Impact of microfinance on education in sub-Saharan Africa
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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 sub-Saharan 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
- 3. Increase income Access to Invest in Lift out of microfinance the future poverty Increase education, health, etc. 3
- 4. Especially Invest in the if available Improvement future to women in education 4
- 5. DFID-funded systematic review Review question given Paper or plastic?
- 7. Extensive searching & 2-staged screening 6 000 Microfinance 336 69 35 Comparative Sub-Saharan evaluations Africa of the impact on the poor 15 7
- 8. Coding 8
- 9. From http://www.zazzle.co.uk/worlds_bestest_appraiser_tshirt-235669736717655238 9 Quality appraisal From http://runningagile.com/category/esther-derby/
- 11. Synthesis 11
- 12. development From http://copyprints.blogspot.com/ Causal chain 12
- 13. Peer-reviewed published report Available at http://www.dfid.gov. uk/r4d/PDF/Outputs/ SystematicReviews/M icroFinance_FOR+WE B%5B1%5D.pdf 13
- 15. Details of our 15 included studies • 4 RCTs 2 quasi-experimental studies 9 with/without studies • 11 = microcredit, 2 = savings, 2 = combined credit & savings • Ethiopia, Ghana, Kenya, Malawi, Madagascar, Rwanda, South Source: Per Herbertsson Africa, Tanzania (Zanzibar), Uganda & Zimbabwe • Rural & urban initiatives
- 16. Scope of the evidence-base RCTs Quasi-exp With/without Micro-savings 2 - - Micro-credit 2 1 8 Micro-credit & - 1 1 savings 16
- 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
- 25. From http://indieintertube.tv/static/episode-length-how-long-should-you-go/#axzz1gSMCYo00 Length of time within micro-credit programme decreases children’s enrolment • Gendered impact: in Zimbabwe on-going borrowing reduced children’s enrolment in school; proportion of household’s girls aged 6 to 16 in school decreasing more for continuing clients than for departing clients & non-clients 25
- 26. 26
- 27. “Credit is like a fire: it is useful to cook your sadza but if you are careless, it will burn your hut.” 27
- 28. Figure from http://www.deathandtaxesmag.com/156359/can-microfinance- save-the-world/
- 29. Causal pathway analysis Source: Per Herbertsson 29
- 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
- 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
- 42. Your thoughts?
- 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
Editor's Notes
- 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