III.7.2- The debate between the institutionalists and
welfarists
The growing emphasis on the financial sustainability and
efficiency of MFIs is believed to reduce the scope for the social objectives
and outreach to microfinance clients. Consequently, a debate on the assessment
of the performance of MFIs has emerged between the institutionalists and
welfarists13.
In 2009, Gutiérrez-Nieto et al. claimed that the
institutionalists appear to have the upper hand in the debate. In general,
«each position differs in their views: (1) on how microfinance services
should be delivered (NGO versus commercial banks), (2) on the technology that
should be used (a minimalist approach versus an integrated service approach),
and (3) on how their performance should be assessed» (Olivares Polanco,
2004, p. 3).
Institutionalists believe that the performance of a MFI should
be assessed in terms of the institution's success in reaching a financially
self-sustainable position. According to Rhyne (1998, p. 7), «the
sustainability group argues that any future which continues dependence on donor
and governments is a future in which few microfinance clients will be
reached». According to Hermes et al. (2007), the commercialization of MFIs
is believed to ensure the growing amount of commercial funding, ensuring and
enhancing the future outreach to new microfinance clients around the world.
Also, Rhyne (1998) and Olivares-Polanco (2004) reported that the
institutionalists' approach combines financial sustainability with (breath of)
outreach objectives. Institutionalists aim to provide access to financial
services to the full spectrum of low-income people living around the world.
Nonetheless, Schreiner (2002) recognized that the self-sufficiency approach is
believed to target less poor clients.
Welfarists believe that the performance of a MFI should be
assessed by determining whether the institution is successful in reaching its
poverty alleviating objectives. Olivares-Polanco (2004) stressed that a key
advantage of the welfarists' approach is the opportunity to gain a direct
insight in the poverty alleviating potential of microfinance. Olivares-Polanco
(2004, p. 6) reported that «the methods used by the welfarists assesses
the impact of the programme on their clients, by measuring changes in dependent
variables such as the level of income, the level of production, sales, assets
or the general wellbeing of the clients». According to Schreiner (2002),
the welfarists ?approach is expected to target the very poor clients, compared
to the less poor clients targeted by the institutionalists» approach.
13 Yaron (1994), Morduch (2000),
Schreiner (2002), Olivares-Polanco (2004), Hermes, Lensink & Meesters
(2007), and Gutiérrez-Nieto, Serrano-Cinca & Mar Molinero
(2009).
Analysis of microfinances' performance and
development of informal institutions in Cameroon
By Djamaman Brice Gaétan
Alternatively, some are advocating the win-win proposition of
microfinance. For example, Yaron (1994) proposed a framework combining the
assessment of the financial self-sufficiency and outreach of MFIs. One the one
hand, the author argues that state support and donations are a fundamental
source of resources for newly established MFIs initially facing a negative cash
flow. On the other hand, the author argues that the mobilization of savings is
fundamental in the support of the expansion of more mature MFIs, allowing for
less government support and donations. Also, «one key to success appears
to be the introduction of a social mechanism that lowers transaction costs,
while supplying effective peer pressure for screening loan applications and
collecting loans», according to Yaron (1994, p. 68).
In addition, Morduch (2000, p. 617) states that for the
win-win proposition «a key tenet is that poor households demand access to
credit, not cheap credit». The author identifies a number of assumptions
underlying the win-win proposition. First, raising the costs of financial
services will not negatively affect the demand of microfinance. Second,
financially sustainable MFIs can achieve a greater scale and outreach than
subsidized MFIs. Third, subsidies reduce the scope for savings mobilization.
Fourth, financial sustainability is critical for the access of MFIs to
commercial financial markets. Fifth, «microfinance has been and should
continue to be a movement with minimal governmental involvement» (Morduch,
2000, p. 624).
46
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Analysis of microfinances' performance and
development of informal institutions in Cameroon
By Djamaman Brice Gaétan
CHAPTER IV- RESEARCH METHODOLOGY
After the appearance of theoretical perspectives, this chapter
will enable us in turn to define the indicators and variables necessary for our
analysis. Thereafter, we will proceed with the analysis of the research
hypotheses and the model associated with this assumption
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