Throughout the Sentinel project, the researchers have continued to ask about the Sentinels’ digitization experience, so it’s opportune to now consider what they’ve said. In this piece, we’ll examine the challenges Sentinels have faced (and opportunities grasped) on the supply side; we’ll then explore some of the demand-side trends that the pandemic has brought; and conclude - with support from other Sentinel researchers - by exploring how much digitalization is an enduring reality. Could it be that what we see among traditional microfinance providers is better understood as an incrementalism than the transformative digital revolution that seemed to be happening?
Read MoreRecent Findings
Insights into the Work of Loan Officers in India Before & During Covid-19
Academic insights into exactly how microfinance institutions (MFIs) and their personnel work are surprisingly scarce. In our recent study, we provide detailed quantitative insights into the job of loan officers, arguably the key microfinance personnel, in India. We document loan officers’ tasks, their time use and output, and describe how they adapted to the new challenges arising with Covid-19. There has been a lot of attention to how lockdowns and restrictions affected borrowers’ ability to repay, and on the mechanics of repayment, but much less on the impact on loan officers themselves and how they adapted to a sudden major change in their work. In this post, we’ll summarize a few of the key findings of our study that shed light on important issues for the MFI sector in planning for recovery.
Read MoreWomen’s Worker Burnout in Microfinance
One of the Sentinel MFIs that we interviewed shared an eye-opening insight with me recently: productivity has been up significantly in 2020. She posed that this could be due to work from home changes, as well as the pandemic-induced realization internally that processes were inefficient and needed to be streamlined. But she also shared a contradictory worry. “What if our staff is burned out?” She then brought up an even larger concern: “What if female staff is suffering in silence trying to juggle home and work responsibilities in an era defined primarily by an uncertain pandemic that has completely shifted the way that we work?” It seems that now is the time to understand worker burnout and its impact on women in microfinance, particularly because there remains a large gender gap in microfinance leadership, and female attrition could reduce the role of women in the leadership of MFIs even more.
Read MoreAfter the Fall (Part 1): The Human Resource
Back in autumn, we published three pieces in a series entitled the Summer of Flux, which among other things explored the acts and omissions throughout the pandemic that distinguished the Sentinels’ varied responses. It looked at the role of those most curious and nebulous factors - ‘luck’ and ‘courage’ - in how they’re getting on. Since then, the situations the Sentinels find themselves in are as varied as ever. Some feel increasingly positive; clear about the path ahead. Others are still beset by uncertainty - and stress. And the arrival of Omicron in each country has created further variability in context and outlook.
In part because of this variability, our next round of posts will be organized more thematically, while also trying to take stock of two years of the pandemic. We’ll have pieces on digitalization, equity positions and a possible framework to guide recapitalization, a case study on how MFIs in high-income countries are coping and responding, and a retrospective look at what the pandemic thus far has meant for these MFIs and their leaders.
First up though is a look at the pandemic through the lens of Human Resources - the experience, motivation, and morale of staff, as well as the leadership and decision-making needed to guide it. What have been the implications of changed working conditions, reduced job security and changes in compensation and incentives, the effects of these on staff morale, and challenges relating to retention and recruitment?
A Summer of Flux (Part 3): The "courage" factor
We opened the previous piece in this series with the Serenity Prayer, which asks for the strength to accept the things one cannot change and the ‘courage’ to change the things one can. That installment explored the first limb - what are the external factors that affect how institutions cope with crises? This piece examines the second bit: what can financial providers do to respond to a crisis. This is, in particular, the heart of the Sentinel Project. What are the tough decisions that microfinance leaders are making, how are they resolving their challenges, and how are they making those decisions? Many of these choices are at least in part irrevocable. That’s why we aim to capture them as they are made, rather than with ex-post justification or explanation. Doing nothing is also a choice (and sometimes just waiting things out is the best choice), and so it does take something like courage to act, and some measure of resolve to follow through.
There are many possible actions and choices to consider: re-negotiating and re-structuring funding, executing operational changes, business ‘pivots’ and the launch of new products, among them. What emerges from the many months of interviews with Sentinels to date is a fascinating breadth of responses to the challenges the pandemic has presented.
Read MoreA Summer of Flux (Part 2): The "luck" factor
In Part 1 of this series we laid out the ‘three-legged stool’ of underlying institutional resilience, proactive response, and the external factors over which Sentinels have no control. At the risk of being reductive, we’ll call this ‘luck’. It is this factor which we’ll investigate in this piece. How devastatingly has the virus taken hold? How did national and local policy-makers react, with new regulation, moratoria, cash protection for households and businesses? What has been vaccination availability and uptake? And on how many fronts, perhaps against climate-driven crises, does the institution have to fight at once?
Read MoreA Summer of Flux (Part 1): The three-legged stool of crisis survival
This short series, ‘A Summer of Flux’, takes us from June to September, covering how MFIs across the world reacted to the Covid-19 crisis during this strangest of (northern hemisphere) summers. It won’t try to be an exhaustive repository of everything said by every Sentinel across all the interviews - that would be impossible. It will, however, try to shed light on how the pandemic has affected institutions, their clients and staff; and how those institutions are responding (with various degrees of success) to the challenges they’re facing.
Read MoreA Turbulent Spring: the First Three Months of Sentinel Reports from a Crisis-Laden Year (Part II)
The first piece in this series focused on the direct impact of the pandemic on the Sentinels themselves, including their staff, product offerings, communications with their customers, and operations. This second installment zooms out to look at the Sentinels in relation to the broader financial, policy, and regulatory systems that surround them, and how the Sentinels have coped with: liquidity and solvency challenges, liaising with funders, lobbying policy-makers, and understanding and implementing fast-changing rules.
A Turbulent Spring: the First Three Months of Sentinel Reports from a Crisis-Laden Year (Part I)
March to May 2021 have been difficult months for microfinance institutions (MFIs) around the world; repeated waves of Covid have wreaked havoc in many countries, and the cautious optimism of late-2020 in many places gave way to resignation and pessimism. Here we track the real-time challenges and decisions of MFI leaders (“Sentinels”), and report on client communication strategies, downsizing, digitalization, emergency credit lines and more.
Read MoreWelcome to the Sentinel Project
Microfinance has never faced a challenge like the Covid-19 pandemic. Researchers are eager to understand how the unfolding crisis is affecting microfinance clients and providers, and several ongoing studies are gathering quantitative data to measure the impact. Existing initiatives don’t, however, gather qualitative data on the pressures that MFIs are facing, the choices they are confronting, and the decisions they are making. To fully understand the impact of the crisis, and learn from it for the future, we have to understand the decisions behind the data.
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