With rigorous economic research and practical policy solutions, we focus on the issues and institutions that are critical to global development. Explore our core themes and topics to learn more about our work.
In timely and incisive analysis, our experts parse the latest development news and devise practical solutions to new and emerging challenges. Our events convene the top thinkers and doers in global development.
Stern advice from Daniel Rozas for the Andhra Pradesh microfinance industry on how it should manage---and should have managed---the crisis of 2010:
There is at SKS and probably at most Andhra MFIs a sense of victimhood. Such is the extent of their focus on the wrongs committed by the AP government that they fail to see---indeed, they actively try not to see---their own culpability. For there is little doubt that there were instances of severe harassment by the MFIs that may have contributed to borrower suicides. Those cases may be few, far fewer than what had been alleged by the AP government. But they are there nevertheless. It also seems clear that the MFIs, via MFIN and individually, have taken steps to insure that such harassment can’t happen again, and in so doing, they have sought to rebuild their credibility. That is, of course, of critical importance. However, what they have neglected is the first step of credibility management---admitting one’s own wrongdoing and taking responsibility for it.
It’s time to stop circling the wagons. MFIN should publish the Glocal investigation report in full. Each MFI should then apologize and appropriately compensate the families of those victims for whose suicides they were found to have borne some responsibility. Finally, it is high time for the boards of many other large Andhra Pradesh MFIs to display real governance and show their current managers the door, then turn attention to themselves and do some house-cleaning by bringing in new directors (a nudge from RBI would help here). Going forward, the MFIs, under the auspices of MFIN, should submit themselves to annual audits of lending and collections practices, and insure that the findings---however damaging---are made public. And for those MFIs that are more worried about solvency than their public image, it’s worth bearing in mind that if they are to have any future at all, these changes cannot be avoided. Better now than later.
Going through all this at a stage when the sector appears to be recovering may well create difficulty in the short run. It would’ve been far preferable to do this last summer. But despite the passage of time, the underlying absence of trust in microfinance institutions---both in India and abroad---still runs deep. By publicly acknowledging and atoning for their wrongdoing, the struggling MFIs of Andhra can finally start the long process of rehabilitating the sector’s tarnished reputation. Only then can they hope to shake off the heavy burdens of the sector’s sorry past.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.
Recently CGD hosted the Second Annual Birdsall House Conference on Women, which focused on beyond-aid approaches for women’s economic empowerment, with particular emphasis on private sector engagement. CGD experts have written about how international organizations and national agencies should examine and correct gender biases in the design and delivery of their strategies for financial inclusion. But while public sector interventions are crucial for promoting women’s economic empowerment, the panelists pointed out that the private sector is in many ways better equipped to provide opportunities for women to grow their businesses, investments, and incomes. Here’s our takeaway.
On Monday, Grant Shapps, the UK's Minister of State at the Department for International Development, kicked off DFID’s Energy Africa campaign at an event hosted by the Shell Foundation designed to help his team figure out how the UK government can invest its political clout and an initial £30 million ($46 million) to tackle rural energy poverty in Africa. Given solar’s limitations and these risks, how can we make sure that Energy Africa fulfils Minister Shapps’s ambitious brief?