Getting to 2005 

Cautionary Notes
Christopher Baker*

 
What I am going to say tonight will be provocative. Although it may by better to remain silent and be thought of as a fool than to speak up and remove all doubt. My experince in this field is long and broad enough to qualify me, along with some of my colleagues here, as a G.O.D gray old dog.

Ours is a field of dynamic evolution. I remember one of the early SEEP-sponsored workshops on credit in 1987, when Henry Jackelen broke the news that if a loan is made, it must be repaid. He spoke of lending as a business, of all things. That was just ten years ago. Since then, the state of the practice in microenterprise development has been moved forward by creative practitioners, contntious political battles and dreamers. The dreamers are largely responsible for the Microcredit Summit held last February and its ambitious rallying call to reach 100 million poor families by the Year 2005. Dreamers are vital to any movement, but we the builders, the practitioners, have to translate the dream into reality. We attended the Summit by the hundreds and sang with the choir. But I question whether this is really the most appropriate stance for us to take, because few can fulfill both the dreamer and the builder roles simultaneously. My message tonight is a caution not to confuse our roles, as the Summit goals - those of the dreamers - present some serious challenges for our community.

The goal to reach 100 million by the Year 2005 implies significant growth of current outreach. Most of us agree that such growth requires quantum leaps forward in institutional capacity. But the assumption that we will develop the requisite capacity and thus achieve major expansion in such a short period of time defies logic. Building capacity in all parts of the world takes time, probably more than the eight years we have given ourselves. Yet, current politics are leading organizations to claim that they will reach millions by the Year 2005 when they are only reaching thousands now. By committing to unattainable targets, we jeopardize our credibility.

As a community, we should be interested in the Summit's rallying call, but not driven exclusively by it. Microenterprise development is not simply about reaching the poor and tallying numbers; it is about empowering the informal sector and strengthening economies. We need to be vigilant about the quality of our programs; we need to be concerned with their impact. We must not abandon the rural sector even though urban borrowers are more readily accessible in greater numbers. Informal sector entrepreneurs have many unmet needs that extend beyond credit and call for ongoing innovation and new product design. The savings side of financial intermeditation still awaits us. The role of microfinance institutions in meeting their clients' need for insurance is only beginning to be explored. These exciting challenges need responses that this community is capable of providing.

Enhancing our credibility by broadening our scope to attend to such challenges and maintaining an honest stance vis a vis our capacity, is critical in the face of ever more frequent expressions of doubt about the legitimacy of NGOs in microfinance. We are being questioned about governance issues, equity ownership and accountability. The commercial sector, it is posited, can provide financial services more efficiently and cost-effectively, without the thorny complications of nonprofit structures, social missions and constituencies.

While I don't share these doubts, I do believe that we must achieve greater efficiency and effectiveness. Our organizations are too expensive; the current levels of funding they require are not sustainable. Yet, so intent are we on selling ourselves in a highly competitive atmosphere that I fear we are losing our capacity for self-criticism. Honest, forthright exploration of problems and solutions must take precedence over grandiose commitments that cannot be met. Ours has been a vibrant and creative community. Let's keep it that way.
 
 

*Executive Director of the World Council of Credit Unions.  

Source: NEXUS, # 39, December 1997.
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