Independent research for global prosperity
Vikram Akula, who founded SKS Microfinance in India, and long aggressively defended it in the face of controversy, apparently has publicly stated that he made mistakes. I just have this fragment from a summary of the talk he gave at a Harvard Business School conference (HT @sushmitameka):
akula
The microfinance rating agency MicroRate recently released an update of its Role Reversal report, which received wide attention five years ago. Like the original, Role Reversal Revisited makes a strong case that public agencies such as the World Bank's International Finance Corporation are investing heavily in microfinance institutions that are also capable of attracting finance from private investors. Thus public investors are "crowding out" private investors, in contravention of their own policies.
Like me, Sanjay Sinha, the director of the microfinance rating agency M-CRIL, sees the speed and nature of growth in India's microfinance sector as a core cause of the debacle in Andhra Pradesh in late 2010. He's written an article on microfinancefocus.com reflecting on these and other lessons.
He closes with a warning to the rest of the world:
Given the microfinance crises in various countries in the last few years, I've been wondering which place might be next. Partly inspired by the format of Daniel Rozas's analysis of Andhra Pradesh a couple of years ago, I made scatter plots of some indicators of potential danger, such as number of microloans outstanding per adult (someone 15--64 years old) and the rate of growth in number of loans.
In the latest entry in CGAP's great series on overindebtedness, Rochus Mommartz of the Swiss social investment group responsAbility (which I think mostly invests in microfinance) is enjoyabl
Shameran Abed, a top manager at BRAC and son of the founder, has contributed the latest post to CGAP's series on overindebtedness:
Barbara Magnoni in the February issue of MicroCapital Monitor (gated) on who came through the Nicaraguan crisis looking good, and who didn't:
In a video-taped interview seven months ago, I expressed a degree of optimism that, historically at least, we had not been over-indebting unacceptable numbers of poor microborrowers, based on an admittedly tenuous inference from high repayment levels in most of the world. Since then, various conversations and data points have left me less comfortable with that inference.
On Monday the Financial Times opinion page carried a defense of India's microcredit industry by nine esteemed academics, including four native to India and one to Pakistan. If you have trouble getting through FT's gate, read this earlier version for the Indian Express.
An excerpt from the FT version:
I spent Tuesday in Delhi, attending the second half of the Microfinance India Summit, and flew down yesterday to Hyderabad, the capital of Andhra Pradesh, where the crisis is brewing.
Here, I will brood on two themes.
