Social Impact Assessment of Microfinance Programmes - weman

After these general comments above, we turn to some of the more important general
findings which emerge from this Study of these six microfinance institutions working in
Pakistan. Specific findings related to each MFI are discussed in their specific Chapters
and are not repeated here, and in this last Chapter, we state some generic, general, results
and observations.
Although in some areas and sectors and with regard to some microfinance institutions,
one finds signs of positive ‘impact’, the single most important finding from this Study is
that the social and economic impact on the lives of those who take credit, for the most
part, is limited. The differences observed in the economic and social aspects of the lives
of those who take credit and those who do not, are, for the most part, statistically
insignificant. While this result may be disappointing for those who think that
microfinance is the answer to all the problems of the poor, it is not a very unexpected
result given the characteristics of microfinance institutions and of the microfinance
sector, as a whole. Given the nature and structure of the microfinance sector – mainly that
it is very young – our results are in line with the findings of many other studies conducted
elsewhere and need not be cause for concern. However, the results, even if they are
interpreted to be ‘negative’ (which they are not) – or not positive enough – are important
for they help temper the enthusiasm of those who believe that microfinance is the Magic
Bullet for all ills, and allows one to take a more realistic picture of development-related
interventions. We do not say that the impact of microfinance interventions is negative;
what we do say is that the impact from microfinance is ‘not positive enough’, and that we
are not in a position to state categorically, that microfinance has a positive impact. We do
find improvement in the lives of many borrowers, but this improvement is not significant
enough. Moreover, this result may also mean that, perhaps, we need some additional
interventions, along with microfinance, to make a significant impact on poverty. Some of
the other important findings that emerge from this Study, follow.
The first observation to be made is, that most of the MFIs in our sample, are recent
practitioners of microfinance and are young and fairly new MFIs. Of the 2,185 Borrowers
surveyed, only 15 percent were in their fourth (or greater) loan cycle. Hence, 85 percent
had not as yet completed their third loan cycle. Clearly, impact, so early on in the process
of intervention, will be difficult to observe or to measure. Most of our results in the last
six Chapters also show that impact has been limited (or unobserved and un-measurable)
in most cases, probably on account of most clients being new to microfinance
interventions. On account of this factor, the greatest impact that we do find in most
indicators, is that amongst microfinance institutions which have been providing credit for
many years. This result, while perhaps not unexpected, leads to questions about
differences in management style and structure being significant factors in suggesting
impact, rather than just the extended time spent with clients.
Other factors that could also be responsible, relate to the idea of microfinance not being
sufficient on its own as a poverty alleviation tool and requiring additional social capital
and physical infrastructure support. Nevertheless, despite the fact that many factors could
contribute to why the two MFIs with the oldest clients seem to have greater impact, we
can say with a great deal of assurance, that a minimum number of years of microcredit
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