MICROFINANCE PUBLICATION ROUND-UP: Financial Diaries of Small-Scale Farmers in Mozambique, Pakistan and Tanzania; Rural Finance in India; Questioning Fundamental Assumptions in Financial Inclusion

“Financial Diaries with Smallholder Families;” by J. Anderson, W. Ahmed; published by CGAP (Consultative Group to Assist the Poor); February 2016; 108 pages; available at http://www.cgap.org/publications/financial-diaries-smallholder-families

This report investigates the financial situations of 270 families in Mozambique, Pakistan and Tanzania and the challenges they faced pertaining to agriculture, finance, health and education. The authors offer the following recommendations: (1) non-commerical smallholders in Mozambique would benefit from improved agricultural production and crop storage methods; (2) Tanzanian households should diversify their savings methods; and (3) Pakistani farmers would benefit from tools that may improve their relationships with middlemen.

Smallholder agricultural families were particularly vulnerable to climate- and insect-related shocks, as “72 percent of Tanzanian households did nothing in response to weather shocks,” and “61 percent of Mozambique households did nothing in response to pest infestation, demonstrating a lack of fallback options” [1]. The report also noted that only 19 percent of families in Tanzania used mobile money [1].

“State of Rural Finance in India;” by N. Srinivasan; published by the Oxford University Press; January 2016; 178 pages; available for purchase at https://originindia.oup.com/product/state-of-rural-finance-in-india-9780199464845

This publication describes the policy framework, institutional structure, trends and patterns of rural finance in India. The report has sections on the following: (1) performances of the National Bank of Agriculture and Rural Development (NABARD), the non-farm sector, microfinance and cooperative banking; (2) “strands” of finance such as savings and insurance; and (3) credit in terms of subsectoral flows, geographical aspects and repayment performance.

“Questioning Three Fundamental Assumptions in Financial Inclusion;” by P. Mader; published by the Institute of Development Studies; February 2016; 31 pages; available at http://www.ids.ac.uk/publication/questioning-three-fundamental-assumptions-in-financial-inclusion

The author asserts that microfinance practitioners commonly hold the following assumptions: (1) increased financial inclusion is directly related to positive developmental outcomes and broader benefits; (2) extending financial services directly benefits the poor; and (3) there are untapped business opportunities in microfinance.

Through an analysis of these assumptions and their potential flaws, Mr. Mader recommends the following: (1) there must be more research on whether microfinance actually benefits developing countries; (2) policymakers and governments should not prioritize financial inclusion without acquiring more evidence on the benefits of microfinance; (3) the business case for financial inclusion must be reexamined; and (4) microfinance institutions (MFIs) should be informed of the potential downfalls of microfinance, which the author argues is typically neglected in policy discourse.

By Jason Wei, Research Associate

Sources and Additional Resources

[1] New CGAP Report Provides Unique Insights into the Financial Lives of Smallholder Families, http://www.cgap.org/publications/financial-diaries-smallholder-families

[2] State of Rural Finance in India, https://originindia.oup.com/product/state-of-rural-finance-in-india-9780199464845

[3] Questioning Three Fundamental Assumptions in Financial Inclusion, http://www.ids.ac.uk/publication/questioning-three-fundamental-assumptions-in-financial-inclusion

Do you know that MicroCapital publishes the MicroCapital Monitor
newspaper each month? Find out more at https://www.microcapital.org/products-page/

Similar Posts: