Beyond Good Intentions and Thinking About Systems

Beyond Good Intentions is a series of short films about what works (and what doesn't) in international development by young filmmaker Tori Hogan. Each Wednesday for the past couple months, she's released a new series of the film.

This past week, she released her segment about microfinance. Of all of the segments so far though, this was one where Hogan was nervous about it's reception. From her blog on Social Edge:

I was a little bit nervous for Episode 9 (and this blog entry) to come out because I am well-aware that I am questioning a beloved organization and a highly popular development initiative. However, I feel that I need to be honest about what I witnessed in the field and, most importantly, I need to encourage a meaningful dialogue about the realities of micro-lending. After witnessing micro-lending programs on three different continents, I came to the conclusion that in most cases the poor don’t need loans, they need jobs. From what I saw, micro-lending isn’t pulling the poorest of the poor out of poverty.

Hogan describes the litany of problems that she found with microfinance that made it less successful than she has supposed in lifting people out of poverty. Some of the main culprits included high interest rates, inadequate economic opportunities, a lack of business skills and entrepreneurial talent, over-burdened loan officers, and a lack of financial sustainability.

I definitely commend Tori for being willing to share her perceptions, and I think they resonate largely with what many critics identify as the Achilles heel(s) of microlending as an anti-poverty strategy.

But perhaps what it's instructive of is the danger of sanctifying any one particular type of poverty intervention. Problems like a lack of business skills and inadequate economic opportunities implicate a system of related problems that no one type of program can address on it's own.

At such an early stage in the history of the social enterprise movement (and yes, Jeff Trexler should rightly point out here that if you want to get truly historical, it's not that early), we have the opportunity to think differently about how we design organizations, fund programs, and facilitate horizontal partnerships that address some of these systemic challenges.