Defining Success
This article is a response to an article in the last edition of The Sydney Globalist, entitled ‘Debating Development: The Controversies Laid Bare’. To view past editions of the magazine, click on ‘Past Editions’ in the menu above.
Lily Morrissey’s article ‘Identity Crisis’ explains how the success of microfinance is being eroded by the ‘self-sufficiency’ versus ‘welfare’ debate of microfinance initiatives (MFIs). While this topic is interesting from a normative perspective, it ignores a much larger question: are MFIs actually successful?
“Before we discuss whether MFIs should be focused on self-sufficiency or welfare, we need to break down the overly optimistic assumptions about the benefits of microfinance.”
Morrissey rightly points out how poorly ‘self-sufficiency’ is defined by MFIs and analysts, yet she fails to explain how welfare models are judged in terms of success (excluding economic criteria). While MFIs may include social targets as their primary focus, the impact of such programs on these aspects is hardly monitored. Furthermore, when it is, the results are bleak. Welfare advocates argue that the targeting of women in MFIs empowers them. However, attempts to evaluate these assertions have found that empowerment comes at a cost. In a number of studies, domestic violence appears to have increased among female borrowers, including those of the Grameen Bank. In addition, MFI intervention has also been weakly linked to increased suicide rates among women and men.
The welfare argument cannot explain these discrepancies. As such, before we discuss whether MFIs should be focused on self-sufficiency or welfare, we need to break down the overly optimistic assumptions about the benefits of microfinance.
