Next week sees a high-profile head-to-head between two of the leading voices on microfinance. In a debate hosted by the United States Agency for International Development (USAID) in Washinton D.C. on Monday, 30 January at 9:00 a.m./14:00 GMT/15:00 CET, David Roodman (Center for Global Development, USA) and Milford Bateman (University of Pula, Croatia) will have alot to discuss.

(P.S. See also below for information about a debate at Harvard University on 2nd February with Guy Stuart.)

Roodman (“Due Diligence”); Bateman (“Why Doesn’t Microfinance Work?”)

The past few years have been particularly turbulent, with a succession of microfinance crises, growing overindebtedness, borrower suicides, disappointing impact findings, and a prize-winning Norwegian documentary contributing to Muhammad Yunus being removed from office as head of Grameen Bank.

The two debaters have met in the past. Bateman first brought a critique of microfinance into the mainstream with his 2010 book, which Roodman heavily criticised. Roodman has made a name for himself as a prolific and insightful blogger with the open book blog he kept while writing the book he recently published.

Whether Roodman’s book (endorsed by Muhammad Yunus) is anything as “impertinent” as it claims to be; what to think of Bateman’s musings about the “end of microfinance?”; and why the best evidence of microfinance’s impact on poverty still is “zero”, will be questions likely affecting the debate as much as the official debate question (which USAID succeeded in making so overwhelmingly dull I fear it may even scare off Washington development brass):

“If microfinance has not achieved its objective in substantially reducing poverty, what are the pathways to financial inclusion that will contribute to this objective?”

Suggestions were solicited from the public in advance. While I have no idea whether it was a realistic shot, I also submitted one (or three); certainly not the greatest question(s) ever, but at least fairly controversial, interesting and debatable, I thought:

“First, why is microfinance assumed to be effective until proven ineffective? Second, what could constitute proof of it being ineffective; or when does an absence of evidence begin to imply absence of impact? Third, if we are concerned for the poor, shouldn’t we stop lending to them [except to a small test populations] until it can be reliably established that microfinance helps the poor instead of having no impact, and therefore being a waste of time and effort, or worse yet, harming them?”

Sadly: rejected. I know of at least two other very interesting submissions which just disappeared. Somehow the organisers managed to drop these options and reduce the choice to six questions which (to me) appear six ways of phrasing three questions (after filtering out the aid newspeak):

  1. What does microfinance do?
  2. Can we do what microfinance does, any cheaper?
  3. Can we rename “microfinance” “financial inclusion” without anybody noticing?

Out of these options came the final question. Well, perhaps it was more audience participation than USAID could handle. But no hard feelings. I have no doubt that – moderated by Chuck Waterfield of MicroFinance Transparency – the two argumentative and well-informed panelists will have a lively and open-minded debate which will focus on the questions which currently matter, above all what to make of the persistent lack of evidence for positive impacts of microfinance.

Just in case you won’t happen to be in Washington D.C. on Monday, USAID conveniently offer the option of signing up for a webinar which should allow you to follow the debate live.

P.S. (26 Jan 2012): Another debate, hosted by the Boston Microfinance Club and Harvard Business School will be held on Thursday, 2 February at 6:30 p.m. in the Harvard Business School, Aldrich 107. Milford Bateman and Guy Stuart discuss the far more straightforward question “Does Microfinance Work?”. 

This looks to be a highly interesting debate thanks to the participation of Dr. Stuart, who runs an excellent course on microfinance at the Harvard Kennedy School (which I was personally allowed to ascertain last year) and has been conducting insightful research on microfinance, not just microcredit, using financial diaries kept by clients in Africa.

(phil)