From 15. – 17.3.2017 organized the Centre for Microfinance Nepal (CMF) the 4th Micro Finance Summit in Nepal. More that 800 representatives from Micro Finance Institutions and cooperatives gathered in Hotel Yak & Yeti to discuss the current status and future of Micro Finance in Nepal. I had the pleasure of being invited as a commentator on the paper, which gave the key slogan of the whole summit: “Balancing Financial, Social and Human Value” published by Dr. Harihar Archarya on the case study of a woman lead and value oriented poverty alleviation model, which was facilitated by SAHAMATI.
The case study gives the reader a detailed insight in the operative aspects of the micro financing model. What is the strength of this paper is also the limitation: it provides detailed insights in the internal organization, however, the methodology does not allow to answer the question, which aspects of the comprehensive intervention was causing the transformation in relationship with family, organization, society and nature. While formulating the research question, Dr. Archarya assumed, that the improved economic status was causing the uplift in the social relationship by asking: “Provided that their economic status is improved, is it possible to bring about significant transformation in social relationship [..]?” Yet for me there are many evidences, that this transformation rather came from the interventions which accompanied the micro finance activity as a second effect of the program rather than assuming, that the intervention changed their economic status and their economic status transformed their social relationship.
Yet the chosen methodology of the paper does not allow to answer the question of the causal effect. Yet to bring up this question I’ve referred in my talk to a comparative field experiment, which is described in Poor Economics (Banerjee, Duflo, 2011). The study has shown, that even though access to micro finance has increased the number of micro-businesses started and consumer goods available in a household their study has not detected that the pure access to finance has increased woman empowerment within the household or an improved access to health care or education. From this I would conclude, that is was not the financial change causing the social change, but rather the intervention of SAHAMATI causing both: an improved economic status as well as a social transformation.
As the majority of the audience where the leaders and initiators of local micro financing initiatives, I’ve tried my best to summarise those conclusions in Nepali language. I continued, sharing the work from Dan Arieyl, who in his book Predictable Irrationality summarised the findings of various experiments how there is something like social norms and something like market norms and how market norms have been show to actually put away social norms. Abhi Kaul, another speaker on that day, was talking about a new movement in Canada and the US “the spiritualisation of money”, which might be a realisation, that from monetising what has been done in social norms, the social norms get undermined.
I concluded my comment with introducing the audience very briefly to the idea of impact measurement and the common good matrix, which which is a tool made to actually measure the impact of any organization in terms of the positive or negative impact of any organization on it’s different stakeholders and allows to put this in a comparative aspect. If i roughly apply this matrix to the activities of SAHAMATI I would see that many aspects of the democracy related indicators have been applied during the project implementation, which made the model so successful: inclusion of the “customer” in product & service development, empowerment of the implementation partners, a set of feedback loops and more has given them back human dignity and provided a space to develop solidarity.
The program ended with a set of questions from the audience in which several interesting questions where mentioned: One of it dealt with the question if a research fund should be established, which could help conducting more and in depth research on the impact of social business. Dr. Balram Duwal furthermore raised the direct question on how social business can be and is related to micro finance.
Those micro finance institutions, which strive for bringing social change, are well advised to consider themselves social businesses and reflect on their social impact along all the lines. Without speaking it out SAHAMATI has been operating up to a high degree as a social business working along several principles, which looked way beyond the financial impact of their doing. The second relation between micro finance and social business is the question into which kind of business a micro business will grow, for the case it grows in terms of size and impact. Where a micro business always starts as a inward-oriented entity while growing into a social business a micro business needs to change at a certain stage of growth to turn its focus outward. This phenomenon I hope to be able to do more research on in future, is something I’ve named the inward-outward-paradigm shift.
It was a great honor for me to be invited to contribute and share my thoughts in this program. I got inspired by he discussion and the energy which was present in the hall during the program. Same like for the rest of Nepal, I could feel the transition in the audience and a new way of thinking about the crucial community service micro finance institutions are playing in Nepal’s transformation. One positive aspect of the transformation was that the whole program was made accessible also to person not present on the day by being live streamed on Youtube. The link below is starting the live stream at the time, where my comment starts (mainly Nepali)
I want to congratulate the center for Micro Finance and Dr. Harihar Archarya for this successful program and hope to be able to contribute in future again.
Ariely, Dan: Predictable Irrationality: The hidden forces, that shape our decisions; Harper Collins
Banerjee, Abhijit V.; Duflo, Esther: Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty; Random House India