Alex Counts is president, CEO and founder of Grameen Foundation, and author of several books, including Small Loans, Big Dreams: How Nobel Prize Winner Muhammad Yunus and Microfinance are Changing the World.
One of the most familiar critiques of the social (or not-for-profit) sector by those outside of it – those in business or academia, for example – is that we are a very fragmented community of organizations that don’t talk to each other, much less collaborate as often as we should. This results in duplication of effort and capacity, as well as unnecessary and unhealthy competition. While often exaggerated, this criticism has some merit, and the socially-motivated international microfinance networks (as well as the microfinance sector generally) are hardly immune. (We have our own criticisms of business and academia, but we’ll leave those for another day.)
For microfinance, 2010 was a year of upheaval and taking stock. When it began, crises of various origins were still being felt in Morocco, Pakistan and Nicaragua. Twelve days into the year, a massive earthquake hit Haiti, negatively affecting many microfinance institutions (MFIs) there. Fortunately, Haitian MFIs, including Grameen Foundation’s long-time partner Fonkoze, have bounced back faster than anyone expected, as I have written in a separate blog.
A few months later, a controversial initial public offering by SKS Microfinance, a leading MFI in India, led to a backlash among the media, political leaders and civil society in general – especially in the Indian state of Andhra Pradesh. (In the early days of that crisis I debated the founder of SKS, which was quite interesting to say the least!) As the year ended, the Bangladeshi government began to harshly criticize and harass Grameen Bank, the country’s flagship MFI, which led to violence against the bank’s employees and, ultimately, to the forced and premature retirement of its founder, microfinance pioneer Professor Muhammad Yunus. (For more on the Bangladesh crisis, click here.)
This was a far cry from the celebrations of microfinance in 2005, the U.N.’s “International Year of Microcredit,” and 2006, when Grameen Bank and its founder, Prof. Yunus, unexpectedly – and in my mind deservedly – shared the Nobel Peace Prize. The fact that microfinance in most countries (and even in most states in India, the world’s largest market for microfinance) remained largely unaffected, and in fact continued to grow and contribute to poverty reduction, was rarely noted in the media or even at industry conferences. There was a lot of soul-searching and hand-wringing, and perhaps a bit of panic.