From market failure to marketing failure: market orientation as the key to deep outreach in microfinance

✍ Scribed by Gary Woller

• Publisher: John Wiley and Sons
• Year: 2002
• Tongue: English
• Weight: 136 KB
• Volume: 14
• Category: Article
• ISSN: 0954-1748
• DOI: 10.1002/jid.883

✦ Synopsis

The term 'revolution' suggests a radical overturning of established order. By this definition, the microfinance movement qualifies as a revolution in that it radically overturned established ideas of the very poor as consumers of financial services. In the process, it has shattered stereotypes of the very poor as not bankable, spawned a variety of lending methodologies demonstrating that it is possible to provide cost-effective financial services to the very poor, mobilized millions of dollars of 'social investment' for the very poor, given birth to thousands of microfinance institutions (MFIs) dedicated to serving the very poor, and made available formal financial services to millions of the very poor heretofore excluded from formal financial markets. (Very poor in this article is defined as the bottom 50th percentile of households below the poverty line within a country.)

It must be emphasized as well that the animating motivation behind the microfinance revolution was 'poverty alleviation', and in particular among the 'poorest of the poor'. The provision of financial services was but a means to this end. Not only that, but microfinance offered a promise to alleviate poverty while paying for itself and maybe even turning a profit-'doing well by doing good'. That too was a revolutionary concept. This promise, perhaps more than anything, has accounted for the mass appeal of microfinance and its rise to global prominence.

The microfinance revolution is now into its second decade. The time is appropriate to step back and assess where the movement is and the extent to which it has achieved its promise of sustainable global poverty alleviation. First, the good news. Researchers have now completed enough impact studies across a wide variety of programmes and countries to allow a reasonably thorough and balanced assessment of the impact of microfinance. Taken as a whole, the evidence demonstrates a positive impact on enterprise and household income and asset accumulation, household consumption, and women's empowerment, and in helping poor households to manage and cope with risk