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This is Daniel.

He is the Chief Executive of DUMFI.

DUMFI is the country’s finest MFI. It is widely admired throughout the country and internationally for its sustainability, the scale of its operations and for its outreach to the poor.

But today Daniel is depressed. He has been reading the news, and is beginning to think they have got it all wrong. He turns to look at the seven golden rules which are still written on the office whiteboard after yesterday’s staff induction session.

  1. Maximise outreach; especially to the rural poor and women.
  2. Insist on savings first; clients must learn to save before they can borrow.
  3. Charge market interest rates; sustainability is the key to growth.
  4. Lend for productive purposes; income-generation is the way out of poverty.
  5. Insist on 100% recovery; delinquency is the hidden virus of microfinance.
  6. Mobilise social pressure; use group guarantees to replace collateral.
  7. Recruit well qualified staff, and reward performance with financial incentives.

They follow all these principles in DUMFI and last year they received a high rating from the Microfinance Rating Agency. How could things be going wrong?

Let’s see what Daniel had been reading…