English - Freedom from Hunger

part of “the impact of microfinance.” Until we know what some of the long-term changes are (or are not),
we cannot truly judge whether, or how, microfinance works.
If we measure the impact of microfinance in the short term, we should not draw conclusions regarding
long-term effects. We have to determine changes that are reasonable to expect within a short span of time.
For example, when studies look for health outcomes, we know we cannot expect long-term outcomes
(e.g., reduced incidence of a chronic illness) in a short period of time. Instead, we focus on outcomes
likely to be seen shortly after the intervention (e.g., health-seeking behavior). If we hypothesize that
microfinance can improve health outcomes over time, we should apply the same expectations that the
health community holds for its more direct interventions to improve health. If we cannot expect shortterm
changes in response to direct health interventions, how can we expect microfinance, with its indirect
impacts on health, to generate short-term changes? But we know it is possible over the long term, because
there are client stories that suggest it is possible.
In summary, our findings suggest that we have to work harder to align our evaluation goals with what is
possible to measure in the time frames we are given to evaluate. Many microfinance practitioners know
and repeatedly tell stories about a woman who has been in a program for five-plus years, but rigorous
evaluations are telling stories in much shorter time frames. If we only measure short-term change, then we
need to explain the results in the short-term context and indicate that long-term effects are still unknown.
Because the “impact story” methodology offers a chance to follow incoming clients over time, even if
they drop out of the microfinance program, we are likely to discover more about long-term change, as
well as gain a deeper understanding of what type of microfinance works for what type of people. This
information will better equip us to design new products and services.
This research has also revealed additional questions for us to explore. The most pressing question is
whether we are asking the right questions. Here, most of our stories are from women, and we understand
their life goals and aspirations to be food, health, education, tranquility in the home and income stability.
Are impact evaluations assessing the impact of microfinance on the self-defined needs of women? What
are the most important short-term measures of success? Is it enough to focus on improvements in the
microenterprise, or should we focus on the secondary effects, such as increased food consumption? How
do we incorporate the poor’s perception of change as a meaningful measure of success? Would we have
detected the life improvements women have told us about in their stories if we instead had looked solely
at quantitative measures of assets?
Finally, is there a paradigm shift in our understanding of how microfinance loans are productive tools
for poverty alleviation? In Portfolios of the Poor iv , we learned how financial diaries revealed complex
financial transactions and multiple financial tools utilized by the poor, microfinance loans being only
one of them. We have also learned in other research that the poor rarely use their microenterprise loans
for a sole purpose—the money is used more like consumption loans. This suggests that clients are using
microenterprise loans more generally to improve their lives rather than just to grow their businesses. Our
impact stories give a glimpse into that dynamic. Families also talk about how the loan was used to pay for
health expenses, to pay off other debt, to pay for their children’s schooling, even to improve their home.
ConClusIon
23