Radio Netherlands Worldwide

This was an interesting and lively debate that seemed to question the very foundation that social business is built upon. An especially poignant comment was made by Faisel Rahman towards the end of the discussion. He states that microfinance institutions need to redirect their focus from profit to the people that they serve. Such a re-alignment of goals would result in smaller returns for investors but would enable microfinance institutions to lend at rates that would help their clients.

This statement assumes that, in their current state, microfinance institutions are much too focused on returns and that, as social businesses, they place a strong emphasis on the profitable side of doing business. In response, I would direct you to a recent paper authored by Kathleen Odell, a professor at the Dominican University’s Brennan School of business. Odell’s paper, titled Measuring the Impact of Microfinance, focuses on several significant microfinance impact assessments released between 2005 and 2010 (updating an earlier paper by Nathaniel Goldberg which reviews literature from before 2005). She examines the current body of research on the topic of microfinance and concludes that, although there are obstacles to determining the extent of the impact, microfinance does benefit microbusinesses.

Odell’s work lies at the heart of the current debate over the merits of microfinance. Her aggregation and assessment of the body of knowledge concerning microfinance enables advocates and critics alike to understand what we know and what we need to find out.

Sincerely,
Remy Olson
Grameen Foundation, Special Programs Coordinator