[From Savings Revolution blog, 21 December 2013]
Being a relative newcomer to the field of microfinance, I have been a spectator to the microcredit boom and bust. I do wonder what made the notion of having poor people live in perpetual high-cost debt such an irresistible concept for so many people. How did it get so over-hyped? In a recent post in this blog, Paul Rippey feared this kind of triumphalist over-hyping taking over the sub-culture of savings groups, asking people to shut their marketing mouths, at least some of the time.
Now I fear that another kind of hype boom and bust may happen in the area I have been working on: mobile money and branchless banking. Let me be precise: my issue is not so much overhyping of the potential of mobile money, but of the pace of growth and impact on the ground. It’s only natural that progress be slow, the Kenyan experience notwithstanding: retail payment systems and cash in/out networks are costly and operationally complex to build.
But what exactly compels the burgeoning mobile money support industry to project a stretched view of reality? I can identify five specific mechanisms.
1. Social media’s love of success stories. Social media offer low-cost mechanisms for individuals and organizations to build brands around specific topics. This creates much volume of content, much of it unfiltered. At the very least, social media act as an unfettered amplifier of conventional wisdoms. More perversely, social media sites often have a bias towards positive stories: many blog editors are not interested in analysis and nuance as much as in showcasing successes and promoting best practices. Eager writers, take note. Moreover, the pressure to express success stories briefly are an open invitation to create sound bites by selective quoting of numbers, out of context and proportion. These sound bites can take a life of their own through repetition across the numerous conferences and fora.
2. Donors acting as project promoters. Many donors think of themselves increasingly as venture capitalists: investing money in select projects which may become catalytic examples. That they become more selectively and deeply engaged is good, they gain a better understanding of business realities. The downside is that they have every incentive to use their voice in public, professional and social media to talk up their projects, not only with the crass objective of basking in reflected glory, but to maximize the possibility of success of their investees. Higher-profile projects will find it easier to recruit good people, raise funding, close deals with important partners, etc. It’s hard to reconcile being both a venture capitalist and an impartial observer.
3. Developmentalists and technologists seeking silver bullets. The spread of new technologies gives wings to those who think that change can happen quickly. Small developments on the ground may be taken as ink-blot-like indications that we are approaching the vertical part of the adoption “S” curves which we have become so used to in the internet age. Except, alas, that other things always seem to get in the way. Today’s mobile money, which is built around retail payments with strong network effects, is too dependent on all-or-nothing type of scale. Middling success is hard to imagine, so any progress is easily interpreted as inertia towards full success.
4. Money corrupts content. When much of the industry depends on donor money, justifying old money and asking for new requires that even small successes be trumpeted beyond proportion. In the area of financial inclusion we are also seeing major corporate PR machines engaging, driven more by a corporate social responsibility (CSR) interest than a direct commercial concern. Spinning stories becomes an objective in its own right.
5. The modern business school culture of being always positive and enthusiastic. Must one really be so enthusiastic about everything that one does, as if it was the most important thing? Must passion be measured by how optimistic one is? Is it so unbecoming to have doubts about what one does? I certainly don’t, I declare myself an impatient pessimist. The pessimism is what gives me the sense that we can’t just carry on doing what we are doing today, that we have to find a better way. But oftentimes it’s easier to fit into donor or NGO cultures if you project the image of total conversion to the cause.
The sad part of overhyping a particular model or solution is not the consequent bursting of the bubble – let them who caused it deal with it. It is the fact that those caught within it come to see their solution as all-encompassing. In the appetite to hog sound bites, donor funding and adulation, it becomes their solution against any other. But in reality our solutions will always fit into and support a variety of other solutions – yes, even M-PESA.