The holy grail of microfinance: ‘helping the poor’ and ‘sustainable’?
The term ‘microfinance institutions’ covers a broad spectrum from traditional businesses, for whom social objectives are only a by-product, to traditional social service organizations, for whomreaching the poorest is the prime objective. In between are social enterprises, which are explicitly aiming at reaching very poor people (however defined) but at the same time are aiming at sustainability.
This article takes the case of Freedom from Hunger’s Bolivian counterpart, CRECER, and shows how although CRECER is making substantial progresss, its success in meeting both these objectives depends
on how they are defined. For example, what proportion of better-off women are allowed among the target group of poor women? And should ‘sustainability’ include, as well as meeting operational
and financial costs, repaying the original donor for their start-up investment? It is argued that most social enterprise MFIs cannot and should not attempt to do this but should aim to provide good-value
services for poor people for a very long time.
reaching the poorest is the prime objective. In between are social enterprises, which are explicitly aiming at reaching very poor people (however defined) but at the same time are aiming at sustainability.
This article takes the case of Freedom from Hunger’s Bolivian counterpart, CRECER, and shows how although CRECER is making substantial progresss, its success in meeting both these objectives depends
on how they are defined. For example, what proportion of better-off women are allowed among the target group of poor women? And should ‘sustainability’ include, as well as meeting operational
and financial costs, repaying the original donor for their start-up investment? It is argued that most social enterprise MFIs cannot and should not attempt to do this but should aim to provide good-value
services for poor people for a very long time.
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