The end of my existential crisis with mobile money........fingers crossed

One of the most remote parts of Bangladesh--the char islands of Noakhali.
Right now they don't look so bad, but once rainy season comes, this will all be underwater....

So the few of you that are regular readers of this blog (and trust me, I love you all dearly for holding in there!) will know that I write about mobile money a lot.  And over the course of the past two years, I've changed my mind a few times about mobile money and whether it's all that or not.

Past posts include:
My skepticism that mobile money providers will be able to figure out how to reach remote areas, like those I visited in Mozambique
Profiles of satisfied mobile money "users" in Bangladesh who don't really feel a need to know how to do the transactions themselves
Flat out questioning whether mobile money created more problems than it solved, especially for low-literacy users!

A few weeks ago I went on a trip to Hatiya, Nohakhali that essentially convinced my that mobile money is, in fact, a transformative tool for financial empowerment in Bangladesh, despite the USSD menu in English and the many other common complaints.

For those of you who haven't had the pleasure of visiting the place yourself: this is historically one of the poorest and most remote parts of Bangladesh.  The families here are forced to move periodically because of river erosion--most moved to this area just in the last 10-15 years.  Often the land is controlled by local elites, who don't make it easy for the poor.  Schools are few and far between, health services far away. Almost all families are subsistence farmers.

The only electricity for miles is generated by solar panels.  Now there are some paved roads and bridges; before, you were reliant on ferries and dirt roads, when they weren't flooded.  BRAC field staff here often resort to taking their shoes off, rolling up their pant legs, and walking through shallow water.  Every Peace Corp volunteer's dream, right?

Not where I'd expect to find the most tech savvy people.

At yet, for the first time, I met rural women that felt confident using mobile money by themselves.  And not only were they confident, but they were excited!!  Watch this short video where you can see for yourself.

One of them mentioned that prior to having her own bkash wallet, she had to go to the bazaar (which was a decent walk away) to buy airtime.  There she could buy a card with tk10 value for tk12 (i.e. a $0.12 value for $0.15).   Now, from her home, she could buy airtime whenever she wanted it "for free."

Better than that, she's now doing all airtime top-ups for all of her neighbors, saving them the trouble of going down to the bazaar and paying the extra fee.  I asked her if she'd considered becoming an agent for the cell phone companies, but she laughed at that.

Here's a video of one woman sending me airtime.

Perhaps more exciting was hearing women talk about how mobile money has transformed their access to cash flows.  Last week I wrote about a woman who took a loan for consumption while her husband migrated to another area for work.  He's able to send her money regularly by mobile money for her to pay the monthly installment.

Before she had her own mobile money wallet on her phone, her husband sent money to her through the agent in town.  That worked okay, but sometimes he wasn't there, didn't have enough cash, wanted some extra money for his troubles, or....you get the idea.  She's clearly very happy to be getting the money on her own phone--both for practical benefits as well as peace of mind (which I think we often undervalue).

My colleagues plan to write some pieces on the financial capability efforts that supported these women to get their mobile money wallets and learn to use bkash so confidently, and I don't want to steal their thunder.

But frankly, the biggest light bulb for me was, "Wow!  This is what's POSSIBLE!"  These women need mobile money, they want it, and they can make it work for them.

Now that we know it's possible, we have a lot more work to do!

At least I can stop pontificating about this now and move onto new topics.

Taylor Swift, Zombies, and why Microfinance isn't evil

"The failure of microfinance is recognised at even the highest levels, and yet for some reason it retains its staying power, like a zombie that refuses to die. "

Ok, what is up with all the comparisons between microfinance and zombies? Seriously? Zombies freak me out, so please stop.

Since January, when six randomized control trials "definitively" stated that microcredit did NOT have a significant impact on household well-being, microfinance has been taking a lot of heat in the media.

What's kind of funny is that the researchers themselves actually weren't quite so negative, not that anyone would take the time to read a massive research document. Here's a line I liked,
"These results suggest that although microcredit may not be transformative in the sense of lifting people or communities out of poverty, it does afford people more freedom in their choices (e.g., of occupation) and the possibility of being more self-reliant."

So why the backlash? It's partially the sector's own fault. Because microfinance was billed as the "silver bullet" to eliminate poverty, long-time critics are gleefully pointing to the research as proof that it's only the industry's own greed that keeps us going.

Wait, what's that, Taylor? "Haters gonna hate, hate, hate, hate, hate....."?

Don't be a hater!! Fight the madness! To shake it off, here are a few questions you can throw into one of these arguments and sound REALLY smart. Extra points if you say it with a big "duh" look on your face.

But wait, the studies only looked at microcredit. Are microcredit and microfinance the same thing?

No, they aren't! Credit is just one type of service. Microfinance encompasses all financial services, usually credit and savings, and sometimes insurance, pensions, etc., that are offered to the poor. Most microcredit providers will opt to provide a mixed basket of services, in regulatory environments that allow them to without a banking license.

It must be risky to provide credit to poor clients, without any collateral or guarantee. Maybe that's another explanation for why the interest rates are higher than commercial banks?

Wow, you're right. Remember that microfinance clients are usually people that no other banks will give credit to! On top of that, many countries are at risk of floods, cyclones, or droughts, during which they often will defer or write off client loans. Not to mention, many microfinance institutions write off loans when a client or her spouse dies. So they have to plan for certain potential losses when calculating their interest rate.

In part because many MFIs (MicroFinance Institutions) are restricted from taking deposits, they often take loans from banks for their own capital. This means that they incur a cost of funds that's reflected in their interest rates.

While haters love to quote a seemingly-absurd interest rate of 200% in Mexico, the global average is closer to 35%. In some markets, interest rates are capped; in Bangladesh, 27% (declining balance) is the limit.

Have there been any other studies on microfinance that found other positive results?

Plenty of them!! One of my favorites is the one that looks at microcredit as an income smoothing tool--that is, when other cash flows are lower, or big expenses are looming--microcredit enables families to avoid selling off assets or going hungry.

Case in point: I met a woman a few weeks ago who lives in a remote area and has a small farm. While her crops are growing, her husband travels to other areas to help with harvesting there, and/or take other odd jobs. Before microfinance was available in her area, she essentially had to wait for him to come home with money, and just survive on whatever meager savings they had. Now, she takes a loan to fund her basic consumption while he's gone, and uses the money he sends home to pay it off. Her stress level has reduced a lot and her consumption is much more stable. Significant? I think so.

Another obvious example is in financing people to seek employment abroad. It's definitely a better option for families than selling off their land and/or taking loans from informal lenders (who can charge rates that make Banco Compartamos look charitable). And soon I'll have research to support that!

Most microfinance institutions are financially sustainable, as opposed to income grants and many other development interventions cited as "better options". So why are we comparing them?

Last month, six more randomized control studies concluded that BRAC's model to help households move out of ultra poverty was "definitively" effective across a range of contexts. Very exciting! But a key piece of that program is proper targeting; that is, finding ultra-poor households that will experience transformational improvements in quality of life from two years of comprehensive support. And guess what? It's expensive, ranging from about $1,538 per household in India to $5,732 in Peru. Should we be comparing this model with microcredit (or microfinance), which targets slightly better-off clients and serves them sustainably? Should we be surprised that the outcomes aren't the same? One thing that the studies did not report was whether microcredit experiences a range of effects. It's possible that for certain profiles, the impact of microcredit is much bigger than for others. It would be really interesting to know more about whether there are sub-groups who did experience significant improvement, as that could help microcredit institutions refine their lending criteria and loan appraisal processes.

Should we be hating on the players or the game? Who makes the rules here?

In my mind, it's regulators that should really be consuming the research findings and asking good questions: Does this have implications for consumer protection? What about for policies regarding interest rates and deposit taking? Again, they'd probably need a much better breakdown of the results than what's currently available. But since microfinance institutions have to abide by the policies set out by regulatory bodies, influencing the policy environment seems like a much better use of time than harping on providers themselves (unless you're a hater and just want to hate).

Is anyone actually suggesting that we should abolish microfinance and give up on financial inclusion? 
I hope not! 

In that case, shouldn't researchers and journalists stop hating on microcredit, and instead think about when it IS an appropriate tool for poverty reduction?

Yes! Or just have a dance party and move on.

Violence against development

"When I started the village organization, the local elites surrounded my home and snatched my attendance register.  They said they would break the organization.  They also beat my husband.  I took all of the organization's members to the home of the local elite leader.  I said to him, 'Either you give us the right to grow rice or give us work.' We did it in reality!  Then he said to us to continue the organization."  Maksuda, one of BRAC's first community health workers, speaking of her experiences in the 1980s in setting up a local community group for poor women. (Unpublished manuscript, Ishikawa)

Development likes to keep its hands clean.  Many NGOs focus on "neutral problems"--health, education, finance, sanitation.

Unfortunately most problems aren't neutral, if one goes below the surface.  Many of them link back to power, and power, as the saying goes, is never given, always taken.

I would argue that the greatest achievements for non-profit organizations have been in the area of technical problems--those where lack of information, services, or economic barriers are the main drivers of the problem. Technical problems tend to have relatively simple solutions that can usually be addressed through local activities, without system-level reform.

Bangladesh has many success stories here: despite persistent levels of high corruption and low public spending in key social areas, we have seen impressive successes in family planning, life expectancy gains, poverty reduction, and agricultural productivity, largely due to the activities of NGOs (and the government's support for them).

Looks innocent enough, right?  But BRAC's intent on educating girls
had violent pushback in early years.

Unfortunately, NGOs have been much less successful on issues whose solutions rest primarily on changes in power or politics--fair elections, eliminating corruption, safety codes for workplaces, police reform, civil rights, just to name a few.  These problems require a stronger stomach--while perhaps not advocating violence, at least having the pragmatism to anticipate the likely dangers.  A quick review of worker reforms or civil rights in America (personally I like "A People's History of the United States") demonstrates the level of chaos and unrest required over many years to get to the (imperfect) freedoms and equality that we enjoy today.

Maybe NGOs shouldn't meddle in these areas.  But in order to truly tackle many of these "subjective" problems, including some that look "technical" on the surface, one must focus on the correction of deeper "relational" issues of power and politics.  As a recent paper by Leftwhich and Hudson said (highlights on Duncan Green's blog),

"Ultimately, if you wish to defeat poverty, prepare to address the power and the politics that keep people poor."

Consider 1994, when fundamentalists burned down and damaged over 200 of BRAC's primary schools in Bangladesh because they were disproportionately educating girls.  They went on to harass teachers and intimidate other female NGO workers.  These fundamentalists recognized that large organizations, like BRAC and Grameen, were challenging the social status quo through a portfolio of seemingly-technical activities which had an end-result of empowering women financially and socially.  That was, in fact, the reason that the NGOs were engaging in these activities--not simply to improve health and finance.

While the fundamentalists managed to cause significant financial damage to the primary schools, they were unable to successfully stop the female empowerment efforts that the NGOs had initiated.  Women themselves were taking things into their own hands.  And once things are set in motion, they can be tough to stamp out (I'm having a hard time finding a good link for this, but Marty Chen wrote a marvelous book called  A Quiet Revolution on women's empowerment in Bangladesh, and Malcolm Gladwell had some really interesting insights into what makes social movements tough to smother in David and Goliath).  Freedoms aren't really one of those things that people want to give up, once they get them.

A few years ago, several studies on microfinance found a positive correlation between loans to women and domestic violence. While providing access to loans can empower women in many tangible ways, there can also be dangerous risks.  When the existing power dynamics in the family are disrupted, the new power players may pay a price on their journey.

One of BRAC's early empowerment strategies was training women as community health workers.
In the 1980s, it was revolutionary to have women going door-to-door and asking questions
about health and well-being.  In 2015, what's the boundary we should be pushing?

Many organizations, including BRAC, know the importance of power implicitly, even if it's a sub-text of their work instead of the headline (social revolution is not a cause that many donors want to associate themselves with, or governments look kindly on!).  An old office adage is,

"The poor are poor because they lack power.  We must organize people for power.  They must organize themselves in such a way that they can change their lives."

Indeed, sometimes the "technical needs" of food, health, money, etc., have to come first.  But these are symptoms of larger problems that also need to be addressed, by going to the heart of the problem. For example, there has been significant research on role of democracy and more broadly governance in preventing large-scale famines.  So even taking on a challenge as seemingly "simple" as hunger (cured by food), comes back to bigger issues. This is obvious to many--Maksuda's story above about telling the local leader he had to provide poor women with "rice or work" indicates a deep understanding about implications of power structures in her community, and showing the courage to confront them in order to move ahead.

Christian Seelos recently published a new framework to enable practitioners to more systematically think through the problems that they are trying to solve, identifying the major "technical" and "relational" dimensions of the problem, and developing strategies to address these dimensions based on that thinking.  I like this framework a lot, but I'm worried that the bigger issue in development is less that we lack a good framework to help us see, but more that we're trying really hard NOT to see the big picture.

Power is a dirty word in development. And yet by not talking about it, we are in denial about the potential risks to our organizations, staff, and clients that the work creates, and we're likely to create programs that fail to tackle all of the key issues that need to be addressed in order to truly accomplish our objectives.

Pissed off, or why I should never read comments on NYTimes.com

Looks just like the "public bathrooms" of NYC, right? Photo credit: Gary White, Waterdotorg

Last week Tahnmina Ahman had an opinion piece in The New York Times about the lack of public toilets in Dhaka, Bangladesh.

The piece begins with a warm and fuzzy anecdote about her mom texting her about how bad the traffic is from Gulshan to Banani (i.e. the poshest neighborhood in Dhaka to the 2nd poshest neighborhood in Dhaka), presumably in an air-conditioned car with a driver.  It goes on to talk about how common it is for men to pee in public, recent "innovative" campaigns that use signs in Arabic as a deterrent (and what's messed up about that), and the need for more comprehensive solutions.

A lot of the readers, presumably those sitting in New York, commented about the lack of public bathrooms in their own cities. It made me realize the lack of context that many had about the sanitation situation in Dhaka more generally. So here are a few fast facts:

It's a good day in Dhaka if I can avoid seeing anyone urinating in public.  Also a good day if I can avoid being assaulted by the smells of human waste--harder to do as it heats up.  It's gross.  But let's be honest, I've got pretty minor issues to complain about.  I've got clean bathrooms at home and at my workplace.

Many people don't have a toilet at home.  Dhaka is home to approximately 15 million people, with about 5 million living in slums or informal settlements.  Virtually none of them have a bathroom at home.  The city government believes that adding infrastructure would only accelerate urban growth, so infrastructure in slums is very limited.

Here's a comment from a (male) resident of Korail slum, "The problem is I have to share a single bathroom with 20 other people. And in the morning, it sometimes takes me at least 40 minutes to just get into the washroom..... sometimes I have no option but to defecate under open sky as the latrines are occupied most of the time.”

Trust me, if you saw the condition of some of these bathrooms, you'd be doing your business out on the street too.

Women can't work in places that don't have toilets.  There's been more attention recently to bathrooms as a big issue for girls and school attendance, especially once menstruation begins.  I wish there was more emphasis on the issue of public bathrooms as a prerequisite to increasing women's participation in the workforce.  If men have to resort to urinating on the streets, what option is there for women?

Ahman mentioned that the de facto public bathroom system is provided by mosques, and many mosques are for men only.  In fact, the bathrooms provided in many markets are more or less for men only--because there is only one and it's full of men.  It creates yet another significant difficulty for women looking to work in markets, bus stations, restaurants, small stores, etc.

Recently I had a conversation with a woman who is the full-time driver for a high-level executive. We were talking about dieting, and I was mentioning the importance of staying hydrated.  She just laughed and said that there are many days when she drinks as little as possible.  Many places where she goes, there is no bathroom available, so she has to monitor her water intake fairly carefully so that she can manage to wait until she's back at her boss's office building or home, where she's got access to safe and clean bathrooms.  If that's the life for a driver, what about for women working in construction sites, vending, and other jobs without regular access to bathrooms?

Want to guess on when this was last emptied?  Toilets like these
are common, and are likely to contaminate local sources of drinking water. Photo Credit: Gary White, Waterdotorg

Without toilets, waste becomes a big problem.  No one really likes talking about solid waste management--it's a gross topic.  But we're talking about a city where approximately one-third of people lack access to bathrooms connected to any type of sewer.  Latrines are similar to outhouses; most of them lack a water supply and have to be cleaned manually (a job reserved for the socially marginalized dalits).  To get around this, many of the latrines have been built over the many lakes and ponds that border slums built on reclaimed land.

So where does all that waste go?  You don't want to know!!  In the rainy season in particularly, diarrheal diseases are common. Children miss school, adults miss work. Obviously, those lacking safe sources of water suffer the most--and many of these families don't have the financial cushion to take days off (rickshaw drivers don't have paid leave).  Previous studies have estimated that the health consequences of poor sanitation cost Bangladesh almost $4 billion a year.

Dhaka needs more toilets, period.  Don't get distracted by the word "public".  We're not comparing the merits of the bathrooms in Central Park to the Starbucks down the street.