ABSTRACT
The only way to know whether an activity is having an impact is through an impact assessment. But microfinance does not fall into the traditional mold for development projects because, in principle, the good institutions become self-sustaining within three to seven years, are off the public dollar, and no longer require subsidies to provide services. Monique Cohen correctly pointed out in her presentation, donors are still grappling with the issue of justifying the initial use of public sector funds. To justify any initiative in microfinance, the development agencies need to know what they are getting for these funds in the long term. But nothing indicates that microfinance helps poor people stop being poor. Cohen said that impact assessment in microfinance has largely been biased toward institutions rather than clients. Poor clients are borrowing, saving, repaying, and returning to purchase additional services at above-market interest rates.
