Microfinance has had mixed and sometimes negative impacts on education in sub-Saharan Africa according to a systematic review. While micro-savings programs have positively impacted education for some, microcredit has been found to both increase and decrease household education expenditures. Two studies showed microcredit reducing school attendance, particularly for girls. Length of time in a microcredit program also decreased children's school enrollment. The evidence suggests microfinance should not be solely relied upon to improve education and its promotion requires a cautious approach focused on those most likely to benefit.
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Impact of microfinance on education in Africa
1. The impact of microfinance on
education in sub-Saharan
Africa: A partnership project
with the Institute of Education
INSTITUTE OF EDUCATION SYMPOSIUM ON EDUCATION AND
DEVELOPMENT, 14 December 2011
Source: Per Herbertsson
Carina van Rooyen, Ruth Stewart
and Thea de Wet
18. Findings – how does microfinance
impact on education?
Credit Combined Savings
credit and savings
MAYBE NO YES
gender difference negative (1) positive (1)
no effect (1)
positive (2)
mixed (2)
negative (1)
no effect (1)
18
19. Specific
paper
findings
* High quality studies 19
20. Photo from http://vishwasaha.wordpress.com/category/yoga/
There is some evidence for positive impacts but
worryingly there is also evidence that microfinance
does harm by negatively impacting on the education
of clients’ children, especially girls 20
21. Savings provision to AIDS-orphaned
young people in Uganda has been
shown to increase their intention to
Photo by Martin Godwin, http://www.guardian.co.uk/katine/katine-chronicles-
attend secondary schooling, & their
certainty that these plans will come to
fruition. These young people also did
significantly better in Uganda’s
Primary Leaving Examinations than
control group (Ssewamala et al 2010)
blog/2010/aug/19/katine-finance-saving
21
22. Evidence for micro-credit’s impact on
household’s expenditure on education is
contradictory:
(1) two studies show increased household’s
expenditure on children’s education;
(2) two studies find no such effect;
(3) one study finds mixed results with varied
positive & negative impacts on
expenditure on education depending on
the region
22
23. On school attendance two studies found
reduced attendance amongst micro-credit
clients
Data from Malawi shows that micro-credit significantly
decreases primary school attendance amongst
borrowers’ children
Noteworthy gendered impact: repetition of primary grades in
young boys & delayed or lack of enrolment for young girls
In Uganda (high quality study) client households were
significantly more likely to have been unable to pay
school charges for one or more household members for
at least one term during previous two years, hence
children had to drop out of school 23
24. But micro-credit does not appear to increase
child labour, so we presume children are not
being taken out of school to work, but because
clients have difficulties paying school expenses
24
30. What we now think is happening
Use other MFI
Social cohesion
Use same
MFI Micro-credit Micro-savings
Women’s
empowerment
Given to individuals or groups
Able to repay loan
Default on loan, Able to
and avoid increase
lose collateral save Long-term
in debt
and/or forced to Spend money differently benefits
borrow more
1.
Actual decreased Actual increased Invest in
income income immediate 2. Consumptive 3.
future: spending with Invest in long-
scope for term future: 4. Consumptive
a. Business spending (non-
productivity:
b. Productive a. Children’s productive):
Determined by external assets a. Add on education
factors: housing Assets which do
c. Adult b. Children’s not retain value
Entrepreneurial ability education b. Assets which health and
d. Workers’ retain value nutrition
Appropriateness of
business in context health &
nutrition
Competition from other
MFI clients Scope for increased
income via business
Gender and power FOR CREDIT CLIENTS ONLY
or employment Improved capabilities
relations Inability to repay loan
Better able to deal with shocks
30
31. What we now think is happening
Use other MFI
Social cohesion
Use same
MFI Micro-credit Micro-savings
Women’s
empowerment
Given to individuals or groups
Able to repay loan
Default on loan, Able to
and avoid increase
lose collateral save Long-term
in debt
and/or forced to Spend money differently benefits
borrow more
1.
Actual decreased Actual increased Invest in
income income immediate 2. Consumptive 3.
future: spending with Invest in long-
scope for term future: 4. Consumptive
a. Business spending (non-
productivity:
b. Productive a. Children’s productive):
Determined by external assets a. Add on education
factors: housing Assets which do
c. Adult b. Children’s not retain value
Entrepreneurial ability education b. Assets which health and
d. Workers’ retain value nutrition
Appropriateness of
business in context health &
nutrition
Competition from other
MFI clients Scope for increased
income via business
Gender and power FOR CREDIT CLIENTS ONLY
or employment Improved capabilities
relations Inability to repay loan
Better able to deal with shocks
31
32. What we now think is happening
Social cohesion
Micro-credit Micro-savings
Women’s
empowerment
Given to individuals or groups
Spend money differently
32
33. What we now think is happening
Use other MFI
Social cohesion
Use same
MFI Micro-credit Micro-savings
Women’s
empowerment
Given to individuals or groups
Able to repay loan
Default on loan, Able to
and avoid increase
lose collateral save Long-term
in debt
and/or forced to Spend money differently benefits
borrow more
1.
Actual decreased Actual increased Invest in
income income immediate 2. Consumptive 3.
future: spending with Invest in long-
scope for term future: 4. Consumptive
a. Business spending (non-
productivity:
b. Productive a. Children’s productive):
Determined by external assets a. Add on education
factors: housing Assets which do
c. Adult b. Children’s not retain value
Entrepreneurial ability education b. Assets which health and
d. Workers’ retain value nutrition
Appropriateness of
business in context health &
nutrition
Competition from other
MFI clients Scope for increased
income via business
Gender and power FOR CREDIT CLIENTS ONLY
or employment Improved capabilities
relations Inability to repay loan
Better able to deal with shocks
33
34. Given to individuals or groups
Long-term
Spend money differently benefits
1.
Invest in
immediate 2. Consumptive 3.
future: spending with Invest in long-
scope for term future: 4. Consumptive
a. Business
productivity: spending (non-
b. Productive a. Children’s productive):
assets a. Add on education
housing Assets which do
c. Adult b. Children’s not retain value
education b. Assets which health and
d. Workers’ retain value nutrition
health &
nutrition
d
s
FOR CREDIT CLIENTS ONLY
Improved capabilities
Inability to repay loan
Better able to deal with shocks
34
35. What we now think is happening
Use other MFI
Social cohesion
Use same
MFI Micro-credit Micro-savings
Women’s
empowerment
Given to individuals or groups
Able to repay loan
Default on loan, Able to
and avoid increase
lose collateral save Long-term
in debt
and/or forced to Spend money differently benefits
borrow more
1.
Actual decreased Actual increased Invest in
income income immediate 2. Consumptive 3.
future: spending with Invest in long-
scope for term future: 4. Consumptive
a. Business spending (non-
productivity:
b. Productive a. Children’s productive):
Determined by external assets a. Add on education
factors: housing Assets which do
c. Adult b. Children’s not retain value
Entrepreneurial ability education b. Assets which health and
d. Workers’ retain value nutrition
Appropriateness of
business in context health &
nutrition
Competition from other
MFI clients Scope for increased
income via business
Gender and power FOR CREDIT CLIENTS ONLY
or employment Improved capabilities
relations Inability to repay loan
Better able to deal with shocks
35
36. Able to repay Given to indiv
Default on loan, Able to
lose collateral loan and avoid
save
and/or forced to increase in debt Spend mon
borrow more
1.
Actual decreased Actual increased Invest in
immediate Co
income income s
future:
w
a. Business
b. Productive pro
Determined by external
assets
factors: a
c. Adult
Entrepreneurial ability education
Appropriateness of b
d. Workers’
business in context wh
health &
Scope for
Competition from nutrition
increased income
other MFI clients
via business or
Gender and power Improved capabi
employment
relations Better able to deal wi
36
37. Use other MFI
Use same
MFI
Micro- Mic
credit sav
Given to individuals or groups
Default on Able to repay
loan, lose Able to
loan and avoid
collateral save
increase in debt
and/or forced Spend money differently
to borrow
more
Actual
Actual increased 1.
decreased 2. 37
income Invest in
income Consumptiv
38. What we now think is happening
Use other MFI
Social cohesion
Use same
MFI Micro-credit Micro-savings
Women’s
empowerment
Given to individuals or groups
Able to repay loan
Default on loan, Able to
and avoid increase
lose collateral save Long-term
in debt
and/or forced to Spend money differently benefits
borrow more
1.
Actual decreased Actual increased Invest in
income income immediate 2. Consumptive 3.
future: spending with Invest in long-
scope for term future: 4. Consumptive
a. Business spending (non-
productivity:
b. Productive a. Children’s productive):
Determined by external assets a. Add on education
factors: housing Assets which do
c. Adult b. Children’s not retain value
Entrepreneurial ability education b. Assets which health and
d. Workers’ retain value nutrition
Appropriateness of
business in context health &
nutrition
Competition from other
MFI clients Scope for increased
income via business
Gender and power FOR CREDIT CLIENTS ONLY
or employment Improved capabilities
relations Inability to repay loan
Better able to deal with shocks
38
39.
40. Some of our recommendations
Microfinance not to be
promoted as means of
improving education in SSA
Microcredit rolled out with
caution & focussed carefully
on those most likely to
benefit
The rhetoric to be scaled
back & wild claims
challenged
41. More (especially on micro-savings) and
better impact evaluations of microfinance
From http://www.verylol.com/wash-when-dirty-1218/
Ongoing discussion of how to deliver
pragmatic systematic reviews for
international development
41
43. Contact us:
cvanrooyen@uj.ac.za
Source: Per Herbertsson
r.stewart@ioe.ac.uk
Presentation online at
http://www.slideshare.net/carinavr 43
44. Acknowledgements
Photos acknowledged on slides
The impact of microfinance on education in SSA by
Van Rooyen C et al is licensed under a Creative
Commons Attribution-NonCommercial-ShareAlike
3.0 Unported License
Notes de l'éditeur
Photo of Africa from
Searched in three specialist systematic review libraries, 18 electronic online databases, the websites of 24 organisations and an online directory of books. We also contacted 23 key organisations and individuals requesting relevant evidence, conducted citation searches for two key publications and searched the reference lists of initially included papers.Searches provided over 6 000 hits; reduced to 383 ‘probably relevant’ reports based on their abstracts. Full texts sought & 336 were collected & screened for second time. Identified 69 studies on SSA which evaluate impact of microcredit and/or micro-savings on poor. Then down to 35 which had comparison group.Explicit & justified criteria for inclusion or exclusion of any study.
Add pick from EPPI Reviewer 4
Had 35 studies when started; ended with 15 included studies of high and medium quality (20 excluded either dueto poor reporting, poor methodology or both).
According to income outcomes, other wealth indicators, and other outcomes for the poor.
Analysed data using two approaches: identification of whether micro-credit or micro-savings were having positive, negative, varied or no effects on the lives of poor people; and narrative synthesis of qualitative findings.
Expect questions re selection/placement biases in the 9 simple comparison studies.Details of the included studies 35 studies which compare the impact of having a loan or a savings account with not having either. 11 studies were medium quality and 4 high quality. These 15 studies were considered ‘good enough’ quality and included in the in-depth review.
3ie’s quality standards for inclusion in its impact evaluation database: “Quality evaluations employ either experimental or quasi-experimental approaches.”EPPI-Centre is one of specialist methodology centres around the world exploring and extending SR methods to consider other types of evidence to address complex questions, interventions and outcomes.
9 studies dealt with impact on MF on education outcomes of the poor. Over simplified: Actually some studies include both credit and savings (lost subtlety) Different levels of impacts – on households, business and individual
As early as the 1960s, when inaugurated the credit union movement to provide loans to the poor in Zimbabwe, he acknowledged “Credit is like a fire: it is useful to cook your sadza but if you are careless, it will burn your hut.” (Brother Waddelove in Raftopolous & Lacoste 2001:35).
Reminder of conditions of micro-credit – high interest rates and frequent repayments = need to make a profit and quicklyRe micro-savings – encouraged to save, but often at a cost (fees to withdraw money)
Could also add behaviour to purple box as an external factor shaping outcomes
“I think an honest appraisal of the current state of the evidence is that we simply do not know whether microcredit raises incomes and consumption. If the case for microfinance depended on whether it was lifting people out of poverty, then the appropriate response right now would probably be to declare a moratorium on support for microfinance until further research clarifies this question more.” ~ Rosenburg 2009 on CGAP website