Alex Counts is the President and CEO of Grameen Foundation and a biographer of Muhammad Yunus, the Grameen Bank founder. Given his position in the large network of Grameen, he holds sway in the microfinance world and beyond. So when he publishes an attack on independent research on his blog, I take to represent a reasonably broad antiscience sentiment in the microfinance industry.

In his article, the head of Grameen Foundation laments the emergence of “a new generation of researchers” rising to “debunk the myth of microfinance being an effective tool to fight poverty” (I consider myself part of this generation, but I’m sure Counts doesn’t mean me). He writes about a “conflict” between researchers and practitioners, questions whether practitioners are to blame for not having brought researchers into the fold, says researchers have supported sensationalist reporting against microfinance, and claims they have not tried to contribute (enough) to poverty alleviation. Then he delves into an elogy for Tim Ogden, head of the Financial Access Initiative at NYU. The overall message – research results which don’t support microfinance should be disregarded; the title-giving Haiti cue is a bit of a red herring – is akin to a call to sticking one’s head in the sand when threatened.

The ostrich, unlike the microfinance CEO, is falsely believed to stick its head in the sand when it feels threatened.

Image: Bob Jagendorf/Wikimedia Commons CC BY-SA 3.0.

I’m writing this to respond to Counts’ piece and his core request “that we get beyond debates about “whether microfinance works” to more fruitful and action-oriented dialogues about “how it can work better”.” The following is my small defense of academia.

(Just to clarify three things first: 1. The article I’m referring to is on Counts’ personal blog, so it’s by no means an official statement. 2. Counts doesn’t say independent research should be banned, just that it’s useless (recall the 2010 microfinance industry’s response to the first RCTs, saying they should be disregarded). 3. Counts supports some research on microfinance, however only research which aims to enhance in one way or another the microfinance industry’s activities.)

Eight contentions

1. The article says researchers have focused on “second and third-rate” microfinance institutions (MFIs), and failed to capture the impacts of good ones. He suggests this is because the “flagships” have failed to open up for research. But, first, one may wonder whether an MFI which doesn’t permit independent research could even qualify as an institution which takes poverty impact seriously. Second: what would the RCT researchers (like Esther Duflo and Dean Karlan) say about the institutions they worked with: bad MFIs? Did they deliberately choose second-rate MFIs? Vice-versa: is Counts suggesting that only Grameen-affiliated MFIs are good ones? If so, why don’t they facilitate independent research?

2. Some researchers – according to Counts – have managed to see the light. Aside from Tim Ogden, the names he gives as “noteworthy exceptions” are Chris Dunford and Beth Rhyne. Both just so happen to be high-ranking, salaried members of microcredit-giving/advocacy organisations. Rhyne works for the Microfinance CEO Working Group and ACCION; Dunford works for Freedom from Hunger. Any further comment needed?

3(a). Counts says that researchers support biased and sensationalist media reporting about their results. He even insinuates their vanity is at fault (because they are “pleased that they were getting any mainstream coverage at all” – how’s that for a dis?). Wow. Well first: researchers (like most other people) have little influence on the headlines written about their work. And second, no – the headline cited as an example (“Small change: Billions of dollars and a Nobel Prize later, it looks like ‘microlending’ doesn’t actually do much to fight poverty”, Boston Globe) doesn’t sound very sensationalist. Perhaps “All Microfinance Fails” might qualify, or “Microfinance the Leading Cause of Suicide and Poverty”. On that note: Counts singles out David Roodman as one of “the most serious researchers” – fine. But if I remember correctly, TIME Magazine wrote about his work: “Does Microfinancing Really Work? A New Book Says No” – go figure.

3(b). What have microfinance professionals ever done to “respond and correct” the sensationalist headlines written about their business? I know industry insiders commonly talk about having raised excessive expectations, but who has actually gone to the general public saying: “Sorry World, we kind of lied all these years about knowing that this really changes lives and will put poverty in museums. But we’re telling you the truth now when we say we that know it does ever-so-slightly-less-than-that.” Who from the microfinance ingroup (except mavericks like Malcolm Harper and Hugh Sinclair) has tried to correct the sensationalism? With headlines like “Micro-miracle: Grameen Bank’s genius is the principles it puts into action” (Houston Chronicle) or “Credit the poor and end poverty” (Sydney Morning Herald) to its fame, nobody associated with Grameen should be throwing stones.

4. Counts accuses most researchers of never considering how (in)adequate their methods are at finding the impacts he sees. How about trawling through all 2,643 publications on the topic like Duvendack et. al. did? Vice versa, I wonder whether Counts lies awake at night considering if what he claims is there might perhaps be inadequately find-able, using proper methods? With his statement, Counts aligns himself with the Rumsfeld School of reality, where “the absence of evidence is not the evidence of absence”.

5. The article asks us to consider a “broader net” of valid research which produces more “encouraging findings”. The one report it cites was commissioned by Grameen and published in the Grameen Foundation Publication Series, not in any peer-reviewed journal. Great work on balance there. Also, it could for instance have included in his “broader net” a recent paper by Angelucci, Zinman and Karlan evaluating an RCT on CompartamosBanco – perhaps the world’s most (in)famous commercial MFI – in which the authors tried as they might to find the positive among pretty glum results.

6(a). Counts’ key complaint and challenge is that “researchers have failed to do much to help ensure that what they have uncovered about what works well in terms of microfinance program operations is digested by practitioners and turned into better services delivered to the poor”. He calls for more “lessons for practice”. One possible response: it is correct (as in: justifiable) that researchers who can’t find (enough) positive impacts have not dedicated the bulk of their further work to tweaking with microfinance. It would be entirely illogical. Indeed, if they had trouble finding that it works, why should they be focusing additional resources on fiddling with it?

6(b). Another possible response: don’t ask others to do your work for you. Frankly, it isn’t up to academia to make microfinance programmes work better. Researchers aren’t consultants for hire or providers of technical assistance. It’s practitioners’ job to make their business work better (Chris Dunford’s comment on Counts’ blog makes the point clearly). Vice versa, nobody’s asking Grameen Foundation to do their research for them; although Grameen is certainly trying, e.g. by promoting its own measurement tools for microfinance impact.

7. Counts’ attack on independent researchers, stating that they have failed to produce “positive change”, hinges on what he considers “positive change”. Of course, if the only changes one considers “positive” are ones which enhance MFIs’ operations, reputation or image, that clarifies things. However, from another perspective, anything from disillusioning the public about a programme without proven effectiveness (and thereby reducing harm and/or further waste of resources) to helping MFIs identify which people to rather not lend money, may be a positive change. To illustrate: we wouldn’t criticise our medical colleagues for testing a new cancer treatment, reporting they found no effects, and then not coming up with ways of improving its marketability. Rather, we would blame them if they weren’t candid enough about the (lack of) findings; and if they showed an excessive commitment to that one treatment, and didn’t discuss possible alternatives, we would question their integrity.

8. If only research which pushes Grameen’s message and helps expand its related businesses is useful, then Counts shouldn’t criticise free academics, but just get microfinance sponsors to pay for it. Wait – they already are. Just one example: the Financial Access Initiative (FAI) which Tim Ogden manages (Counts praises his “can-do attitude and constructive approach”) is funded exclusively by an insurance company and the Gates Foundation, which itself funds microfinance. Its four “partners” include a microfinance consultancy and (above-mentioned) Freedom from Hunger. This is of course not to say that all research from institutions like FAI or J-PAL (the latter founded and funded by an outspoken microfinance supporter) is necessarily biased or suspect; merely to highlight Counts’ clear preference for slightly less-than-arms-length rather than independent research. Here in Germany there is an ongoing debate about the independence and credibility of “Stiftungsprofessuren” (privately funded professorships and research groups); in the USA it has simply become an accepted fact that private interest groups should pay for research in their areas of activity.

The world according to Grameen

In all, the article’s forceful statement against independent research speaks for itself. The message – we want more research showing that our work is good – need hardly be sought between the lines. All other research is annoying, destructive, and not useful. Of course this isn’t Grameen’s first attack on people or groups who don’t toe the line; this time it’s the many academics who don’t fit the picture. The article illustrates, once again, how much the core of the microfinance “cult” (as Hugh Sinclair calls it) is creating its own reality. The rest of the world isn’t on message, and the CEO of Grameen Foundation doesn’t get it. So he sits down and writes an article about why the rest is wrong.

“Constructive” efforts, however, might also begin by wondering why dedicated and smart researchers (and I don’t mean critics like myself) can’t confirm Grameen’s view of things. Even if it means considering whether Dr. Yunus might have been mistaken in a few regards, surely taking the disappointing findings by independent (and sometimes even not-so-independent) researchers seriously would be an option; especially for an organisation as dedicated to poverty relief as Grameen? However, that would of course require keeping one’s head out of the sand, and considering whether there might be some things wrong with microfinance.