June 30

Tayo Akinyemi

Microfinance: An Open-Book Blog

Occasionally one encounters a novel application of a familiar technology. In this case, it’s blogging. David Roodman, fellow at the Center for Global Development and architect of the Commitment to Development Index, is writing an open-book blog about microfinance. He drafts a chapter, then posts it for comment and critique. Mr. Roodman shared the introduction to his book on February 17th and has since authored nine additional sections. Although the work looks substantially complete, there is still a tremendous opportunity to contribute to its evolution. (Talk about opportunities for co-creation!)

What I appreciate most about Mr. Roodman’s approach (apart from his willingness to share the manuscript-in-progress), is his clear and thoughtful use of a framework to couch the discussion. The purpose of the book is to explore the impact of microfinance from three primary perspectives : development as freedom, development as institution-building, and development as measurable impact.

Development as freedom, a concept introduced by Amartya Sen, refers to the ability to exercise one’s sense of agency and maintain control over one’s life. With respect to microfinance, the question is whether (and under what circumstances), microfinance increases or limits the freedom of those who use it. Creative destruction, described by Joseph Schumpeter as the dissolution of the status quo caused by disruptive innovation, is the underpinning of development as institution building. From this perspective, the relevant query is whether the evolution of financing for MFIs has improved the state of the field. Finally, development as measurable impact explores the debate over whether social impact can be meaningfully measured. In other words, how do we know if microfinance is really helping the poor?

Editor’s note: A blog post written by Manuel Bueno, published yesterday on NextBillion.net, addresses this exact question.

Given the extreme contrast between microfinance success stories and those of disaster and indebtedness, a balanced interpretation of these accounts and a rigorous exploration of the truth is quite welcome. Check out David Roodman’s Microfinance Blog here.

Happy Reading!