The advent of mobile technologies provides the opportunity to lower transaction costs and provide services on a sustainable basis to ever-lower levels of poverty. To be effective, the products and services we develop using this technology must address the high levels of vulnerability faced by people living in extreme poverty and must take into account the pressures and challenges these people face as they seek to manage their lives and care for their families with limited and irregular incomes.
That is what we learn from the microfinance providers who track the well-being of their clients over time. Once they reach scale, these organizations begin to develop ways to help their clients deal with other areas of vulnerability: healthcare, education, access to broader markets, and safe places to store their assets. In so doing, these organizations also reduce their own vulnerability. Their knowledge of their client’s needs, preferences, and aspirations allows them to adapt to changing circumstances, identify potential problems, and build a more secure portfolio as they help their clients build more secure assets.
Microfinance only succeeds when its clients grow and prosper. And for our clients to prosper, we need to find ways to help them address the many areas of vulnerability in their lives. When microfinance clients remain vulnerable, so do the institutions that serve them. We need to focus less on the growth of our institutions and more on what is happening in the lives of our clients. For the Microcredit Summit Campaign, this means putting much more emphasis on our second goal, helping 100 million families lift themselves out of extreme poverty, because this is the goal that measures whether or not we are succeeding with the original mission of microfinance. Changing the focus to client outcomes will require action by many other actors involved in promoting and providing financial services to those living in poverty:
- Microfinance providers should track and report to their investors and donors on client outcomes.
- Governments should require that those who receive government support for microfinance clearly articulate the mission that they seek to achieve and the levels of poverty that they seek to serve, and then utilize measurement tools to track whether they are succeeding at what they set out to do. (A recent study by Canada’s Standing Committee on Foreign Affairs and International Development on Public-Private Partnerships made this point by concluding that government investments in microfinance and other development activities that combine public and private actors should include “a process to monitor each project, which would assess its outcomes against the project’s established objectives and its broader contribution to poverty reduction through inclusive economic growth.”) 
- Social investors and donors should use client outcome information to decide how to invest their resources in a way that reflects their social goals.
- Those who invest in microfinance funds and donate to microfinance providers should request information on client level outcomes so that they can know whether the resources they provide are achieving the results they desire.
Marianne Williamson, a popular U.S. author and lecturer, encourages us to carefully consider how we approach and serve poor clients. She says, “Any distrust comes from perhaps well-meaning people who don’t deliver on their promises…You gain the trust of the poor people the way you gain the trust of anyone else: you’re true to your word.”
True accountability means being accountable for achieving the results that we set out to achieve. For those of us who want to see people in poverty using financial services as a tool for moving out of poverty, that means we need to keep track of what is happening to the poverty levels of our clients. Without that information, we do not know how vulnerable our clients remain, and how vulnerable our institutions are that serve them.
That is what Conchita Quintero teaches us. After losing two children, she still pressed on and, with the help of ASKI and others, was able to learn how to deal with some of the vulnerabilities she faced. “Riches can be stolen,” she says, “but what you learn cannot be stolen by people. It’s up to you, how you’re going to benefit from your learning.” 
If we want to provide financial services in a way that helps people move out of poverty, then we need to provide things that cannot be stolen. We need to provide products and services that help people living in poverty to address the many areas of vulnerability that they face, so that their hard-earned gains are not taken away by disaster and disease.
Conchita looks out over her land, her livestock, and her small store. “I will say to my children, ‘Love this because I built it with my hard work.’” 
 Dean Allison, M.P., 2012, “Driving Inclusive Economic Growth: The Role of the Private Sector in International Development,” report of the Standing Committee on Foreign Affairs and International Development, November 2012, 41st Parliament, 1st Session, Ottawa, Canada, http://bit.ly/DeanAllison.
 Opportunity International Australia, 2012, “Conchita’s story.”
Photo credit: Rakibul Hasan
|← Previous: 2013 Report > The Health and Microfinance Alliance||Next: 2013 Report > Appendices →|
—The Institute of Development Studies
Table of Contents
- Executive Summary
- Reaching Fewer
- The Promise of Mobile Technology
- The Psychology of Scarcity
- Developing Appropriate Products
- Conclusion and Recommendations
- Get Your Copy