The results of microfinance depend very much on the place of residence of the borrowers

A recent study of microfinance borrowers shows that, overall, their loans have improved their standard of living. But the impact also depended on the region and country where these people lived.

So says a study by impact measurement firm 60 Decibels, which surveyed around 18,000 clients of 72 microfinance institutions (MFIs) in India, Latin America, the Caribbean and in Southeast Asia.

To expand on these findings, Calum Scott, director of global impact at nonprofit Opportunity International Australia, provided additional information on the nine MFIs included in the survey that are supported by Opportunity International.

India

In India, where 60 Decibels researchers surveyed 2,022 clients of eight MFAs, respondents were less likely to say they had "significantly increased" their income (15%), perhaps because they had harder to grow their business. Moreover, these companies have increased the number of people they employ (9%) less than in other countries. This is partly due to the fact that businesses in India are generally solo businesses. “These are usually one-man businesses, less likely to employ anyone anyway,” says Scott, whose organization focuses on poverty reduction.

Borrowers in India were also more likely to reduce food consumption to meet repayments than in other regions.

Scott cites Cashpor, an MFI in northern India, as a good example. The second largest MFI in Opportunity International's network with 1 million ready clients, it operates in northern India in largely isolated rural communities where a large proportion of their clients live in extreme poverty. Although these borrowers use their loans for business purposes, the businesses are smaller than those based in other surveyed regions that are not as poor.

Microfinance borrowers in India

getty

Probably because the areas served by Cashpor are so poor, a high number of respondents (more than half of clients) said their loan had increased the number of "quality meals", one of four dimensions related to the improvement of household well-being. Others include spending on children's education, home improvements, and access to health care.

At the same time, despite being less affluent than customers in other countries, respondents reported a significant shift in household improvements. "They started from a different level than other regions, but still saw improvements," says Scott.

Latin America and the Caribbean

The survey covered 2,960 clients of 13 MFIs in nine countries. According to the report, these MFIs are relatively less likely to work with clients living in extreme poverty.

According to Scott, borrowers from the three MFIs working with Opportunity International in the region reported a greater increase in the impact of their loans on their business and a higher percentage said they had increased employment by report to the two MFIs working with Opportunity International in India that were included in the survey. But, while they reported an increase in quality meals, the increase was less than in India. A partner MFI reported that about half of clients said there had been no change, and the other half mentioned a slight increase.

The survey also focused on the issue of resilience with two questions: one asked how easy it would be to meet a major emergency expense, a measure used by the World Bank to assess the vulnerability of people living in poverty, according to Scott. . The other focused on whether the services received from their microfinance lender had contributed to these results. According to Scott, a Dominican Republic-based MFI said it was much easier to deal with a sudden expense, a much higher number than other Opportunity International partners. "This suggests that the services of MFIs make them more resilient," says Scott.