II.1- Welfarists and Institutionalists approaches
Microfinance is a means to fight against poverty in developing
countries, through the financing of income-generating activities for poor
households. However, the best way to help the poor gain access to financial
services welfarists opposes the approach to that of institutionalists. Although
they share the goal of poverty reduction, these two approaches put microfinance
in the Crossroads.
The welfarists are based on the theory of social
responsibility vis-à-vis the customer to meet its expectations (Carroll,
1979; Servet, 2007). This school of thought evaluates the performance of MFIs
in terms of the customer through the social (outreach) and impact analysis
(impact assessment): it targets the poor whose incomes are 50% lower the
poverty line ($ 1 per day) and aims to improve their living conditions. It is
composed mainly of supportive institutions NGOs or cooperatives that see
microfinance as a key means to reduce poverty of the poorest. Despite its
emphasis on the rational management of resources and does not exclude that MFIs
can conduct a profitable business after a period of 5 to 12 years, this school
of thought advocates an offer financial services at rates interest and a
relatively low reliance on subsidies.
The institutionalists rely more on contract theory, which
considers that incomplete contracts can lead to opportunistic behavior of
applicants for credit (and Guinanne Ghatak,
14
Analysis of microfinances' performance and
development of informal institutions in Cameroon
By Djamaman Brice Gaétan
1999). The institutionalists evaluate the performance in terms
of the institution by targeting a clientele of poor households and to the
financial sustainability of MFIs. They designed a set of "best practices"
(Appendix 1) bank-bank to increase the effectiveness of management systems
(finance and accounting, marketing, service delivery, etc), whose adoption is a
step essential to achieving financial self-sufficiency in industrial scale and
access to financial markets. They consider financial independence as a
criterion that best fulfills the social mission. They are essentially financial
institutions: either specialized microfinance institutions regulated (NGOs,
NBFIs and microcredit associations) that falls clearly within the realm of
profitability or village banks and some commercial banks that are more
traditional recently involved in microfinance.
The respective approaches of welfarists and institutionalists
have the subject of a number of criticisms. The first approach faces the
problem of viability and sustainability induced by subsidies, low reimbursement
rates and rising operating costs, the second approach a customer micro
entrepreneurs very close to the poverty line ($ 2 per day) which are applied in
interest rates high enough to ensure the financial autonomy of MFIs. This
"microfinance schism" (Morduch, 1998) refers to the tradeoff between targeting
the poor and profitability of MFIs.
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