Borrowing to Save: Savings-led Microfinance Part III
The last two entries describe pretty different profiles. But you may have noticed that Nuru’s target population, those living in extreme poverty, begins working with the Agriculture Program instead of CED. It turns out that many CED loan clients are not the extreme poor.
It’s widely accepted that microfinance is not a development panacea. Prominent theories go further to argue that microcredit only benefits the “economically active” poor because the destitute and those living in extreme poverty are subject to too much need and instability to repay a loan or create value from one. Thomas Dichter describes the microcredit paradox, that “the poorest people can do little productive with the credit, and the ones who can do the most with it are those who don’t really need microcredit, but larger amounts with different (often longer) credit terms.” Despite this, the extreme poor can still be served by microfinance. Poverty is dynamic, not a static line that neatly divides extreme and moderate poverty. An individual just out of poverty is especially vulnerable to shocks like illness or loss, and easily moves in and out of poverty. So lending to those who are out of extreme poverty can have a wider effect, by preventing further impoverishment. Targeting a specific population doesn’t mean you don’t look outside that group. This is why we design for the extreme user.
Last week I went to G-Kenya, a Google event for business and technology entrepreneurs to view Google’s suite of products to drive innovation in technology and business across Africa. Nuru was a bit out of place, a small non-profit focused on remote rural areas in a room full of savvy urban businesses. But Google’s applications are equally important for us. Google docs help us work with co-workers a continent away, using Google Earth we can map the footprint of a Nuru well, and Google forms accessed with a mobile browser let CED officers conduct site visits to loan clients in the field. The development of internet usage in Africa and the trend toward mobile internet access doesn’t just come from consumers in the cities. I happen to know over 60 community leaders armed with internet-enabled Nokia 1680s, who represent over 1,300 rural farmers ready to join the global market. We’d make an interesting extreme user for the business and technology world.