Microfinance has emerged as one of the leading solutions to address global poverty. The sector’s pioneer, Muhammed Yunus, was honored with the Nobel Peace Prize in 2006 for his work over decades to extend financial services to the poor. Since the birth of the microfinance movement in the late 1970s, tens of millions of impoverished households have received small loans enabling them to start or expand small-scale businesses and create a better future for their families. In the world today, roughly 1,200 microfinance institutions serve 72 million people — mostly women.

India is the world’s largest and fastest growing market for microfinance. Here, microfinance has been a powerful tool in helping alleviate poverty by providing money to help the poor earn a living or tide them over at a time of hardship. The money, for instance, might help buy raw products to make soap, or sewing machines to make clothing, or pay for medicine.

Middle Managers — Microfinance’s Backbone

Microfinance middle manager works with CCL's Visual Explorer cards.Microfinance is a high-volume and high-touch business that operates in far-flung rural areas where most of the poor reside. At the heart of these operations is a cadre of middle managers who must ensure that all microfinance’s many moving parts come together. These managers, often young with limited experience and modest educational backgrounds, are pressed with high-order leadership challenges. These “mini-CEOs” are charged with managing large dispersed teams, tackling a complex financial operation with many transactions and achieving the dual objectives of running a social organization and a viable business. They are also part of a less than robust leadership pipeline.

Says Peg Ross of the Grameen Foundation, “One of the most significant risks facing microfinance is the lack of mid-level leaders who will be ready to step into senior positions as the first generation of founders retires. Few organizations have planned for this succession, and fewer still have put development plans in place for this critical group.”

Front and center for these mid-level leaders, however, is juggling today’s responsibilities. A key issue for these hard-working front-line managers is leadership skills. Without these skills they can’t effectively manage, motivate and guide their teams, which often are drawn from the ranks of rural populations themselves. In recent months, this issue has come to a head. The microfinance sector in India has experienced a sharp crisis. Some microfinance organizations have been charged with coercive collection practices in contrast with their mission to help the poor.

“The crisis speaks to the need for leadership development in the sector. For the managers who run field operations, the ability to exercise good business and moral judgment is essential; the potential for good or harm to the poor hangs in the balance,” says Lyndon Rego, director, CCL’s Leadership Beyond Boundaries (LBB) initiative.

No Footsteps to Follow

Recognizing the need for these managers to gain specific leadership skills during this time of explosive growth, CCL’s LBB team, in partnership with the Grameen Foundation, Continuum, CoCoon Consultingand CapitalPlus Exchange (formerly ShoreCap Exchange), launched the “Footsteps” project in India.(View the video entitled “The Future of Microfinance.”) The name notes that microfinance middle managers have no footsteps to follow as they work to carry out their complex and demanding jobs and develop into the capable and conscientious future leaders the sector needs.

The project has encompassed extensive field work to understand the challenges of microfinance organizations and work to create innovative solutions that can be scaled out to develop middle managers based in remote rural communities. The work builds on efforts by CCL to develop leadership capacity in senior teams in the sector working with organizations such as CapitalPlus Exchange and Unitus.

“Our early efforts to enhance leadership and management skills amongst staff of development financial institutions we work with were very well-received and this led us to focus increasingly on designing and providing additional capacity building support in this area,” says Urmi Sengupta, director, Small Business Banking Network at CapitalPlus Exchange in Chicago, who has worked with CCL. “Impacting people skills can have significant results on the outcomes and behavior end, leading to improved work environments and superior institutional performance.”

Now the challenge is to create a scalable and affordable learning solution to reach middle managers who are pivotal to the future of microfinance. To this end, CCL, the Grameen Foundation, Continuum and CoCoon Consulting are seeking to raise funds to develop and deliver leadership solutions in India, and then expand the initiative globally.

“Our challenge is to create effective and innovative learning solutions to help these middle managers lead effectively,” CCL’s Lyndon Rego says. “In many ways microfinance represents the tip of the spear for the social sector. If we can create effective leadership solutions here, where leadership challenges are perhaps the sharpest, we will have developed approaches that can be adapted to help nonprofit leaders everywhere tackle great change and complexity.”

To learn more about CCL’s work in India or to become a part of this bold solution, visit here.

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