Alvaro Rodriguez A. · @alvarodrigueza
17th Jan 2011 from Twitlonger
@davidroodman: Or capped ROA? RT @nancymbirdsall What is your alternative(on #microfinance)? http://j.mp/ehFbDx Not coop ownership? // Long debate to do it over Twitter. I think we need to stop the right and wrong debate that Yunus is instigating! We need many different approaches if we want to solve the issue of lack of access to financial services. I have no problem with the coop ownership as ONE alternative. On the cap on ROA I do have an issue... Why? Because we still have approximately 850 million clients Worldwide that have yet to be served and to do that we need approximately US$425 billion in funding! I simply cannot see how we can get that funding with caps on ROA. Billions of people are screaming for access! So let's ALSO embrace market principles in order to address the issue of lack of access to quality goods and services - financial services being one of them. By supporting a market approach, it does not mean that I believe other approaches are wrong. We will need multiple approaches in order to be successful in addressing the issue. One challenge that we have is figuring out how we complement the approaches and not undermine each other instead.
Embracing market principles does not mean we are absent from the challenges of maintaining the mission. Many microfinance practitioners have had mission drift (and not necessarily because of market forces) and it is our responsibility - specially the market leaders - to be guardians of the mission and hold principles such as the Smart Campaign. One example of mission drift is moving up market and stop serving the lower segment of the base-of-the-pyramid. To maintain lower average loan balance poses a challenge in terms of costs and therefore interest rates charged. It is important not take the easy road to give way to the critics of high interest rates by simply increasing the average loan balance.