Norman Rockwell on Meme TransmissionA meme is an idea that spreads from person to person within a culture. The term was coined by Richard Dawkins in his book The Selfish Gene, and the idea of a “meme” has now become… well, a meme: there are websites devoted to tracking memes, as they rise from nothing, and - frequently - fall. Dawkins gives examples of memes: melodies, catch-phrases, fashion, and technologies. 

Dawkins could have added “microcredit” to his list of successful memes. (I mean by microcredit meme something like the assumption that small loans to poor people are usually a good idea in most situations, even in the absence of other financial services, and generally worthy of promotion by governments, NGOs, and donors.) Please understand that when I use such a stark formulation, I’m describing myself, for at least two decades of my professional life…

Most of you readers are - I’m quite certain - younger than I am. I have witnessed the rise from nothing of the microcredit meme. I first ran into it in the 1980s when Andy Oerke of now-defunct Partnership for Productivity started talking about credit as a means of empowering rural populations. I was inspired, went off to Burkina Faso to work for Andy, and then in 1986 went to Bangladesh, spent time with Mohammed Yunus, and was touched and even more inspired by what I saw. I became a “meme-vector”, spreading the idea of microcredit as a way of fighting poverty to anyone who would listen. (In fact, my perceptions of the power of microcredit were formed on the basis of no more than ten anecdotes! But I was still convinced.)

Along the way, I founded two credit-only MFIs, and started getting strong signals from remarks from clients, and from common sense, that ever-increasing debt loads at high interest rates were not the solution to poverty. But the microcredit meme was growing fast, and while I tried to moderate the spread of uncritical credit, I stayed in the field, half-heartedly, until the 2000s, when I discovered savings groups, and - like many others - thought, “We should have been doing this all along”.

But the microcredit meme is still incredibly strong, and I am amazed to find it alive and well in every country I visit. It is not evidenced based, and in fact, it often (it seems to me) flies in the face of evidence and even common sense. It is usually accompanied by unexamined statements about poor people “needing” a loan, and often entangled with conversations that really are about the welfare of financial institutions.  What’s going on? Why does the microcredit meme keep spreading? Is it the microcredit summits? Yunus’s charisma? The marketing aces at Kiva? Hillary Clinton? I assert that it is not because the last thirty years have accumulated overwhelming evidence that microcredit is doing a great job at alleviating poverty, or producing any positive effect worthy of the donor millions that have been poured into it, and are still being poured. That evidence simply does not exist - the studies that address the issue are convincing only to those who are already convinced.

Dawkins points out that memes can take on a life of their own, with their own agenda and their own survival mechanism, and that they can be detrimental to their hosts: us. Are we carrying the microcredit meme, or is it carrying us? What keeps it going?

Reader Comments (4) 

Paul - Wonderful post. I think if we want to know who is responsible for the meme, we need to look into the mirror. Remember how many of jumped aboard in the 90s? And are now gnashing our teeth? It took a long time for microcredit to spread and will take a long time to extinguish. Lots of memes take off that have no evidential basis (Hello, Kitty). Microcredit is a fad that will burn itself out. Let's just hope it does not take savings groups down with it.

Sat, May 21, 2011 | Kim Wilson (Orientrow@yahoo.com)

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I just finished reading an ODI article on the state of micro-finance, it was published March 2001. Has anyone read it? It really is an excellent article and is worth adding to the library here. I will see if I can attach it here later. Otherwise I can email it to Paul and Kim.

Wed, May 25, 2011 | Jill Thompson (jill-jbay@truewan.co.za)

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Can someone explain why the Savings Revolution receives strong backing from USA- based international NGOs like CARE, CRS, Oxfam America, the University of New Hampshire, with substantial financial support from the Bill & Melinda Gates Foundation , while the input from Europe-based development institutions seems to be marginal ? 

What should be the message form the Savings Revolution to Micofinance Investors who will meet in Geneva , 5-8 July 2011 at the occasion of the 'Microfinance Investment Summit' ?

Tue, June 14, 2011 | Koenraad Verhagen (k.verhagen@telfort.nl)

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Dear Koenraad,

That's a great question with an answer that depends on the nature of the "microfinance investors".

If the microfinance investors are commercial investors, who see micro-loans as a new and promising asset class; who love the high interest rates that poor people have no other option than paying; who appreciate the generally high portfolio quality that comes with joint and several guarantees, social pressure and the well-developed sense of personal integrity of people in traditional cultures; if their business model involves keeping as many poor people as possible in debt at high interest rates for as long as possible; then one should say nothing about savings-led, community-managed microfinance. Financial investors will not be interested in savings groups unless they find a way to change them into revenue centers. Given the remarkable ingenuity of bankers, they may well succeed, and so it is better that savings groups stay under the radar of financial investors as long as possible. If they would like to throw some CSR dollars at the INGOs for savings groups, they will find takers, but I'm afraid that is letting the camel's nose into the tent.

On the other hand, if the investors are social investors, whose goals are improving the quality and outreach of financial services to rural and urban poor, they should be introduced to the concept of savings-led, community-managed microfinance - it's a message that is sufficiently revolutionary, that one may need to hear it more than once. It goes against the tide of recent history, and requires people to re-think some of the ideas that "everyone knows". Donors should be introduced to the work of other donors - Gates, certainly, but also MasterCard Foundation, and increasingly DFID and USAID, and they should be told about the remarkably low cost-per-member of bringing a range of financial services to otherwise unserved or underserved people.

They should also be introduced to the idea of Savings-Group-as-Platform for other services; we can put you in touch with the work that Aga Khan Foundation has just done in this area, and the course in Adding-Value-to-Savings-Groups that the Carsey Institute's Sustainable Microfinance and Development Program will offer in Tanzania 10-14 October 2011. The short films produced by AKF, available on Savings-Revolution.org, are a very effective and efficient way to introduce or reinforce the idea of savings-led, community-managed microfinance.

Thanks for writing - I think your question is key to much of the debate going on about financial services for the unserved.

--Paul

Fri, June 17, 2011 | Paul Rippey