Spl article: Mobile banking for microfinance & inclusive growth

By Souren Ghosal

Microfinance Focus, March 11, 2010: There is no doubt that the most popular mandate in developing countries is to outreach poor by creating employment opportunities and providing financial support to the poor through state interventions.  Obviously such intermediation often fail to reach the poor as these intermediaries floated by the state are loaded with bureaucrats and politicians who are more prone to exploit the poor and ignorant rather than to outreach the bottom of the pyramid and or to hold their hands in running their farms or firms and to provide succor to overcome calamities they often encounter. Indeed it is widely held view that rural micro- entrepreneurs are not capable to organize themselves to conceive, run and bear risk of any sustainable economic enterprises and therefore they need support and hand holding by the state government and or economic institutions promoted and run by the state and people (PPP). No wonder that state policies and programs for alleviation of poverty are all routed through state political and economic institutions.

It is an irony that in practice it has been observed that such intermediation has failed to outreach bottom of the pyramid as because these institutions are found in practice keener to fill their pockets rather than provide succor and support to the poor.  Seibel and Parhasib and Benjamin and Piperek in their research studies (1990 & 1997) have brought out very vividly that the traditional approach of funding the bottom of the pyramid only through state intervention as has been generally practiced due to perhaps the influence of Keynes’s theory of state intervention to prop up the economy need not only revisiting but also rewriting. In fact doles and subsidies provided by the state not only fail to reach through such intermediation by the state but on the other hand weakens the self confidence and initiative of the poor and make them more and more dependent on the state as if state is next to god to ameliorate their misery and poverty. These obviously over the years have made them laggards and fatalistic….

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