Singapore: Springer Singapore, 2022. xxvii, 158 pp. (Tables, graphs, figures, maps.) US$120.00, cloth. ISBN 9789811902161.
Dr. Md Aslam Mia’s Social Purpose, Commercialization and Innovations in Microfinance is a novel attempt to shed some light on the issue of microfinance. Mia is a Bangladeshi-origin scholar who is currently working as a senior lecturer in the School of Management, Universiti Sains Malaysia, Penang, Malaysia. As the title denotes, the objective of the book is to provide a thorough analysis on three different and important aspects of microfinancing, namely; social purpose, commercialization, and innovations.
The distinct banking system of microfinance is a subject of global significance. Imagine a world without such a banking system: annually some 140 million impoverished or nearly impoverished people would lack access to financial capital. Some 600,000 people are directly involved with the micro-finance institutes (MFIs) that deliver financial services to the masses. Microfinance provides loans to the marginalized, voiceless, powerless, landless, and impoverished without any collateral commitments. Bangladesh is considered both a birthplace and laboratory for the proliferation of microcredit. Professor Muhammad Yunus received the Nobel Peace Prize for the contributions of his microcredit approach and the establishment of a new banking system through the Grameen Bank. Though the Grameen Bank and its operating system are the object of both praise and criticism, microfinance has significantly impacted the overall economy of Bangladesh. It added somewhere between 8.9 and 11.9 percent to the country’s GDP, depending on the assumptions made about the working of the labour market. Its contribution to the country’s rural GDP is even higher—between 12.6 and 16.6 percent.
Mia’s study is organized into five main chapters, excluding the prologue and epilogue. The author has made use of several national and global data sources, including the Microcredit Regulatory Authority of Bangladesh, CGAP, microrate, MIX Market, and the World Bank FinDex data, among others. The book makes a significant contribution as it utilizes the latest global microfinance data to delve into the challenges of innovation and other constraints relating to the global microfinance industry. Chapter 1 sets out the context, purpose, justification and organization of the study. Chapter 2 basically deals with the various concepts and purposes related to microfinance and MFIs. This chapter traces the roots of microfinance in Bangladesh during the mid-1970s, a period of economic turmoil following the country’s war of independence. During his interactions with the poor, Dr. Yunus, an economics professor at the University of Chittagong, Bangladesh, realized that most of the poor living in the village of Jobra were trapped in a vicious cycle of debt due to their lack of financial capital for running small-scale businesses. This motivated him to introduce a new bank named the Grameen Bank. As the author observes “The concept of modern microfinance was ignited in 1976, when he [Dr. Yunus] lent his own money (US$27) to 42 women” (18). Mia makes a distinction between microfinance and microcredit. He explains the concept of Islamic microfinance as an alternative to conventional microfinance.
Chapter 3 provides a detailed explanation of the concept of commercialization in the microfinance industry. It examines the various aspects of commercialization, such as funding, interest rates, emergence of profit and non-profit MFIs, lending techniques, legal status, gender, and the lending market. Here the author offers a lucid discussion of the question of regulatory governance in the global microfinance movement. Chapter 4 elucidates the innovations in products and services by MFIs through an examination of experiences from the Bangladesh microfinance industry. Bangladesh has one of the longest histories of microfinance. The industry has transformed not only in “terms of its product innovations, but also its delivery method, which includes mobile and internet banking” (69). This development has contributed to a plethora of related services, including human development training, capacity building, education, health awareness, disaster management, product marketing, and most importantly, information related to basic civil rights. NGOs have become an extensively discussed issue in Third World countries in general and Bangladesh in particular. This chapter documents the experiences of a Bangladeshi NGO, the Bangladesh Rural Advancement Committee (BRAC). Although the Grameen Bank is the pioneer of microfinance in Bangladesh, BRAC is considered one of the largest and most diversified NGOs, not only in Bangladesh but globally.The funding sources for MFIs have experienced twists and turns over the last few decades, with a significant shift in the funding landscape. As a result, over the years, MFIs have become more resilient, adaptable, and efficient as well. These issues are captured in chapter 5, along with an analysis of how various sources of funding affect MFI’s social outreach and financial inclusion agenda. Chapter 6 explains various types of innovations, such as individual lending, the urban market, legal status and gender, among others, all of which were absent during the inception of the modern microfinance industry. This suggests that MFIs need to attain financial sustainability (e.g., covering operational costs) to ensure their continuous services for the poor. Finally, chapter 7 concludes the work with some implications and future research directions. The author notes that the demand for credit will persist in society. Therefore, we have to address the challenges from both national and global perspectives. The functioning of the regulatory framework and bodies are of huge importance in this regard. The author observes that the unavailability of accurate data on microfinance operations is a major obstacle facing academic analysis.
The strength of Mia’s book lies in its comparative discussion and analysis of three significant aspects of the microfinance industry—social purpose, commercialization, and innovation—by drawing insights and information from a global dataset. Further, the book utilizes the local Bangladeshi microfinance experiences to place the analysis in a larger global context. The book would be quite useful to any common reader interested in microfinance. Almost all the South Asian countries have adopted microfinance as a policy framework for poverty eradication, women’s empowerment, human development, and social mobility. For this reason, the book will prove a good reference source for policy makers. However, one weak point for the book is the editing, with grammatical and linguistic errors unfortunately persisting. But despite these minor criticisms, the book will be useful to students of economics, marketing, finance, management, development studies, and social sciences. Aslam Mia deserves congratulations for this book-length study on a topic of global significance.
Saleh Shahriar
North South University, Dhaka