Triple Jump’s Response to Hugh Sinclair’s Book: Does It Raise More Questions than Provide Credible Answers?

http://microfinance-in-india.blogspot.in/2012/08/triple-jumps-response-to-hugh-sinclairs.html

Regulation and Supervision of Micro-Finance Investment Vehicles: An Urgent Task for Central Banks and Regulators Globally!

http://microfinance-in-india.blogspot.in/2012/07/regulation-and-supervision-of-micro.html

Does Sinclair’s Open Challenge (to the Global Micro-Finance Industry) Make His Claims True?

http://microfinance-in-india.blogspot.in/2012/07/does-sinclairs-open-challenge-to-global.html

http://microfinance-in-india.blogspot.in/2012/07/should-not-microfinance-investment.html

http://microfinance-in-india.blogspot.in/2012/07/why-blame-mfis-alone.html

I agree with you that Hugh Sinclair appears to have hit the nail smack on the head (of microfinance). He has very firmly and comprehensively exposed the real greed-based motives of so many of the most prestigious institutions and individuals working in the microfinance industry today and in the past. Some of the material is simply shocking. I really don’t see how the microfinance sector can once more pick itself up and recover, to be honest. It might indeed be ‘the end of microfinance’. But I also agree that Sinclair errs in resorting to the ‘happy ending’ that ‘some’ microfinance actually works. Why did he choose to do this? And, more to the point, where is the evidence for this? I mean, if he blasts others for not being upfront, then he should have given some evidence so that we can see what exactly this MFI he likes so much is doing to help the poor.

Hugh: I’m sorry to say but yet again you are seriously muddled here, and not just with regard to my name. I simply don’t get the connection you make between me wanting to limit the damage caused by the channelling of scarce financial resources into microfinance applications and the point you make about having a bank account or not. The two things are totally seperate issues and you can have one without the other, or both, or neither. Microfinance is ‘not worth doing’, as you put it, among other things because it impels local economies into a trajectory marked out by de-industrialisation, informalisation and infantilization. If you mainly channel resources in such a way as is suitable only for petty trade-based informal microenterprises, then that is exactly what you end up with. And upon such a base, there is simply no evidence from anywhere that a country or locality can grow and develop: the evidence is all around you in Africa, where I think you work, probably more than anywhere else. And the IDB in its excellent 2010 publication’ The Age of Productivity’ also makes exactly this argument for Latin America, that too much finance has gone into informal enterprises and self-employment ventures and not enough into much bigger formal enterprises, inclouding SMEs.

Milford

In spite of widespread rhetoric to the contrary, no one should have the ‘right’ to borrow. Whether the loan comes from Wall Street or their neighbours, their character and previous track record should matter. But everyone should have the right to a safe, flexible place to save their money. That is what we should have delivered long ago, and it is not too late.

Banks and credit unions provide microfinancial services to many more people than the 120 million or so who are served by the specialist MFIs. In particular, some 70 million women in India are served by the five mllion or so self-help groups (SHGs) which save with and borrow from commercial banks. The SHGs are not perfect, by any means, but the interest rates they charge their members, and which they pay the banks, are not excessive, indeed they are often too low because of misguided political interference.

And ‘we’, who may have rather large mortgages and are rightly concerned about fractions of a percent differences in interest rates, often over-emphasise the importance of interest rates. Look at the website of ‘Qickquid’, a major British lender; I saw their poster advertising ‘ten minute money’ yesterday, proclaiming in large letters that their APR was 1790%; this does not stop their (mostly) literate British clients from using their services. Price is only one of the ’4 P’s’ of marketing, and product, place and promotion may matter a lot more to some clients.