What a great trip that was! I really built on my learning from and confirmed my belief that there is a lot for UK CDFIs to learn from the Indian experience. There are many similarities and differences with both operational and strategic issues.
Operationally, for instance, CDFIs in both countries face access to capital as a major issue, as is the balance between social and financial goals. Just like the UK. However the scale of the problem in India is much larger than in the UK. One microfinance organisation (MFI) we visited, had been in operation for nine years, and had just started making a profit. It employs 1500 people, has 279 branches and 370,000 clients. Yet they, and the other 800 MFIs in India, have only penetrated less than 10% of the market. Mindblowing! Another operational issue is capacity and performance: technical assistance in India echoes the cdfa’s performance framework, Change Matters: they look at the same challenges and provide similar guidance, which is good to know. Information on performance was readily available as India has a culture of bureaucracy. The MFIs were planned, monitored, evaluated, internally audited, systematised and processed to within an inch of their lives – it all provided a clear picture of their businesses and impact and allowed for really good discussions. Building clients’ business skills is another challenge for both countries as it is a hugely important part of the work we all do, a key way of addressing this is by working with partners: this goes on in both countries as well.
Strategically, as in the UK, CDFIs in India use a variety of legal frameworks and legislation is an issue. A bill is currently working its way slowly through the system: which means this is a step further forward than us. This issue of overindebtedness is beginning to rear its head in India: it has been a challenge here for a number of years. As in the UK, there is a debate on having a levy on the cost of credit with strong polarised opinions on the matter.
My most memorable experience was visiting the slums of Mumbai. Amid the stench and the squalor I met women, MFI clients, who were using their loans to change their lives and that of their families. In my naiviety, I marvelled at how clean they were. They were all dressed in beautiful saris, had glowing skin and shiny hair. Their tiny homes were immaculately kept: all this is no small feat without running water and having to share toilet facilities with 15 other families. When I remarked on this to our guide he told me, matter of factly, that the slums are rife with disease and the woman know that, unless they keep everything really clean, their children will die.
With thanks to RBS for facilitating the trip and to my fellow Advisory Board members for their insights and perspectives.
