Ujung Timur Tebet, 12 Juni 2010, 01:15 WIB
Poverty has long been the world’s problem. It has been a concern not only for those belong to the so-called poor and developing country but also for the well-developed one. Since it is already deemed as a global problem, a global effort is then necessary to encounter the problem. As such, in September 2000, United Nations declared The Millennium Development Goals with eradicating poverty as one of the goals. Programs are set and funds are flowing fast from Donors to support the goal.
Fired with the UN’s Millennium Development Goals, Microfinance has gained very wide attention as one of the powerful tool to alleviate poverty though it is rooted far back in the late 70s. Microfinance is aimed to help the poor in accessing financial product and services to deal with their poverty problem. The program sees poverty as the result of the inexistence of tools and opportunity to conduct income-generating activity, to build asset base and to insure from income shock which all can be handled using financial products.
However, unlike their wealthier counterparts, the poor are less likely to have access to traditional financial product and services since most of the poor are excluded from the formal financial system. Hence, providing access to financial products and services may help the poor to jump out of the poverty. This has set the ground to launch microfinance program.
Starting with providing micro loan for productive activity, microfinance has developed into a more complete financial service. Microfinance institutions are now offering a wide array of financial products including saving and insurance. The interlink of loan, saving and insurance is deemed necessary to alleviate poverty. Whilst micro loan provides opportunity for the poor to increase their income through productive activity, micro saving and insurance provide means of asset building and protection. The first is more like a starting point to go above the poverty line and the later prevent the poor to go back below the line.
Statistical wise, the development is even more obvious. Latest report on MFI benchmark issued by The Microfinance Information Exchange (MIX) in 2008 involves 1,084 MFIs worldwide compare to just 57 MFIs in 1999, indicating a growth in the number of MFI serving the poor. Average number of active borrower has increased to 69.227 borrowers in 2008 or almost double from 36.795 in 1999. Though the total asset slip down below 1999 figures the average total of gross loan portfolio went up to US$ 34.9mio in 2008 from US$ 23.2mio.
The development of microfinance marks a new trend within the history of the program. It which previously was a social program is currently moving forward to be more commercial. Backed by the argument that MFI should adopt market-based approach to achieve financial self-sufficiency, they are becoming more profit oriented than ever. The MIX report strengthens the above conjecture by looking at the profit status of the reporting MFIs. In 1999 only 23% of the total reporting MFIs categorized as for profit MFI compared to that in 2008 of 38%.
The commercialization phenomenon is also evident, as mentioned by Dr. Peter Wolff of German Development Institute, by the investment in microfinance fund being tripled during 2005 and 2009. Microfinance market is now seen as a potential and interesting market for institutional and private investors. The poor who is previously left excluded from the financial system, considered not profitable and costly to serve is now provide a handsome opportunity to make profit out of it. Michael Anthony, head of Allianz’s Microinsurance, asserts a growing market of microinsurance. Allianz’ microfinance products in eight different country show promising result: profit after the first 12 months. The market itself is estimated at around two billion people. Simply put, the micro market is not that micro after all!
Going forward, the debacle in microfinance has been going around this issue of commercialization. Many have feared that this profit-seeking motives turn the microfinance away from its original mission of helping the poor out from poverty. The fear is not really exaggerating knowing that the nature of those institutional investors is purely commercial. Big corporations are surely entering the micro market with business paradigm, thus profit is their main objective. The pragmatism of corporations is very potential to clash with the idealism of social development program. Those supporting the social view of microfinance are questioning whether commercial objective can go hand in hand with social objective of poverty alleviation, whether the profit obtained is justified with the benefit received by the poor. The bottom line is, would it be ethical gaining profit from the poor?
The opposite argue that being profitable is an important factor to have a sustainable microfinance institution. It ensures the continuity of the institution to keep providing its services so that ensuring its optimum impact on developing the poor. The sustainability of an MFI is less likely to be achieved by depending on donor fund or any other subsidy-type of funding due to its short-lasting or ad-hoc basis. Furthermore, a market-based approach and commercialization do have a positive impact on MFI operation. The requirement to becoming profitable urge MFI to operates in the most efficient manner as well as promotes good governance within MFI. Those two are condition that most subsidy-dependent MFIs are lack of.
The big challenge ahead is consolidating the two opposite views. Profit is a necessary condition for a successful microfinance institution yet it is not sufficient. Financial performance should be accompanied also by social performance. Profit will then be not unethical provided the true beneficiary of the program, which is the poor, received most of the benefit from the microfinance services. The two objectives must be balanced. A difficult task yet possible to achieve.
One expert in the field argues that one solution of the problem will be market transparency, competition and customer education. Market transparency and competition will force price and rate for the microfinance services provided to a level that is fair or aligned with the value of the services given. Educated customers will also tend to evaluate the offers made more carefully and shop around for better value for money. Hence, MFI will not be able to earn unjust profit. It implies that the same efficient market mechanism is assumed to take place as well in this micromarket though it may be differ from its macro counterpart. The poor comprising the micromarket may not have the same opportunities and capabilities in receiving and digesting information, the main factor behind the efficient market.
Practical wise, there should be a microfinance model that allows synergy of the good of profit and the benefit to the society. This model must involve public-private partnership wherein government as well as non-government organizations act as social judges for the private commercial interest in the microfinance. Regulation need to be set out ensuring fair price and competition benefiting the customer. Customer need to be educated in regards to the feature of the product, the benefit and the cost. Social performance has to be included in measuring the performance of a microfinance institution. Lastly, as the corporations have shown the profitability of their micro-product, empirical studies must also be done to prove its social benefit to the poor. As such, all will ensure that profit is ethically earned.
To sum up, profit and society does not always sit in different corners. The two can go hand in hand. Though, extra works need to be done to come out with institutional model of microfinance that balances the two objectives. Existing commercial MFIs can provide meaningful insight by examining the social impact of their products to the poor customer.
Reference:
Tidak ada komentar:
Posting Komentar