Defining Alternatives
Introduction
INAFI, as a global network of microfinance practitioners is committed to poverty reduction through microfinance intervention. It brings together microfinance practitioner NGOs at three levels – international, regional and country levels in Asia context. INAFI INDIA as a chapter of INAFI derives its philosophical underpinning and inspiration from the global vision of INAFI where even the poorest of the poor have been able to attain life of dignity with basic standard of living including access to food security, clothing, shelter and education, health care. INAFI places the poor at the centre of development. It would like to see a world where the poor, particularly the poorest, have the opportunity to participate in their own development by enhancing their own skills and abilities to reduce vulnerability and enhance opportunities through lives and build sustainable livelihoods. In realizing this vision, INAFI recognizes the critical role of microfinance interventions as part of the development strategy in eradicating root causes of poverty. These development perspectives for poverty reduction set the alternative premises for INAFI and consequentially for INAFI INDIA.
Defining alternatives of INAFI in India
The uniqueness of INAFI INDIA as a microfinance network, basically stems from being practitioners based. They consider microfinance as a means to larger end of poverty reduction and not an end in itself. The members are development practitioners for either in plus credit mode or credit plus mode. Which means they are engaged in addressing poverty - issues of health, education, etc. and thereafter taking to microfinance intervention as a part of the larger agenda or those starting with microfinance and thereafter integrating microfinance with other social and development issues and themes.
It is important to recognize that member practitioners of INAFI INDIA though committed to sustainability of the intervention always put people first before profit. For them, the client sustainability is critical and takes precedents over the financial sustainability and profitability issues.
Alternative in approaches
a. enabling method
The microfinance sector is generally characterized by direct financial intermediation wherein the NGOs/MFIs deliver primarily the credit. The INAFI INDI network, however believes in enabling mode of delivery rather than directly providing the financial services. The members of the network are primarily involved in social intermediation of organizing the poor preceding the financial intermediation. Which means, the members organize the communities in an institutional framework at the grassroots, build their capacity, skill and awareness for undertaking the financial and other developmental work. This is the distinctly different alternative approach of INAFI INDIA network members. As for instance, SHGs and its federations promoted by the members would undertake / organize microfinance services themselves or avail of these services from mainstream financial system through a linkage process facilitated by the members of network.
The enabling process had several spin off benefits, the paramount being building the local leadership to lead, guide and own the programme by promoting and enhancing the mutuality principle. Another good opportunity in the enabling method is that the process intensive intervention strategy brings out the needs and the demands of the clients which would make the programme more responsive to clients.In other words, it would be demand driven rather than supply led.
b. development outcome to direct the financial services
When microfinance intervention is primarily directed at reducing poverty, it is an imperative to look at the outcome and impact of the financial services being delivered to the clients. Mere delivery of financial services without reckoning the development outcome would not serve the objective and there is a danger of financial services getting primacy over the results, - the means becoming larger than the end.
Keeping this in view, INAFI INDIA is keen to pursue the goal of achieving the intended development objective through microfinance services. This calls for identifying and defining the development objectives for the microfinance programmes and thereafter organizes the services to achieve those ends. It is, therefore, important that microfinance services are to be tuned and tailor made to meet the development objectives and INAFI INDIA stands out with this alternative approach in the comity of microfinance practitioners.
Alternative paradigm – Beyond microfinance
The INAFI’s single most important guiding principle for microfinance intervention is to address poverty from holistic development perspective.
Which means microfinance is a cog in the larger wheel of development. The network members would be looking beyond microfinance to address the other issues of poverty – social, cultural, etc. In fact, network members are challenged by the microfinance programmes to respond to the locations specific development issues and problems which have a debilitating effect on the microfinance programmes such as usury or social exclusion issues, etc.
The alternative paradigm of microfinance gets reinforced with practitioners using the opportunity provided by microfinance to weave social sector and other development programmes around microfinance. This alternative paradigm of INAFI fits in well with the poverty school approach visa-a-vis the minimalistic financial intervention only.
The alternative in practice: addressing risks and vulnerabilities and building safety nets
Microfinance practitioners all over the world now recognize that micro credit alone would not be effective and other financial services savings and insurance products are equally critical for poverty reduction. While saving up could insulate to certain extent the clients from the shocks and uncertain happenings, the insurance services provide a comfortable cushion against future emergencies and risks.
INAFI INDIA believes that building social security system through insurance services organized through the linkages with the mainstream companies or on the principle of mutual solutions within the community is quite critical for addressing poverty by providing a safety net.
