Maybe Consumer Goods Aren’t Such a Bad Thing

> Posted by Danielle Donza
Four days after taking on David Roodman in DC, Dr. Milford Bateman travelled north where the Boston Microfinance Club invited him to debate Dr. Guy Stuart, an independent consultant and Senior Advisor at Microfinance Opportunities. The point that resonated most with me was this question: Maybe consumer goods aren’t such a bad thing.
Milford made the argument that many microfinance loans are being used for consumption, say a TV, which immediately made me cringe. Consumption often has a bad name as an unproductive use of funds.
But then Guy jumped in and unpacked consumption for us. Yes, there is consumption in the form of alcohol, cigarettes and gambling, and we can all agree that is not a desirable use of microfinance loans. Yet, Guy, who has done countless financial diaries with microfinance clients, points out that money is fungible. So, if a client uses some of loan to buy a consumer good, such as a TV, and uses some of the loan to improve her business, as long as she is able to pay off the loan with interest, then who’s to say consumption is such a bad thing? That TV has now provided the client with 1. A source of information/education, 2. Status in the community, 3. An asset, and 4. Improved quality of life.
The moderator, Professor Kim Wilson of the Fletcher School, concurred that we need to stop putting moral judgment on clients’ use of funds. If clients think it is important to buy a TV to watch Bollywood films, well, then, that is an improvement in their quality of life and not something the microfinance industry should deem wrong, especially as we huddle around our own TVs at night to watch American Idol.
Image credit: Milford
Have you read?
‘Rethinking Multiple Borrowing’ – Daniel Rozas Blogs on MF Focus
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Dispatch from the Field: Loan Officer Incentives – A Delicate Balancing Act

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