THE HELLER SCHOOL FOR SOCIAL POLICY AND MANAGEMENT

BRANDEIS UNIVERSITY

Sustainable International Development Graduate Program

Module 1: “MICRO-ENTERPRISE DEVELOPMENT AND

FINANCE” HS 280f

Spring 2015

Instructors:

Jeffrey AsheFellow Carsey School of Public Policy

University of New Hampshire

Adjunct Associate ProfessorBrandeis, Columbia Universities

Vinod ParmeshwarGlobal Hiring Manager

Oxfam AmericaAdjunct Associate Professor

Brandeis University

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Module 1: “MICRO-ENTERPRISE DEVELOPMENT AND

FINANCE” HS 280f

MAIN POINT OF CONTACT

Professor Jeffrey AsheEmail: jeffaashe@gmail.com

Phone : 617-547-9109Office Hours: Upon Request. I enjoy speaking and

meeting with students and I will hold open office hours throughout the module immediately following the class. These dates will be announced in class. If you would like to meet with me individually at another time, please send an email with your request.

UNIVERSITY NOTICES

1. If you are a student with a documented disability on record at Brandeis University and wish to have a reasonable accommodation made for you in this class, please see me immediately.

2. You are expected to be honest in all of your academic work. The University policy on academic honesty is distributed annually as section 5 of the Rights and Responsibilities handbook. Instances of alleged dishonesty are subject to possible judicial action. Potential sanctions include failure in the course and suspension from the University. If you have any questions about my expectations, please ask.

Academic integrity is central to the mission of educational excellence at Brandeis University. Each student is expected to turn in work completed independently, except when assignments specifically authorize collaborative effort. It is not acceptable to use the words or ideas of another person – be it a world-class philosopher or your roommate – without proper acknowledgement of that source. This means that you must use footnotes and quotation marks to indicate the source of any phrases, sentences, paragraphs or ideas found in published volumes, on the internet, or created by another student. If you are in doubt about the instructions for any assignment in this course, you must ask for clarification.

This course meets from 9:00 AM to 11:50 on January 12th, 26th, February 2nd, 9th, 23rd, March 6th, and 7th. It is open to all students. The syllabus is subject to change. If the instructors need to travel, classes may be rescheduled.

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COURSE INFORMATION

Course description: Despite an avalanche of criticism microfinance still represents a major breakthrough in providing financial services to the poor, even though it is seldom the “silver bullet” to end poverty that was advertised. Thirty years ago a worldwide study of institutions assisting the smallest economic activities of the poor identified only a handful of institutions that served as many as 2,000 clients. Today 200,000,000 are current borrowers from microfinance institutions, but this number may be stagnating as easy to access markets become saturated with borrowers taking out loans from multiple institutions. With that said loans from microfinance institutions have become one of the several tools that those living on two dollars per day or less use to manage their money.

Despite the rapid growth of microfinance over the past three decades and the recent emergence of mobile money to manage money, eight out of ten who could benefit from improved financial services still lack access to them. Most lacking access live in the villages of the world’s poorest countries or are among the poorest living in the slums surrounding towns and cities.

While this course will discuss microfinance and mobile money it will also introduce the class to an emerging methodology that is demonstrating its potential for serving those left out in large enough numbers to make a difference. Instead of creating complex financial institutions that provide services, groups have been trained to manage their own small scale financial institutions. These groups each with about twenty members mobilize their own savings – the poor can save – lend to each other and divide the savings and loan interest among themselves at the end of a cycle, about a year. In Africa this fast growing alternative model has in just seven years grown from one million to 10.5 million villagers more clients than microfinance institutions have reached in thirty years in many countries while reaching a population that institutional microfinance scarcely touches.

This is a class for those who want to learn about the difficult business of delivering services in settings that are impoverished and unstable. There will be more from the trenches war stories than theories as students grapple with the issues of creating large-scale, locally controlled programs that cost little and virally self-replicate. Oxfam America received a major grant from the Gates Foundation to build their Saving for Change Initiative to scale in Mali, Cambodia and El Salvador and Guatemala which will be featured in this class. Until

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March 2013 I led the Oxfam America program. Vinod Parmeshwar was the Saving for Change Deputy Director.

Students will have access to the Saving for Change operational manuals – how to keep records when literacy is nearly zero – and extensive research. One session will be dedicated to students telling their own microfinance war stories whether the outcome of their work was successful or not. What we learn from these experiences will shed light on how to design and implement genuinely useful initiatives within the vast sea of ill conceived, top down, expensive, small-scale, low performing development efforts. Given the state of the world that faces rising population, climate change, collapsing resources, land grabs, policies favoring the rich, corruption, and the reduced will of those with money to constructively mitigate the problems they have unwittingly or purposefully imposed on the world’s poorest we have little time to waste on what does not work. The baton is being passed to you as the next generation of development experts.

What is unique about this class is we will not only talk about issues but in the second module working in small groups you will design your own micro-savings or micro-credit initiatives as you learn the nuts and bolts of effective program design.

Professor Ashe has more than thirty years of experience designing, evaluating and managing microfinance programs with assignments in thirty five developing countries. He founded and directed Working Capital that was for several years the largest microfinance institution in the United States. He was also the Senior Associate Director of Acción International and introduced peer group lending to Central and South America and carried out the first worldwide study of institutions reaching micro-enterprises. The course will draw heavily on his more recent work directing the “Saving for Change” initiative at Oxfam America and the research he carried out in Nepal, India and Zimbabwe that informed the project design.

The second Professor for the course, Vinod Parmeshwar, is the Global Hiring Manager at Oxfam America and was previously the Deputy Director of Community Finance in charge of operations at the field level. Before that he worked for Catholic Relief Services in India where he managed a team and at the Self Employment Women’s Association in India. He also worked for Citibank in India.

Core Competency Statement

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This course teaches concepts and skills that have been identified as core competencies for a degree in SID. The skills developed in these two courses focus on the following core program competencies:

The role of the financial sector in development. The design and implementation of a large scale and well managed

initiative. Project monitoring and evaluation. Designing services to reach the poorest. Understanding program management. Building communication skills through essays, reports and

presentations assigned during the courses.

Sustainable Development Statement

This course relates to the field of sustainable development as follows:

Since the number of the poor is huge and growing effective programs must serve a substantial percentage of the population. Microfinance programs although they have been criticized lately have a demonstrated capacity to reach substantial numbers of clients but emerging technologies both community based – savings groups, and high tech – mobile banking represent breakthroughs in reaching this population.

When women work in groups, bonds of solidarity and mutual assistance and cooperation are developed which provides them more power which impacts on their role within the household, the community and local government

When villagers undertake projects such as those that improve agriculture production increases making it possible to produce more and earn more income and stay on the land.

Gender Perspective Statement

This course incorporates a perspective on gender as follows:

Many programs profiled serve women exclusively or in their majority

When women start a business they have a source of income that they control and this gives them more say in the household and more independence.

Participating in a group and especially becoming an officer develops leadership skills.

Groups are often a platform for education in women’s rights, health and family planning.

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There is a documented link between participating in a group based microfinance program and women’s empowerment and improving their status in the community.

Women participants invest more in education

BASIC APPROACH

Lectures Guest speakers Discussion and small group work Group project and presentation (second module) Assigned readings Final paper

MODULE 1: JANUARY 12 TO MARCH 9 - HS 272f: MICRO ENTERPRISE DEVELOPMENT AND FINANCE:

GRADING

Your grade will be calculated as follows:

Attendance and Participation 15%Midterm 35%Final paper 50%

CLASS SESSIONS

Requirements:

Attendance and prompt arrival at all sessions

Attendance is critical both for classroom discussion and your learning. If you must miss a class (or will be late), please advise me in advance by email at jeffaashe@gmail.com. If you receive an excused absence, I will provide make-up work.

Participate in class discussions and any small group work.

Be prepared to actively participate in the discussion. As a large amount of the learning for this course comes from the readings and from students’ lively conversation, it will be beneficial to actively participate throughout the module. Comments and debate that move the

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discussion forward or that offer fresh insights or thoughtfully unique approaches to the material are highly valued in this course.

Complete readings

This class is interactive and discussion based. Your ability to participate is integral to the quality of the class.

Submit essays, paper and presentations on time.

Due to the fast paced nature of Module courses, it is important for students to submit essays and papers on time. We want to provide feedback on your assignments in a timely manner so that the exercise becomes a learning experience and not reduced to the limitations of coursework.

Respectful Conduct in Class

It is expected that students use questions, dialogue, debate, and the application of frameworks to engage the class in an interactive learning environment. We believe that this will allow for the course to have learning that goes beyond a passive transfer of knowledge in the classroom. As much as we encourage students to voice their questions, concerns and opinions, we ask that students remain courteous to each other’s learning process, opinions and style.

Please note that we request that laptops not be used during class except when required for in-class assignments. This is to ensure that all students are fully engaged in class discussion and lecture. Also, please also turn off all cell phones.

COURSE READINGS

Class readings will be posted on Latte. You will also find a section of links to help with your final papers and your academic inquiry into microfinance.

SUBMITTING ESSAYS AND THE FINAL PAPER

Unless otherwise specified, all assignments are due on the stated date at 10 pm.

February 9 Midterm Due

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February 16 A one-paragraph to one page proposal on the final paper.

February 23 A first draft for detailed comments and feedback.

March 8 5-8 slide presentation on your final paper due Sunday at noon.

March 9 Final paper submitted via email to jeffaashe@gmail.com before the start of our last class.

Guidelines for the Midterm:

Students are expected to complete a two to three page, 12pt font, single spaced essay for the midterm. This essay is meant to help you capture your understanding of the financial inclusion sector through the sources provided from class. It is important to include what have you learned or found interesting to this point and what are the implications of these findings for your career and work.

Students should make reference to at least 5 readings or sources in the body of their text. No formal citation format is required for the midterm, however you must clearly identify the source to which you are referring. You will be graded on both on your synthesis of the articles and how well you have articulated how the readings have helped your understanding of the topic.

The grading rubric for the midterm will be as follows:

4 Outstanding3 Above Average2 Average1 Marginally Acceptable

Please submit your midterm in a Word document via e-mail to Professor Parmeshwar at vparmeshwar@oxfamamerica.org and CC Professor Ashe at jeffaashe@gmail.com Paper copies or PDF versions will not be accepted.

FINAL PAPER:

Please note that there are five components to the Final Paper which should be addressed to jeffaashe@gmail.com:

1. Brief 2-3 sentence summary of the final paper concept to the class (on February 9th)

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2. A one paragraph to one page concept note on your final paper (due February 16th)

3. First Draft (due February 23th)4. Final Presentation on March 9th (5-8 slides submitted to

jaashe@gmail.com by noon on March 8th)5. Final Paper (due at 9am on March 9th)

Paper Copies and PDF versions will not be accepted.

The final paper will focus on a major issue or topic in microfinance. Some students may choose to design a microfinance program or to access a program they have been associated with prior to Heller. Others might choose an issue such as impact, or management, or methodology, or how to bring financial inclusion to the ‘bottom of the pyramid’ (BOP).

The page guideline is between 10 and 15 single spaced pages. It is important to provide details and make reference to what you have read or learned in class. If you need help searching for a topic, look through the resources available on LATTE. Professor Ashe will also be available during office hours to help students with ideas for their papers. Please use APA for your citations in the Final Paper. For reference, please review Purdue’s OWL formatting guide.

Students will also be asked to share the topics of their paper in a 5-8 slide presentation on the last day of class. Presentations should not exceed 10 minutes in length.

CLASSES

January 12 CLASS I

The Development Challenge: The “Informal Sector.” The Role of Traditional Revolving Savings and Credit Associations

(ROSCAS) and Moneylenders and what Traditional Institutions imply for the Design of Microfinance Initiatives.

Review of Class Requirements and Syllabus

Student Introductions: Name Country Experience in microfinance, financial inclusion and/or international

development

Traditional Saving and Lending:9

There may be as many as a billion microenterprise and subsistence small farms in the world. In many countries the needs of the vast majority of those not served by institutions are met by ROSCAS (revolving savings and credit associations), moneylenders and middlemen and traders who buy and sell their goods. What do these traditional institutions tell us about the design of effective programs?

Class Discussion: Describe how a ROSCA works. What needs do ROSCAS address? Why are ROSCAS so common throughout the world?

Small Group Discussion: What are the strengths of ROSCAS? What are their limitations? What changes would make a ROSCA better able to serve the needs

of poor rural women? What do traditional ROSCAS tell us about the characteristics of

microfinance programs that can best meet the needs of the poor?

The five models of Microfinance:

Credit led Grafting Savings led Self-help groups linked to banks Mobile money

Pre-Class Reading:

Please read in its entirety ‘The Poor and their Money’ by Stuart Rutherford (available on LATTE)

January 26CLASS II

Financial Inclusion

Small group discussion. Each of the five groups focuses on one model presented in the first class

What are the strengths and weakness of the model you have been assigned

For what population is each model most appropriate Report out – each of the five groups reports out on one of the

five models10

Moneylenders:

What needs do moneylenders address? How does money-lending work? How do moneylenders select those

who they will work with? Determine how much to lend them? Set loan terms? Insure loans are repaid? What interest rates do they charge?

What are the advantages of access to moneylenders for the poor? What are the disadvantages?

What do the ways moneylenders work tell us about the design of microfinance programs that can best meet the needs of the poor?

High Performance and Low Performance Projects:

Based on your discussion of the workings of ROSCAS, Moneylenders and Traders and your analysis of the five major models of microfinance what are your observations on the following questions?

What would a high performance project look like? What are its characteristics? Class quickly lists the characteristics of high performing credit and savings programs

Small Group Work:

Each small group will be assigned two or three of the points raised above and be asked to change an initiative that is performing poorly in each of these areas to one that is performing well. Groups will then share their strategies for improving performance.

Pre-Class Reading:

David Roodman’s Due Diligence. Please read chapters 1-5 (See LATTE for access to readings)

February 2: Class III

Building Microfinance to Scale

PRESENTATION:

The “Laws” of Microenterprise Development The “Laws of Microfinance Project Management Efficient, efficient, expanding programs

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The Microfinance Story – PISCES to modern microfinance – taking an idea to scale

RCPB – Successful implementation of the grafting model – experience from Working Capital – credit led microfinance in the USA

Pre-Class Reading (also posted on LATTE):

Hugh Sinclair’s post on Next Billion: ‘The Kiva Fairytale’ Please browse the site of Pro Mujer and read Delivering

Integrated Services to the Rural Poor Banco Compartamos Documentary on PBS NOW (we will view

this in class) David Roodman’s Due Diligence. Please read chapter 6-9

February 9Class IV

Introduction to ‘Saving for Change’

Students share topics for their final papers (first draft will be due on February 16th) and have the opportunity to present their microfinance experience to the class.

Overview of Oxfam America’s Saving for Change Initiative:

How Saving for Change grew to 650,000 group members in eight years.

Discussion of design issues:

Saving for Change incorporates the lessons of all these initiatives and adds:

Simplified written records Simplified oral record keeping Pictographic manuals The evolving model of service delivery Increased emphasis on spontaneous replication and replicating

agents Addition of training modules – “the sustainable prosperity package.” A defined exit strategy What is next

Pre-Class Reading:

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Please read the first four chapters of ‘In Their Own Hands: How Savings Groups are Revolutionizing Development.’

Feb 23 Class V

Professor Parmeshwar Training Simulation

Introducing SfC to a village Training a Savings Group

PreClass Reading:

Please finish reading ‘In Their Own Hands’ to prepare for the simulation.

March 2Class VI

Professor ParmeshwarMeasurement and Tracking

Tracking performance – why is it important Management of an information system

PreClass Reading:

SSIR: Getting Results: Outputs, Outcomes and Impacthttp://www.ssireview.org/blog/entry/getting_results_outputs_outcomes_impact

SSIR: The Strategic Plan is Dead. Long Live Strategy http://www.ssireview.org/blog/entry/the_strategic_plan_is_dead._long_live_strategy

Suggested Reading: SSIR: Measuring Social Impact:

http://www.ssireview.org/blog/entry/are_you_david_not_goliath

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March 9CLASS VII

Last Class of Module I

Student Presentations on Final Paper

‘Hot Seat’ Professor will answer all of your questions about microfinance (details will be provided)

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