I have just published the longer and I hope more interesting installment of my two-part blog on behavioral economics and in particular, on the implications of the arguments made in the book Scarcity for microfinance and more broadly for international development. It includes a brief analysis of Fonkoze’s CLM (“Pathway to a Better Life”) program through the behavioral economics lens.
I have gotten lot of feedback on my previous post about the researcher/practitioner divide in microfinance. Needless to say, not all of it has been positive (though some has been very supportive).
I now see some omissions in the original post. As I mentioned in the comments section, there have been positive examples of researchers making efforts to set the record straight when the mainstream media reported in an inaccurate, harmful and sensationalistic way on their findings. I should have spent more time looking for the links to them but now I have published the best example, and others have given additional links. I still think researchers could have done more, but it is important to acknowledge what has been done.
Further, I should have mentioned a generous offer made by Dean Karlan to speak to practitioners assembled by Grameen Foundation about what research tells us about what works best in microfinance – something we intend to take him up on at some point. However, I believe that writing a paper on “lessons for practice,” as I have proposed, is considerably more cost-effective than one-off trainings and all the travel expenses they entail. That is why I was so pleased that Tim Ogden agreed to take this idea up.
I suppose that is what struck me so much by Tim Ogden’s positive and immediate response to my plea that he take on writing a “lessons for practice” paper – for whatever reason, he was willing to grant that an idea from someone outside the research community was valid and worthy of his time. I have not seen a lot of that to date. In my mind, he was implicitly admitting that there may have been something researchers had missed in terms of maximizing the public utility of their efforts. I found that refreshing.
Looking ahead, I think it is important to create a space where researchers and practitioners can work more collaboratively to advance learning, practice, and impact. Some years ago David Roodman and Beth Rhyne hosted a meeting that attempted to do that, but it was not successful. During that meeting I proposed, for example, that researchers offer to brief practitioners on upcoming research prior to being released, so we could ask questions, get clarification, think about implications, and prepare questions that would come our way from the media. The research community assembled that day turned down this suggestion.
Perhaps that meeting and my idea were ahead of their time. Today, Innovations for Poverty Action, the Financial Access Initiative and ideas42 are making worthy efforts to create this space. I give them an A for effort even though there is still clearly a lot of ground left to take. Alex Rizzi made some very concrete observations and suggestions on my earlier blog, which I commend and hope people take notice of. Those comments have prompted me to commit publicly to somehow find the money to translate the “lessons to practice” paper into several languages once it is complete.
An issue I may explore elsewhere relates to who is paying for research into the impact of microfinance, and whether that biases the results in any way. I need to give that more thought and I welcome input. I am told that the RCT-practice issue is also complex in the health care industry and there are many parallels with our own journey in the microfinance and financial inclusion arenas.
I am pleased to report that when I talked to Tim Ogden in London at the Financial Inclusion 2020 conference, about which I have had a blog recently published by the Center for Financial Inclusion website, he encouragingly confirmed his commitment to writing the “lessons for practice” paper. He noted that he, like so many of us, is subject to the demands of donors and doesn’t always get to do what he wants to right away. He also joked that he was uncomfortable with the ways that I had complimented him. (When I told Tim that someone had cautioned me against writing that my initial opinion of him was that he was “contrarian and pugnacious,” he smiled and said, “That’s the part I liked !”) I suppose that final point underscores that I really don’t understand researchers. Perhaps in time I will better comprehend what makes them tick.
In any event, I think it is important to underscore that while we may think about things differently and are subject to varying incentives, microfinance practitioners and researchers are on the same team fighting the same fundamental problem.
In the circles I move in these days related to my work with Grameen Foundation and Fonkoze, one often hears that more people in the world own and/or have access to a cell phone than to a toilet. I am not sure of the significance. Perhaps this factoid is meant to draw attention to the proliferation of mobile phones, or to the stalled effort to ensure safe sanitation, or maybe to misplaced priorities. (And if it is the latter, is it commenting on the priorities of the poor, or of development planners?)
Anyway, yesterday was World Toilet Day, something that Anne Hastings of Fonkoze brought to my attention when we were exchanging emails on another topic. Later, I read an op-ed in the New York Times criticizing the Gates Foundation’s emphasis on solving the world sanitation crisis through inventing new toilets for future deployment around the world. The thesis was that there are many low-tech and affordable solutions that already exist and the focus should be on them.
I have some sympathy for this view. A simplistic over-emphasis on “gadgetry” has infected many humanitarian efforts lately. At the same time, I think it is dangerous to dismiss the potential of new thinking, and new thinkers, to come up with technologies to better serve the world’s poor and organizations that work directly with them.
A critical factor with deploying solutions to the poor – whether they be low-tech or high tech, digital or analog, 20th century or 21st – is the institutional capacity of grassroots organizations to explain new ideas and technologies to the poor and provide the financing and troubleshooting needed to optimize impact. This is why organizations like Fonkoze are so essential, especially in places like rural Haiti where there is such a paucity of strong private, public and humanitarian institutions. (I made some similar points about the challenges confronting the “financial inclusion” agenda in a recent blog.)
In any case, as I compose this I am en route to Haiti for a meeting of the Fonkoze Family Coordinating Committee (that I described in another recent blog) and for a celebration of Anne Hastings 17 years of service in Haiti. I will be reporting on all this in the days ahead. As part of this celebration, I have been re-reading and re-posting my four-part series on Anne that was published last year.
In my previous post – which generated a record 20 comments (not including my own), 747 views, and a fair bit of controversy – I promised to provide a separate update on my book and recent developments with Fonkoze. Here is that update. I will return to the issue of how research and practice relate in another post.
First, let me comment about the status of my book on Fonkoze. Despite claims to the contrary, I have not “ditched” it. The reality is more interesting and has three elements. First, I have come to a more realistic assessment of the time it will take to properly research and write something that does justice to the subject.
Second, Fonkoze is undergoing some important transformations in terms of its structure, strategy and staffing, and I believe it will be more appropriate to finish the book once those changes have played out. In particular, Anne Hastings stepped down as the CEO of SFF, the for-profit arm of Fonkoze, after 17 years of full-time work leading various Fonkoze institutions, and she was initially succeeded by a three-member management committee.
More recently, Matthew Brown, a member of that committee, was named as CEO by the SFF Board. The other two members of that committee, Dominique Boyer and Francis Ollivier, remain in their roles as COO and CIO respectively. Anne will be an active volunteer even as she has become the manager (and effectively staff director) of the Microfinance CEO Working Group that I am a founding member of. The Working Group is composed of 8 microfinance networks comprised of 250 of the world’s leading microfinance institutions that reach 40 million families. I see her appointment as a strong affirmation of the respect and influence Fonkoze has garnered well beyond the borders of Haiti, in large part due to Anne’s nonstop efforts spanning nearly two decades.
Third, I have been drawn into trying to shape the transformations Fonkoze is going through (in ways I detail below). In order to write even somewhat objectively about Fonkoze, time needs to pass after I phase out as an active volunteer for me to take up the book again in a serious way. (To give some idea of how active: I have been in Haiti every 8 weeks for the last two years.)
So, what have I been doing? Over the past year I have continued to Co-Chair the Fonkoze Family Coordinating Committee (FFCC), a high-level advisory group made up of board members and senior staff (drawn from all three organizations) that discusses and makes recommendations on important issues that impact multiple Fonkoze organizations.
My Co-Chair, Julian Schroeder, is one of the most extraordinary people I have ever met – a savvy businessman who is also a devout Christian, humble to a fault, reflexively optimistic and affirming of others, and when needed, very decisive and vocal. It’s been a terrifically challenging and satisfying assignment.
As one would expect in a high pressure endeavor, I have made, caused and observed some wrong decisions, hurt feelings, and frayed relationships. But overall, few if any deny that the FFCC has been a constructive force within the Fonkoze family. In many ways, the family of Fonkoze organizations is working very well, tackling vexing problems head on, and solving many of them. And what a learning experience it has been for me! With so many microfinance institutions splintering into non-profit and for-profit arms, this experience of enhancing coordination and managing a leadership transition has important lessons for a global audience.
In addition, I chair the Fonkoze Futures Committee, which is charged with raising the funds needed to properly recapitalize these organizations, all of which were badly drained (in human and financial terms) by the 2010 earthquake aftermath, ongoing losses by the micro-lending operations, and some calculated risks meant to benefit clients that did not pay off. Recently, the Futures Committee efforts paid off in a historic investment of $2 million in SFF by Digicel – a leading global communications provider with operations in 31 markets in the Caribbean, Central America and Asia Pacific. Some other promising trends are emerging, particularly in terms of SFF tracking to its planned pathway to breaking even in the not-too-distant future.
As my involvement with Fonkoze has deepened, I cannot deny that my ability to write objectively about the organization has been compromised to some degree, even as my knowledge of it has grown. Thus, I feel a need to taper down my involvement before taking up the book project again in a serious way. But this blog will continue in the meantime.
After not posting anything on this blog for more than eleven months, I hope at least a few people are still paying attention. If so, they could reasonably ask me about the status of my book on Fonkoze, and of Fonkoze itself. I will largely leave the answers to those questions to future posts. My book is on the backburner for now, though I hope to pick it up and complete it in a couple of years. By that point, I may have more time to write and the Fonkoze story will be less in flux. I will soon be posting a blog about some major developments with Fonkoze and the role I have been playing.
One of the things that has preoccupied me over the last couple of years has been the mostly tumultuous relationship between the microfinance movement on the one hand, and a new generation of researchers that has been studying it on the other. I recall a colleague saying to me in the late 1990s that a new generation of PhDs would warm to the task of trying to debunk the myth of microfinance being an effective tool to fight poverty. To some extent, that confrontation has come to pass.
Certainly, microfinance practitioners and advocates have contributed to this conflict by their (I suppose I should say our) collective lack of curiosity and defensiveness about research findings showing our weaknesses, and also by not being as welcoming as we could be to researchers wanting to study our flagship organizations (which has helped lead them to focus mostly on second and third-rate microfinance institutions). Needless to say, there have been noteworthy exceptions, such as Chris Dunford, formerly the CEO of Freedom From Hunger, and Beth Rhyne, the director of the Center for Financial Inclusion at Accion who recently joined the Grameen Foundation Board of Directors.
Still, researchers are far from blameless. When the media has covered their studies, they have tended toward oversimplified and sensationalistic headlines and stories – which the researchers, perhaps pleased that they were getting any mainstream coverage at all, have done too little to respond to and correct. Furthermore, while the most serious researchers (such as David Roodman) have come to the conclusion that reliable financial serves are extremely valuable to the poor – in fact, more valuable than they are for the non-poor – they have been unwilling to question whether it might be issues with their research methods (rather than entirely with MFIs’ practices) that have caused little positive impact being measured from microfinance in recent studies (aside from contract savings programs), particularly since few dispute that well-run MFIs collectively provide reliable financial services to the poor on a massive scale. (If one casts a broader net in terms of what one considers valid research, as I do, there are quite a few encouraging findings.)
But most damning in my mind is the fact 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. For example, Dean Karlan’s flawed but impressive book More Than Good Intentions, which I reviewed, is chock full of tantalizing nuggets about what researchers have learned about what works best in delivering microfinance services. Unfortunately, those insights usually get buried amongst other findings and rhetoric, and are generally not understood by practitioners.
As a result, I have been trying to argue that we should hold researchers to the standard they hold the rest of us – they should measure whether their research, on which millions of dollars are spent every year, produces any positive change. More tangibly, I have been urging the research community for months to write up in a single paper the “lessons for practice” coming out of their many studies of microfinance, so that we get beyond debates about “whether microfinance works” to more fruitful and action-oriented dialogues about “how it can work better.” My advocacy has been met with deafening silence … until a surprisingly satisfying and productive encounter with a researcher this past summer.
By way of background, I first met Tim Ogden, the managing director of the Financial Access Initiative at NYU, at a social enterprise conference organized by the Stern Business School in November 2012. He was generally rather contrarian and pugnacious, but he made some good points. At the end of his session he went out his way to compliment my colleague Matthew Speh, who was also on the panel, for his emphasis on grounding strategy in research on customer needs and behaviors. Maybe there was more to Tim than met the eye.
Fast forward a few months, and Tim was spending a couple of hours with the Microfinance CEO Working Group (MCWG) that I am a founding member of. The MCWG has been grappling with how to better quantify our collective outcomes and impacts on poverty, and Tim was giving us some sensible and constructive feedback. At one point, I raised the issue of whether he or some researcher he might identify could come up with the “lessons for practice” paper I had been advocating (perhaps prompting some eye-rolling by my CEO colleagues who had heard me beat this drum before).
Tim immediately saw how this could be helpful and said he would take a serious look at taking it on himself. Some weeks later I called him to make sure he understood our request (since one CEO colleague had a different recollection), and he and I were on the same page and in fact, he had already made some real progress. Even if he does not produce this paper himself, I admire his can-do attitude and constructive approach.
Coming back to Fonkoze, Tim said something during his time with the MCWG that really struck me. He said that one of the hypotheses that merited testing was whether the hundreds if not thousands of well-run MFIs that provide reliable and reasonably efficient financial services, without requiring bribes, have helped raise the expectations of millions of poor people about the quality of services they deserved in general. If true, this could have profound impact on how the poor interface with their local and national governments as well as the private charities, faith-based institutions and businesses that serve them. More demanding and discriminating customers of these services could cause a chain reaction of improvement and investment, assuming public, charitable and commercial entities are responsive (and certainly some are, based on their desires for, if nothing else, reelection, profits, etc.).
He also raised some other interesting issues related to the indirect impact of microfinance on national development, such as MFIs collective success in training of hundreds of thousands of employees to provide reliable and often excellent customer service and to manage operations efficiently – skills that are often in short supply in developing countries and that are likely transferred to the broader economy as employees leave MFIs to work elsewhere.
The particular theory about raising the expectations of the poor, if proven to be true, may point to one of Fonkoze’s most profound and lasting impacts in rural Haiti – a place where the government, charities and businesses provide few services, and what they do provide is often haphazard and substandard. The process of Haiti developing into a self-sufficient democracy free from abject poverty is obviously going to take many years and a wide variety of complementary strategies. But I believe that progress is possible.
When I recall the Bangladesh I encountered when I first landed there in December 1988, it was not that much farther along than Haiti is today. By 2013 Bangladesh, despite its many problems, has already met its 2015 Millennium Development Goals concerning halving the number of people in extreme poverty and reducing child deaths, and is on course to meet almost all of the rest of those goals. Imbuing its population with higher expectations from the institutions that serve them will certainly be a part of Haiti following a similar course. How interesting it would be to have researchers test that hypothesis in the years ahead!
So let me tip my hat to one researcher whose constructiveness and fresh ideas have impressed me, and who has also given me a possible new reason to appreciate the important work of Fonkoze.
(A follow up post to this blog can be accessed here.)
Let me be honest — I love to write, especially about things that fascinate me. As many people are aware, I have started to fall in love with Haiti as I did with Bangladesh in the late 1980s and 1990s. So, as the world of microfinance deals with various shock waves including fair and unfair criticism in the media and from political leaders, I feel it is important to shine the spotlight on those who are providing microfinance in the true spirit of the visionary leaders who started this anti-poverty movement — people like my mentor Prof. Muhammad Yunus and Ela Bhatt. So I have decided to take a sabbatical from Grameen Foundation, the organization I founded in 1997, for part of this summer to research a book about Fonkoze, the leading microfinance institution of Haiti. Starting this summer, I will be posting updates on my book including draft passages and short videos filmed in Haiti with my handheld camera. I hope lots of people will take interest in this project, check out the postings and comment on them so I can improve my thinking and writing, and even repost/circulate what I post to draw in others. I want this book to shift mindsets, educate, inspire and also reach best-seller status so that the good work of organizations like Fonkoze can be expanded. All proceeds from sales of this book will benefit Grameen Foundation and its work to support organizations like Fonkoze in the battle against global poverty.