This is a summary of a paper by Roy Mersland, Samuel Anokye Nyarko and Ariane Szafarz; published by CERSEM; February 2019; 11 pages; available at https://www.sciencedirect.com/science/article/pii/S2352673418301574
Most microfinance organizations (MFOs) provide access to financial services with the goal of catalyzing development in impoverished communities. However, MFOs, like other social enterprises, can experience “mission drift.”
The authors describe two categories of mission drift: 1) an MFO gradually loses interest in the original mission regarding low-income communities and instead gains more interest in the profitability of the organization; or 2) an MFO publishes a mission statement, but its actions do not match this statement. Considering that the first category has been studied more thoroughly, the authors of this paper focus on the second category, which they refer to as “whether MFOs ‘walk the talk’.”
Reviewing mission statements from 199 MFOs in 59 low- and middle-income countries, the authors discuss whether the organizations fulfilled the following frequently-invoked goals: “poverty alleviation, women’s empowerment, and rural financial inclusion.” To determine whether an MFO stayed true to its mission of poverty alleviation, the researchers evaluate “average loan size (scaled by GNI per capita), number of credit clients, and group-based lending methods.” Women’s empowerment and rural financial inclusion are measured by observing the MFOs’ ratios of female and rural clients, respectively. The conclusion is that MFOs generally do “walk the talk” of their mission statements.
By Tiannah Steele, Research Associate
Sources and Additional Resources
CERSEM publication
https://www.sciencedirect.com/science/article/pii/S2352673418301574
CERSEM homepage
https://cersem.uia.no/
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