Social Impact Assessment of Microfinance Programmes - weman

are necessary for impact to take place. It is difficult to say what those minimum ‘numbers
of years’ are, but repeat clients in their fifth and sixth loan cycles seem to show greater
impact, and the fact that they voluntarily keep coming back to the MFI, suggests that the
clients themselves, perceive significant (or at least some worthwhile) impact.
If the number of years for impact is important, partly on account of better entrepreneurial
ability, better use of the credit market, experience, the relationship with the MFI, and a
host of other reasons which accrue over time, the second observation from our survey
relates to the greater impact observed on account of loan size. Apart from this cocktail of
reasons – experience, relationship – each loan cycle is (usually) greater than the previous
amount. Hence, our results, linked to the number of years argument presented above,
relate to the fact that larger loan sizes – or at least a loan size above a minimum – has a
greater impact than does a small loan amount. Table 9.1 displays the loan cycle amounts
of all the MFIs which were part of this Study, and a reading of any Chapter will shed
some light about observable impact. Our results suggest that a longer relationship with
microfinance and/or higher amounts of credit, will have a greater impact, clearly not a
very surprising or unintuitive result.
The question worth asking is whether a higher loan amount would have the same impact,
or whether it is a combination of a longer relationship with greater amounts It is difficult
to answer this question conclusively, although in the case of one MFI, our results suggest
that a longer-term relationship on its own is not enough and that there has to be a’
substantial’ – however defined – loan amount to make microcredit work. It is also
possible that a higher amount on its own, from the first loan, without that special, longerterm
relationship, could also show a greater impact. Hence, new entrants in the
microfinance provision sector, might be able to show greater impact by starting at higher
credit levels. Whether any new MFI would take such risks with new, unknown and
untested clients, is a questionable point. Another fact that may be related to loan-size,
deals with the difference in Group Lending and Individual Lending. Most of our MFIs
follow the Group Lending method. This means that the group may limit the upward
amount of a loan and weigh it down. In the case of Individual Lending, MFIs are free to
lend as much as they want and can select clients individually and more carefully, after
which they can offer them higher loans. With many MFIs in Pakistan moving from
Group Lending to Individual Loans, we might see the average loan size of these MFIs
increasing.
3