An industry impact statement – without impact?

Last week, a group of leading microfinance organizations came out with a joint statement on measuring the impact of microfinance. It had Accion and Grameen, Unitus and Finca, Opportunity International, and Women’s World Banking. It had a commendable call to be “reasonable and measured in our claims for what microfinance can accomplish.” It realistically characterized microfinance as “but one mechanism in the toolkit of global poverty alleviation.”

But what this statement didn’t have was any real measure to back up its assertion that microfinance has a positive impact on poor customers. Instead it fell back on first-hand client accounts of microfinance in, as David Roodman wryly put it, what may be “the most filtered, unrepresentative collection of microfinance stories ever.”

In addition to Roodman, Rich Rosenberg at CGAP has also done a nice job of critiquing the mixed messages and misunderstandings in the statement. 

The fact is that the next wave of impact evaluations are unlikely to show results that are radically different from the most recent studies from India and the Philippines. The industry advocates will have to face the music sooner or later.

The most unfortunate part is that the impact evaluations provide important information that the microfinance advocates are ignoring.  Taking evaluation more seriously can help improve what they’re doing.  BASIX is a great example of how evaluations can be a powerful force for constructive change. After evaluations of their products showed lackluster effects, they used the evidence to go back to the drawing board and figure out how to serve their clients better with new and improved products. It was the start of their signature livelihood strategy. 

But perhaps we shouldn’t expect the advocates who signed the recent impact statement to understand this. After all, they are in the sales, not the innovation business.