sake, which may end up meaning, I got big, but my clients are still in poverty. So it’s really what your mission is”.
He raised several questions on real intention of IPOs (Initial Public offerings) in the wake of recent IPO stunt by SKS Microfinance , He said, “Did Grameen Bank raise money from the market? How much of the Compartamos IPOs went to fund the loan portfolio? Of their $400 million profit, how much of it went into the portfolio? Zero. How much of the SKS IPO will be going into the loan portfolio? It seems like it’s a lie. Well I assume you’re saying, well the investment firm comes in with its investment money that went into the portfolio, and then when the IPO came out, they got the profits. I’m just wondering, the investors who came in – to what extent are they committed to the eradication of poverty and transformation in personal lives? It remains a question”.
He emphasized that the leader of the Microfinance institutions will have to be crystal clear about its mission. If MFIs stick to the mission, they can engage with investors or other stakeholders in a right direction of poverty alleviation programme. In the context of his statement, he added an example,” There was a deal, 3 years ago, of $180 million with BRAC and Citibank – I don’t think BRAC’S mission changed, I think they just had the resources they needed to expand their mission.”
Finally, he was bit apprehensive and on the rapid commercialization in the microfinance sector, he said, “I assert that if we go too far down that road there’ll be a day where you, and I and others will be ashamed that we’re in microfinance.
© 2010, Microfinance News. All rights reserved. 2008-09
5 Comments on “It is about remembering your mission in microfinance: Sam Daley-Harris”
Trackbacks
Write a Comment
Gravatars are small images that can show your personality. You can get your gravatar for free today!
It is quite interesting to find such a discussion, on the mission drift of microfinance. I would like to re-state my point, posted earlier on this site, that we need to distinguish between the broad mission of microfinance and the individual institutional missions of organisations (MFIs) involved in microfinance sector ( delivery). How do we make a match between these two? Institutional sustainability is needed. But it doesnt justify loan sharking and exploiting the poor negotiating power of the clients, who are obviously, unorganised, illiterate and struggling to make a living out of these borrowings. How do we ensure that these MFIs dont slip to such nasty money making business? I would feel that community access to accounts of MFIs and their social auditing should be made an essential condition for MFIs. It is not just a commercial activity. It is a societal mission, we are trying to achieve through microfinace and let us not allow the greedplay of MFIs sabotage the dreams of the neglected, excluded and forgotten ‘bottom of pyramid’
Mr Sam has raised a very pertinent point of relevance for micro finance sector. Yes, Mission will have to be an inbuilt ingredient of all related activities in micro finance. Commercialization would be to a limited extent but it cannot over shadow the entire gamut . Transparency and total commitment towards betterment of the lives of the beneficiaries are to be the long term goals.Indeveloping countries, micro finance is to be developed as a sustainable brand for feeling its impact in every walk of life of the beneficiaries.Who would do? Basically the promotors with their crear and fair intentions and definitely the whistle blowers. IPOs what for?
After years of outstanding work in India, our MFIs have caught the Wall Street greed bug. How else can anyone justify going to the capital markets to raise funds for the “PPPOOOOOOOOOOORRRRRRRR”? My respect for this sector has completely eroded and it is no longer a satisfying feeling to be associated with this sector.
I think turning SKS into a profit-turning business defeats the very spirit behind microfinance lenders. Village loan sharks are essentially going to be replaced by corporate loan sharks – both are motivated by pure greed & taking advantage of the poor.
Over the years, I have found microfinance institutions worthy of my charity. I am happy to donate to legitimate institutions that do so much good by helping people out of poverty. I have been overwhelmed by how much so little money can do to help people in need – it is profoundly satisfying to know the money I donate is going to such a worthy cause. I simply cannot believe any microfinance company that plans to turn a profit to satisfy investors will not do so to the detriment of the those very people they purport to help.