Replication: is the search for best models in microfinance inhibiting innovation and institutional learning?

Abstract

The search for the right way to bring opportunity and sustainable development to the underprivileged parts of the world has led to efforts to move beyond the concept of traditional charity and has begun to encompass ideas that work with the people and for the people. The microcredit solution was created as such a model. This thesis contributes to the development of the field of microcredit by providing research on the way institutions copy one another in the search for best practices and a working models. It specifically looks at the way microcredit institutions replicate established methodologies in an effort to scale up numbers of people being reached as beneficiaries of microfinance. This would allow to reduce the overhead cost of researching and developing new programs and allows for quick replication around the world. There is speculation that replication suppresses innovation and learning within the organizations and the field as a whole. It is believed that institutional performance is being largely conditioned and stagnated by objectives that concentrate on numbers and quantitative results as opposed to the original mission of achieving a significant social impact. I examine three of the pioneering microcredit institutions: ACCIÓN International, Grameen Bank (with a look at Grameen Trust and Grameen Foundation) and FINCA International. Experiences of other institutions and programs will serve to further complement my case studies. Additionally I explore the role of the Microcredit Summit Campaign as an agenda setting forum for microfinance policy and practice. The findings of this paper suggest the opposite of the original hypothesis. The institutions dedicated to microfinance have continued to be innovative by creating numerous ways of technology, savings, insurance and other financial services into themicrocredit mix. The microfinance field is in essence a demonstration of innovation and exhibits a complicated but overall positive move. The future of the movement, however, will be determined by institutions that are clear about their motivations and reasons for being involved in the microfinance field.