Scalability of microfinance impact: Some ground realities
A thick layer of dust had completely transformed my appearance. Moving through practically non-existent roads, maneuvering across open ditches, erratic traffic, and animals wandering on the streets, I couldn't help but draw a contrast between various ground realities. 3 hours ago, I was in Gandhinagar, the capital city of Gujarat, abuzz with Vibrant Gujarat festival. After changing 3 buses and traveling for 150 kilometers, I had reached my destination, Surendranagar, an administrative district in the state of Gujarat. I was here to meet Milaap borrowers, talk about their small-scale businesses, and get an idea about the impact of microfinance loans they had availed through Milaap's field partnership with Prayas. I met with a few borrowers, conducted interviews, took photographs, and at the end of the day had sufficient data to create impact stories. Impact monitoring and assessment is an integral part of any mission driven initiative, and after working on field for 7 months, I can say that it’s really not that difficult to gather data and verify facts. But when working with people with so diverse cultural, financial and demographic backgrounds, what scales can we possibly use for quantifying positive impact?In past few years, microfinance and crowd funding has emerged as a promising new prospect in the field of social development. With the involvement of private sector companies, various liability issues which plagued social development sector have also been resolved. Partnering with local field organizations, private companies have also been able to sort out the last mile issues and reach out to the remotest of communities. But how can we assess the impact being created on the ground level by such microfinance oriented initiatives? Sure that in India alone, millions of dollars have been disbursed as loans, and have impacted lives of thousands of families, but when these funds finally percolate down to the individual level, a typical microfinance loan amounts to around Rs. 20,000. Since Base of Pyramid groups are the target for these loans, monthly household income of a borrower usually averages to around Rs. 8000 to 10,000. For a family working on such budgets, a financial boost of Rs. 20,000 is also valuable, and on a lot of occasions, I have myself witnessed the changes such loans brought about in a borrower’s life. And yet, there is recurrent request for these loans from the same borrower, suggesting a higher requirement to bring about the intended change.When dealing with social sector, facts and figures cannot be the only benchmarks for accessing impact. On the field, there exists examples where a beneficiary availed a microfinance loan for enterprise development, made the right investments, and yet the borrower’s situation was so marginal that the boost could only last him/her for a few months, and after that, they were back to square one. In ordinary parlance, such a loan would be said to have created a positive impact. It reached the intended borrower, it was used for the intended purpose, and it did create an impact, but only for a while.There is a need for microfinance in social sector to go beyond the usual norms. There is a need to set new targets, which go beyond facts and figures and encompass humanitarian aspects. Only then will it be possible to do scalable impact monitoring, which gives a whole picture, not just a perspective.