At the 32nd edition of Midi de la Microfinance, more than 140 participants attended a debate at the Banque de Luxembourg between Jean-Michel Servet, Professor of Development Studies at the Institute of International Studies in Geneva and Luke Vandeweerd, Management Advisor at the Appui au Développement Autonome (ADA).

Jean-Michel Servet, author of the books 'Banquiers sux pieds nus' ('Barefoot Bankers') and 'La vraie révolution du microcrédit' ('The Real Microcredit Revolution'), the latter of criticises microcredit.

"Microcredit is like a broken clock," stated Jean-Michel Servet at the conference. "Twice a day, it shows the correct time, so you will inevitably always find situations where microcredit has helped reduce poverty".

Many of the guests were in agreement that microcredit cannot solve all poverty issues alone, with Luke Vandeweerd of ADA explaining that product development and microcredit support services are vital for the success of financial inclusion. He continued by stating that micro-savings enable financial security for families and, in certain cases, allow debt repayment.

According to Jean-Michel Servet, the globalisation of financialisation has meant that access to financial services represents as vital a need as "access to water and to education". The development of populations with no access to conventional financing requires financial inclusion by prioritising loans to microenterprises and not to consumption.

Debate moderator, Chicot Eboué, addressed the potential link between microfinance and neo-liberalism. ADA commented that as some of the largest and best-known microfinance institutions (MFI) have drifted towards neoliberalism, it has created the perception that the system is not working and that it is time to turn to another alternative.

Luc Vandenweerd stated that as some MFIs are geared more towards profitability, it is essential to choose partners well. In the case of ADA, medium-sized MFIs were selected based on their strategy and pre-established social mission. LMDF, an ADA partner, is a socially responsible fund which only invests in institutions with a confirmed social vocation. This is always checked by its teams who study their operation on the ground.

Having also acquired many years of experience in the field, Jean-Michel Servet, former Symbiotics administrator, one of the largest microfinance investment funds worldwide, is convinced that for the optimal development of an inclusive finance sector, the social mission of MFIs should be placed as a central pillar. he added that large investment funds are too concentrated in certain countries where there is a need for structures such as ADA to diversify the investments.

 

Photo by ADA / Luc Deflorenne (Jean-Michel Servet, IHEID; Chicot Eboué, Université de Lorraine; Luc Vandewerd, ADA)