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The World Bank’s previously public data on microfinance and financial inclusion has recently been locked away behind a paywall. It’s hard to figure out why. However, it raises larger questions about the Bank’s strategies for microfinance and knowledge more broadly.

(This is a background piece to an article published on the IDS blog.)

Since the 1990s, the World Bank has sought to present itself as not only as a lender, but also a global “Knowledge Bank” that collects and provides knowledge as a global public good. It has garnered some praise, and perhaps more criticism, for ostensibly seeking to monopolise knowledge about development. In 2012, the Independent Evaluation Group concluded the objective of creating a global Knowledge Bank had not been achieved, criticising a lack of uptake of knowledge within the Bank and “intellectual silos”.

So how about intellectual vaults, with knowledge securely locked away? Turning public monopolies into private (or pseudo-private) monopolies; now that doesn’t sound like something the World Bank would be in favour of, does it? It’s precisely what happened with the World Bank’s microfinance data platform earlier this month.

The MIX (also known as “Microfinance Information Exchange”, or “Mixmarket.org”) was created by the World Bank’s in-house-but-arms-length microfinance governing body, CGAP, to improve the transparency of the microfinance industry. Since 2002, the MIX (whose connections to the World Bank are not made very clear, but its headquarters are across the street) has collected data about the global microfinance sector, packaged primarily to cater to investment decision-makers.

The MIX’s “.org” suffix denotes its claim to serve the greater good. The data were made available on-line.  Anyone with an interest in microfinance could access it: “a big win for open data in international development”.

Get the “public” data – for upwards of $486

Those days, it seems, are over. All the data which were previously available for downloading and (usually after some cleaning) analysing in a spreadsheet are now behind a paywall. What used to be a “global public good” is now priced at at least $486 a year – clearly too much for most students or researchers, let alone those from developing countries.

paywall

(Image: screenshot from themix.org)

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Excerpt from “The Political Economy of Microfinance: Financializing Poverty”, Chapter 2, A Genealogy of Microfinance. (see other excerpts here)

Microcredit allowed the well-institutionalized tool of credit programming to remain inside mainstream development policy, despite a diminished role for governments, and despite the fall from grace of subsidies. In reality, microcredit programming merely shifted the subsidies and state involvement one level “up”: no longer were loans to the poor subsidized and publicly supported; now the organizations which lent to the poor were subsidized and supported.


Historical growth of the microfinance industry

Sources: World Bank (2001); Maes/Reed (2012); MIX (2013) = Basic MIX MFI Data Set, as of 26 December 2013.

Reliable data on microfinance from before 2000 are very rare. In the mid-1990s the World Bank surveyed the sector and counted over 900 “institutions which offer microfinancial services” (around 735 of them being “proper” microfinance institutions), each serving at least 1,000 clients. The list included seven large banks and one NGO. The survey tallied around $5 billion in outstanding loans. However, the vast majority of MFIs were recently founded NGOs which placed little, if any, emphasis on savings and received over two-thirds of their funding from donors (see Figure below). This group was fast-growing. The World Bank (2001: 4) noted: “Much of the impetus for this growth comes from donor organizations and NGOs embracing microfinance as the latest tool in development and poverty reduction. Due to the increasing availability of donor funds, microfinance institutions have grown rapidly.”

Standardizing microfinance, financially

The World Bank’s decision to support microfinance primarily through its International Finance Corporation (IFC) arm, whose purpose is “financing private sector investment, mobilizing capital in the international financial markets, and providing advisory services” (IFC 2011), affected which type of organizational model would become dominant: MFIs that were willing and able to manage funds that were channelled from mainstream financial markets were favoured. Read the rest of this entry »

CGAP is the World Bank’s (not-quite-so-)arm’s-length sub-organisation whose role is to promote microfinance. CGAP (“see-gap“) once stood for “Consultative Group to Assist the Poorest“, now it officially stands for “Consultative Group to Assist the Poor”. Actually, if nomen were to be omen, it should probably stand for “Consultative Group to assist (those who lend to) the Poor (and not-so poor)”.

Courtesy of Wenger Swiss Army Kives

So many functions … but can it cut?

I don’t expect CGAP to function as an independent evaluator of microfinance. What I do expect is that CGAP publications have minimum standards of research quality and logic.

The most recent CGAP report, entitled “Latest Findings from Randomized Evaluations of Microfinance” (Bauchet et. al.), however, is appalling on both counts. Nearly everything about this report is problematic. It is racked by wishful thinking – to paraphrase: “we may not have evidence that microfinance does what it was supposed to, but we still believe it works” – and it has a disturbing feel about it, which derives from: (1) what the authors have left out, and (2) the heavy tension between concern for the poor and patronising them.

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The Book

Governance across borders: transnational fields and transversal themes. Leonhard Dobusch, Philip Mader and Sigrid Quack (eds.), 2013, epubli publishers.
February 2017
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