March’s Most Popular Posts: The power of transparency
Remember that blue and black (or is it white and gold?) dress that broke the Internet for a few weeks? There was actually some science behind that difference in perception that led to many a debate on Twitter.
The point? Even when conclusions appear to be self evident, even “transparent,” different people tend to see different things. The perspective that transparency brings to the eye of the beholder could qualify as a dominant theme of our most-read and most shared posts in March, starting with 10 Takeaways from the World Bank Forum on Microcredit’s (lack of) Social Impact: The key discussions, debates and controversies as the sector contemplates its future by James Militzer, editor of NextBillion Financial Innovation. The post, our most popular of the month, chronicled the discussions at the World Bank event Financial Services for the Poor: Lessons and Implications of the Latest Research on Credit which centered on six recent studies of microcredit’s rather mediocre social impact. Militzer helped filter both the conference discussions and the Twitter chatter that echoed and amplified it, into one detailed post.
The key section from the piece included the insights of scholars Esther Duflo and Abhijit Banerjee, who conducted the studies for the Abdul Latif Jameel Poverty Action Lab (J-PAL):
“One of the most interesting research questions seems to be: Why are a small number of borrowers able to parlay microloans into much greater entrepreneurial success than typical clients? Duflo said there are studies that are trying to zero in on the 5-10 percent of clients who truly thrive with microcredit. However, she added, ‘There is no magic sauce that I know of … [to determine] who not only has entrepreneurial spirit, but who is good at it. That’s kind of the million dollar question, not just for microfinance but also for commercial banks.’ Yet the common approach of combining business training with loans doesn’t really work, she said – at least not as currently practiced. As for the 90-plus percent who don’t derive major benefit from the loans: As Banerjee put it, ‘I think people are making the right choices, it’s just that business is not their priority. Their priority is to maybe buy a television, pay down another loan, or something. I think we haven’t done a good enough job in tracking down what they really want to do with the money, because we started with the presumption that business is what it’s about.’”
Chuck Waterfield was incredibly transparent about the wind down of Microfinance Transparency, which helped pry open the doors of many microlending institutions to disclose true loan rates and other data, bringing more sunlight into the sometimes shadowy industry. But after six years, Waterfield said the NGO, which he led as CEO, determined that collecting such “a large volume of pricing data cannot be done sustainably.” Before stepping aside, Waterfield answered several frequently asked questions and concerns in the post MFTransparency is Dead … What Does That Mean for Pricing Transparency?: The CEO of the influential watchdog initiative discusses the future of pricing transparency in microfinance – our second most-popular post of the month. He said in the past five years “many funders and international networks had begun to incorporate pricing collection into their due diligence practices, reflecting their increased awareness of the importance of pricing data.” But he seemed to punt on whether the microlending industry can adequately police itself going forward.
“Microfinance practitioners and stakeholders are now aware of the importance of ethical and transparent pricing, and we now have the ability to help ensure that it becomes the industry standard. But true change comes not from knowledge but from action. Each and every stakeholder in microfinance has the ability to now take action to make fair pricing a reality. MFT has never been the solution to the problem; actions taken by each and every institution are the solution to the problem. So our parting advice for the industry boils down to three words: It’s your turn.”
Finally, Anastasia Mirzoyants-McKnight, director of research and operations of InterMedia’s Africa branch, enlightened us on how some 10 million customers of M-Shwari are using it in her post: NexThought Monday – Everybody Loves M-Shwari: So why isn’t everybody using the mobile banking service? The mobile service, which was designed to offer low-income customers access to formal credit and savings services with a formal bank, was formed in 2012 by Commercial Bank of Africa (CBA) and Safaricom, the parent company of M-Pesa. M-Shwari users might be more easily categorized as early adopters than very low-income (base of the pyramid) users, Mirzoyants-McKnight writes:
“While the demographics of the users changed between 2013 and 2014 to include more rural and below-the-poverty-line users, the overall profile remains almost the same as a year ago. M-Shwari users are financially comfortable and relatively young, which means they also might be financially adventurous and in a position to experiment with M-Shwari without the fear of long-term financial consequences. Such financial freedom might be, at least currently, difficult to afford for the bottom of the pyramid populations.”
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I remember a time not so long ago when the idea of medical “lab on a chip,” or a futuristic device that analyzed a drop of blood for a host of ailments, seemed like the realm of cold fusion or hydrogen energy, i.e. always five or 10 years away. But with the dawn of smartphones, it’s here, in ways we never could have expected when the iPhone first was unboxed. It’s also becoming increasingly available for the people who can’t afford an eye exam, much less a smartphone. Enter Vula Mobile which enables health workers in remote areas to carry out eye tests and consult with specialists using a smartphone. This technology may not constitute a “lab on a chip” but it sure seems to have the potential to change a lot of lives at low cost.
Thanks to all of NextBillion’s contributors last month.
Scott Anderson is the managing editor of NextBillion.