Tag: Bloomberg

The Stories We Can Tell Without Data

~ Sasha ~ Leave a comment

A few weeks ago, Bloomberg published two scathing articles about the microfinance industry. The articles asserted that major investors—both public and private—are making massive profits through their investments in microfinance, while the industry systematically hurts borrowers. The article begins:

Suicides, debtors’ prisons and delinquent borrowers forced to sell their land—the grim social costs linked to microfinance a decade ago were supposed to be a relic of the past. But efforts to clean up the industry lost momentum, and today billions of dollars are flooding into a system that promises the world’s poor a better life while often compounding their misery.

As I shared in an article I posted on LinkedIn yesterday, the claims in this article are not supported by the data.

Most Impact Reports Are Nothing More Than Stories

How could this be?

It’s because this article falls into an all-too-common trap: relying on robust, objective data sets to profile the financial returns to microfinance investors; and resorting to a handful of interviews and case studies of borrowers, plus a number of expert interviews, to paint the story of social impact.

The question we must ask is: how can it possibly be that, in 2022, the social impact of an industry that reaches more than 140 million clients can credibly be assessed from a few dozen client interviews?

And the answer is: because this is common, accepted practice for assessing most social impact.

For most investors, even those who have a stated intention to create social impact, the “assessment” of this impact is a storytelling exercise. These stories are often based on a handful of anecdotes or case studies, which might include conversations with a small number of customers.

Indeed, if you pick up an annual social impact report from most investors or companies, what you’ll have in your hands is, most likely, a narrative exercise devoid of first-hand data.

So, it is no great surprise that microfinance—a well-established, well-respected sector in social investment—has fallen victim to this same sort of storytelling exercise…only this time, the individual case studies paint a particularly troubling picture of the industry.

Better Social Data is Available in Microfinance

My response to the Bloomberg article points out that there is, in fact, a massive dataset that captures the lived experience of nearly 18,000 microfinance clients who represent 25 million microfinance customers.

This dataset, gathered by the company I run, 60 Decibels, shows that microfinance is creating positive outcomes for the vast majority of borrowers:

Nearly three in four of the clients we spoke to said that their loan repayments are “not a problem”…. Seven in 10 of these clients credit their microfinance institution with helping them strengthen their financial resilience, meaning that they are better able to face a major expense. Four in five clients told us their lives are improved thanks to access to microfinance, with a subset of these, one in three, saying their lives are ’very much improved.’ Similarly, four in five clients say they are better able to reach their financial goals thanks to microfinance.

The dataset also shows that, for a small subset of microfinance customers, their microfinance loans are indeed a burden, that their repayments are causing major strain on their well-being, and that their lives are worse, not better, because of their microfinance loans.

The point is: like most financial products, microfinance has the potential to create both benefit and harm. How the service is delivered, and, in particular, product design and client protection practices, play major roles in determining the impact of this product on the lives of millions of customers.

Of course, this more nuanced version of the story doesn’t make for flashy headlines. Then again, we shouldn’t be surprised that the microfinance industry, or any industry that aims to create social impact, would be vulnerable to such a story being written.

Until we set a new standard, one in which regularly collected, objective, comparable, quantifiable social impact data is expected for anyone claiming to create social impact, we will remain an industry that relies on storytelling.

You can read my full article here.

The Yankees put safety first

~ Sasha ~ 4 Comments

I’m no big baseball fan, but I was excited to go to a friend’s surprise 40th birthday party at Yankee stadium the other night. In addition to wanting to celebrate with a friend, it felt like a very New York thing to do.

I happily rediscovered that Yankee stadium is really easy to get to by public transportation – Google maps told me I could take any of three subway routes or Metro North. I got there from downtown Manhattan in 30 minutes, taking the A train to 145th street and transferring to the B train along with the guy in the Yankee’s jersey who was trading stories with his 9-year-old daughter who was going with him to the game.

I got off at 161st street and I made my way to Gate 4. There was a guy inspecting each bag perfunctorily and asking each person to turn on their cellphone, which I didn’t pay any attention to until he told me I couldn’t bring my bike helmet into the stadium.

My bike helmet? The bike helmet I wear so that I can use the Citibikes that are Mayor Bloomberg’s pride and joy?

“Why?” I asked.

“It’s a security risk….If you like you can talk to my supervisor.”

The supervisor was worse. He talked to me for a minute, then got a call on his cellphone and disappeared. I waited. Five minutes later I went back to the first guy and asked for the supervisor again. When he came back out, my pleas notwithstanding, he told me there was no way the helmet could come in, no way they could hang on to it for 5 minutes while I got my friend’s car keys to put it in her car, no way I could leave it behind one of the many desks in the lobby. What I could do was go to the nearest locker, which apparently was seven blocks away at a bar.

“What do you suggest I do?” I asked.

“What you do with your property is not my concern, sir.”

(I beg to differ. I didn’t have a “disposing of or storing my innocuous property” problem until I bumped into you.)

So there I am, outside of Yankee stadium, the clock ticking on the “surprise” moment in the surprise birthday party, with an apparently illicit mostly-foam bike helmet that I have no way to store or dispose of. I wish I’d known at the time that there is no mention whatsoever of bike helmets not being allowed in Yankee Stadium on the Yankee Stadium Security Policies web page (though it says laptops are not permitted, and they are), but I didn’t. So instead I pleaded a bit more, I asked for more explanation, and I’m told that a bike helmet can be used as a weapon, at which point it also didn’t occur to me to say that a beer bottle would be a better weapon, as would a full soda can, both of which I later had access to inside the stadium.

Trapped, powerless, and out of time, I gave in. I walked 20 yards to a nearby lamp post and clipped the helmet on to it, assuming I’d never see the helmet again but secretly hoping that the better angels of human nature would prevail; that something hidden in plain sight would somehow be overlooked; or that the surly supervisor would surreptitiously keep an eye on my helmet for me (it was in his line of sight), as a sort of karmic payback for being so woefully unhelpful and unsympathetic.

Sadly, there was no happy ending. When I got back a couple of hours later the helmet was gone.

The helmet only cost me 30 bucks at Dick’s Sporting Goods, and this is mostly a trivial story – except for how patently absurd the whole thing is, how an incredibly low bar wasn’t crossed by anyone who could have said “hey, this is crazy, go ahead” or “let me help in some small way,” and how it’s so easy to have rules and institutions and just a little bit of power, be abused, even in the smallest of ways.

And, if Citibike is going to become a real part of the fabric of New York City life, perhaps our fine Mayor, as a parting gesture, could mandate a blanket permission for bike helmets to be allowed in buildings, museums, and, yes, stadiums.

Otherwise, pretty soon I’ll get sick of buying new helmets, and will be tempted to flaunt all the rules and sit outside the game with my helmet and a 32 ounce soda, jeering.