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  • Leadership Team
  • Tara Thiagarajan
    Chairman and Managing Director
  • M Narayanan
  • Board of Directors
  • R.Ramaraj
    Advisor, Sequoia Capital
  • Ashok Mirza
    Chairman, Apcom Group
  • Rahul Varma
    Chief Leaming Officer, Accenture
  • NC Sarabeswaran
    Partner, Jaganath & Sarabeswaran
  • Sandeep Farias
    Managing Director, Elevar Equity
  • Advisory Board
  • M.V. Subbiah
    Murugappa Group
  • Marthi Subrahmanyam
    Stern School of Business, NYU

Dr. Tara Thiagarajan

Chairman and Managing Director

Tara Thiagarajan is Chairman and Managing Director of Madura. Her interest lies in understanding large-scale human systems for the purpose of developing scalable, for-profit solutions that drive progress. She writes extensively on constructs of human progress including a column called The Physics of Poverty on a series called The Big Idea for The Smart CEO magazine and begins a new series with Entrepreneur Magazine on microentrepreneurs called Inside Out. She is also a regular op-ed contributor to several mainline magazines and dailies in India, including the Economic Times, Business Line, and Entrepreneur Magazine on issues concerning microfinance, financial inclusion, poverty, and progress. Her writing can be accessed at

Tara has a BA in Mathematics from Brandeis University, an MBA from the Kellogg School of Management at Northwestern where she was an Austin scholar, and a Ph.D. in Neuroscience from Stanford University. She did her postdoctoral research in neural network behaviour at the Section for Critical Brain Dynamics at the NIH and is a visiting scientist at National Centre for Biological Sciences. She is also an Advisory Group Member at Ashoka Changemakers.

M. Narayanan


Narayanan has 25 years of experience in the banking industry where he has held key positions as Head of Treasury at Bank of Madura and Head of Treasury at the GMR Group, Bangalore. His earlier career led him through a variety of significant roles at Bank of Madura including Head of Mumbai - Main, the largest branch of the bank, and AGM of Cash Management Services, Merchant Banking and Corporate Banking.

He was also an active member of various committees including Strategic Planning, Investment, Forex and ALCO. Following the merger of Bank of Madura with ICICI Bank he took on the role of VP of Corporate Banking. He has also worked briefly at Union Bank of California and at ING Vysya Bank.

Mr. R. Ramaraj

Advisor Sequoia Capital

Ramaraj is a Senior Advisor at Sequoia Capital and is a member of the Global Board of Trustees of TiE (The Indus Entrepreneurs). Previously he was the Co- Founder and CEO of Sify Limited, the pioneer and leader in Internet, Networking and eCommerce Services in India. Sify was the first Indian Internet company to be listed on the Nasdaq National Market in the US (NASDAQ. SIFY).

Ramaraj was recognized as the ‘Evangelist of the Year’ at the India Internet World Convention in September 2000 and voted IT Person of the Year 2000 in the poll in India. He was invited by the UN Secretary-General, Kofi Annan to be a member of UN’s Working Group on Internet Governance (WGIG) and is the first Indian to be invited to the Board of directors of ICANN (Internet Corporation for Assigned Names and Numbers). Mr. R. Ramaraj holds a B.Tech in chemical engineering from the University of Madras and a M.B.A. from the Indian Institute of Management, Calcutta.

"I am very impressed with the truly social focus of Madura in what could otherwise be a cold, commercial face. From providing the lowest interest rates to entrepreneurship training, all so efficiently is truly inspiring"

Mr. Ashok Mirza

Chairman Apcom Group

Mr. Ashok Mirza is the Founder-Director of the Apcom group of companies including Dax Networks and Cenza Technologies. He has over 35 years of experience in the IT industry, beginning his career with IBM Corporation in 1971.

He holds a B.S. in electrical engineering from the Institute of Technology, BHU India and has attended the Wharton School's SMU Executive Education Program.

"One of my main reasons for associating with Madura is the socio-economic difference they are making in village families through the women. This began with our Founder-Chairman, Dr KM Thiagarajan’s vision, deep belief and commitment to economic growth in rural areas, by creating and educating Self Help Groups & providing them with capital. This is a belief that by educating, informing and empowering women, India will prosper."

Mr. Rahul Varma

Chief Learning Officer, Accenture

Rahul is presently the Chief Learning Officer at Accenture where he is responsible for Accenture’s global learning organization. He was previously Director for Human Resources Strategy, where he was responsible for crafting and driving Accenture’s HR strategy across the company’s businesses globally. He is currently based in Singapore and has been with Accenture since 1994.

Rahul has a Master’s degree in Personnel Management (MPM) from Symbiosis Institute of Business Management, Pune, and a Bachelor’s degree in Honours in Economics from Kirori Mal College, University of Delhi.

"It has been a privilege for me to be associated with Madura Microfinance. I have found the leadership to be inspirational, forward thinking, and deeply committed to their mission. There are wonderful stories of employees who were once beneficiaries of its loans and have since become proud ambassadors. Social value creation is embedded in every facet of the organisation - be it the care with which new members are educated and prepared for self-sustenance. or the laser focus on operations so they receive funds at the lowest possible rates. There is a great story being scripted in Madura!"

Mr. NC Sarabeswaran

Senior Partner Jagannath and Sarabeswaran

Mr. N.C. Sarabeswaran is a senior partner with the well established audit firm Jagannath & Sarabeswaran in Chennai and currently serves on the board of GMR Energy Limited and Road Sector Companies of the GMR group where he is also Chairman of the Audit Committee. He has previously held board positions in a number of banks including the Vysya Bank and the Tamil Nadu Mercantile Bank, both as an RBI nominee and in an independent capacity.

Mr. Sarabeswaran is the past President of Indo- Australian Chamber of Commerce, a bi-national Chamber headquartered in Chennai. He is also the primary Trustee of Veda Pati Nidhi Trust, a 25 year old Trust supporting more than two hundred old, indigent Pandits and runs two other family Trusts catering to needs of the underprivileged.

Mr. Sarabeswaran graduated from Madras University and is a qualified Chartered Accountant. He has been a certified Chartered Accountant since 1968.

Mr. Sandeep Farias

Managing Director Elevar Equity

Sandeep Farias is a Founder and Managing Director of Elevar Equity ( ), a thesis based investor focused on backing entrepreneurs who deliver essential services to disconnected communities underserved by global networks. He founded Elevar on the view that: “Lack of access to basic services for any individual is really an issue of discrimination and must be challenged. It is imperative that we leverage the power of markets to scale and provide access to life changing services to millions of individuals and communities.” It is this idea that drives Sandeep to provide equity to entrepreneurs who challenge discrimination, help them prove their business model, establish the right governance, and raise additional capital to grow.

Previously, Sandeep founded the India operations of Unitus (a global microfinance accelerator) in 2004 and was Chief Innovation Officer of Unitus in 2007. He conceptualized Unitus’ India strategy, built the India team and launched a number of strategic projects for the organization. Sandeep came to the impact space from Nishith Desai Associates (NDA), one of India’s leading law firms where he founded the firm’s development sector practice, incubated new practice areas and led its corporate law practice. He also established the firm’s offices in Palo Alto, California and Bangalore, India.

Sandeep serves as a Director of Vistaar Finance, Aarusha Homes, Glocal Healthcare, Shubham Housing Finance and Madura Microfinance and has served as a Director of Ujjivan. Sandeep has an integrated Law & Arts Honors Degree from the National Law School of India University in Bangalore, India.

Elevar Equity is a thesis based investor focused on backing entrepreneurs who deliver essential services to disconnected communities underserved by global networks. Core to Elevar’s investment approach is the belief that all people have intrinsic economic and social value. Elevar invests in companies whose products and services unlock this value by enabling disconnected communities to create opportunities for themselves. Elevar’s entrepreneurs have clear vision, deep customer knowledge and know how to harness market forces to build lasting companies and foster economic development.

"Elevar invested in Madura because of the relationships it has with its customers and its vision to build multiple products for them. Its financial performance and efficiency has given the organization the ability to adopt a differentiated strategy to meet the needs of its customers."

M.V. Subbiah

Chairman NSDC and former Chairman and COO, Murugappa Group

M.V. Subbiah is the former Chairman and COO of the Murugappa Group of Companies. He has won several awards including the National HRD Award for his contributions to human resources development, the JRD Tata Corporate Leadership Award and recently the Padma Bhushan. He is presently the Chairman of the National Skills Development Council.

Marthi Subrahmanyam

Professor of Finance and Economics, Stern School of Business, NYU

Marti Subrahmanyam is the Charles E. Merrill Professor of Finance and Economics at the Stern School of Business at New York University. He has published extensively on various topics relating to capital markets and is editor of a number of academic journals. He has been a consultant to a number of major investment banks and other financial institutions and presently holds board positions with various companies including Infosys Technologies and ICICI Bank. He holds a B.Tech from IIT, Madras, a post graduate diploma in Business Administration from IIM, Ahmedabad and a Ph.D. from the Massachusetts Institute of Technology.

The Impact of Microfinance in Sub-Saharan Africa: A Systematic Review of the Evidence

  • C. van Rooyen
  • University of Johannesburg, Aucklandpark, South Africa
  • R. Stewart
  • University of Johannesburg, Aucklandpark, South Africa
  • Institute of Education, University of London, UK
  • T. de Wet
  • University of Johannesburg, Aucklandpark, South Africa
Accepted 12 March 2012, Available online 23 April 2012


Microfinance is seen as a key development tool, and despite the current deepening crisis within the industry, it continues to grow in sub-Saharan Africa. We systematically reviewed the evidence of the impacts of micro-credit and micro-savings on poor people in sub-Saharan Africa. We considered impacts on income, savings, expenditure, and the accumulation of assets, as well as non-financial outcomes including health, nutrition, food security, education, child labor, women’s empowerment, housing, job creation, and social cohesion. The available evidence shows that microfinance does harm, as well as good, to the livelihoods of the poor.

Key words

  • microfinance ;
  • micro-credit ;
  • micro-savings ;
  • sub-Saharan Africa ;
  • poverty ;
  • impact

1. Introduction

The development industry, and in particular government agencies, are calling for greater evidence and a focus on “what works”. There is therefore an urgent need to collate and review the available evidence of the impacts of major development programs. Microfinance is one of the largest development programs worldwide, both in financial terms and in relation to the number of poor people targeted. In this paper, we report the findings of the first systematic review to address the question “what works” in microfinance. In doing so we employ a rigorous and increasingly important methodology which is promoted as a valuable tool for bringing together the best quality, most relevant evidence (DFID, 2011  and Petticrew and Roberts, 2006 ).

The provision of “micro” financial services to the poor (those earning less than $2/day), in particular small loans of $50–$1000, has been hailed by advocates as an effective poverty alleviation and development tool (CGAP, 2003. Robinson, 2001  and Yunus, 1999 ). Known collectively as microfinance, these services include micro-credit, micro-savings, micro-insurance, and money transfers, and have been attributed with enabling micro-entrepreneurs to build businesses and increase their income 1. as well as improving the general economic wellbeing of the poor. Furthermore, microfinance has been credited with improving other financial outcomes (including savings and the accumulation of assets such as furniture or a sewing machine), as well as non-financial outcomes such as health, food-security, nutrition, education, women’s empowerment, housing, job creation, and social cohesion (Afrane, 2002. Barnes, 1996. Barnes and Keogh, 1999. Beck et al. 2004. Hietalahti and Linden, 2006. Hossain and Knight, 2008. Khandker, 2001. Odell, 2010. Schuler et al. 1997. UNICEF, 1997  and Wright, 2000 ). The underlying logic is that by providing financial services to the poor, for example in the form of credit or savings, they manage their money differently, investing, acquiring productive assets, increasing their skills levels, opening new businesses, etc.

But various studies have questioned these positive impacts. Some indicate much more mixed impacts, such as benefits for the poor but not for the poorest (e.g. Copestake et al. 2001. Hulme and Mosley, 1996. Morduch, 1998. Mosley and Hulme, 1998  and Zaman, 2001 ); or helping the poor to better manage the money they have ( Rutherford, 1996, pp. 2 ) but not directly or sufficiently increasing income, empowering women, etc. (e.g. Husain et al. 2010. Mayoux, 1999  and Rahman, 1998 ) or that money spent on microfinances could be better used more effectively for other interventions ( Karnani, 2007 ) or that a single intervention (such as microfinance) is much less effective as an anti-poverty resource than simultaneous efforts that combine microfinance, health, education, etc. ( Lipton, 1996 ). Others allude to negative impacts (i.e. that microfinance does harm), such as the exploitation of women, increased or at best unchanged poverty levels, increased income inequality, increased workloads and child labor, the creation of dependencies and barriers to sustainable local economic and social development (e.g. Adams and Von Pischke, 1992. Bateman and Chang, 2009. Copestake, 2002  and Rogaly, 1996 ).

Microfinance is increasingly questioned, not only for its lack of proven poverty reduction and development outcomes, but also on ideological terms — for example, see Bateman, 2010. Bateman, 2011. Dichter, 2007  and Fernando, 2006. and Roy (2010). The recent crisis which has hit the industry in India (but also in Bosnia, Morocco, Pakistan, Nicaragua, and Nigeria) where thousands are over-indebted with serious implications for people’s livelihoods and communities, also increased the concerns. Further, an increase in the commercialization of the industry has been met with suspicion and concerns around the ethics of making money from the poor, and talk of “mission drift”, even within the microfinance industry (Chang, 2007. Fernando, 2006. Karnani, 2009. Weber, 2006  and Yunus and Weber, 2010 ). Especially in India the case for greater regulation has been voiced clearer and louder as businesses have failed and suicide rates risen. The evidence for the positive claims surrounding microfinance is being challenged, and rigorous evaluations sought. But much of the available research has focused on how to improve the industry, rather than how to prove impact ( Hulme, 1997 ). What good research does exist has only served to deepen the controversy: the publication in 2009 of the first randomized controlled trials (RCTs) in India and the Philippines (Banerjee et al. 2009  and Karlan and Zinman, 2010 ) failed to find evidence that microfinance alleviates poverty, sparking a defensive response from within the industry ( Accíon International et al. 2010 ). There is a need to systematically bring together this varied evidence to establish what the combined good quality evidence shows about whether or not microfinance benefits the poor in terms of a wide range of outcomes. Furthermore, in acknowledgement that microfinance itself varies enormously and is available to a wide range of people in a variety of contexts (Goldberg, 2005  and Odell, 2010 ), there is a need to consider what we know about the different types and models of microfinance and whether or not they work, for whom and in what circumstances.

While the level of evidence is gradually increasing, a simple search of bibliographic literature, and more thorough overviews of the evidence ( Duvendack et al. 2011 ), reveal that the majority of microfinance and of the related evaluations still emanate from Asia where the microfinance movement originated. Theory suggests however, that microfinance works differently in different regions where the population density, attitudes to debt, group-cohesion, enterprise development, financial literacy, and financial service providers all vary (ArmendГЎriz de Aghion and Morduch, 2005. Fischer and Ghatak, 2011  and MIX & CGAP, 2011 ). We believe there to be an increasing need to understand the evidence from sub-Saharan Africa, one of the poorest regions of the world where development aid is proportionally large ( United Nations, 2008, pp. 1 ), and where there are still majority non-profit service providers in the microfinance industry ( MIX & CGAP, 2011, pp. 2 ). 2 International agencies are increasing their investment in a wide range of microfinance initiatives in the region (MIX & CGAP, 2011  and World Bank & DFID, 2010 ), where microfinance has a long history pre-dating the better known micro-banks such as Grameen Bank; these include the credit unions of the 1950s and 1960s ( Raftopoulos & Lacoste, 2001 ), and group-based savings and lending groups in the form of cooperatives ( MIX & CGAP, 2011, pp. 3 ). At the same time, the microfinance industry in Africa is still relatively small and being concentrated in a small number of countries ( MIX & CGAP, 2011, pp.10 ), but growing, thus providing an opportunity for research to shape decision-making, especially in the light of international agencies planning new initiatives to develop capacity in the region and seeking both the opinions of stakeholders ( World Bank & DFID, 2010 ) and evidence of effectiveness ( DFID, 2010 ).

Systematic review methodology provides an ideal opportunity to address this question of the state of the evidence of impact in the region thus far. While relatively new in the field of international development, this approach is standard practice in medicine, health promotion, and some areas of social policy, where policy-decisions are not made and new research not commissioned without first understanding the combined findings of the best-quality and most relevant research evidence as reported in a systematic review (Cochrane Collaboration, 2012. Cook et al. 1997. Mulrow, 1994  and Sebba, 2004 ).

The definition of microfinance

“Microcredit, or microfinance, is banking the unbankables, bringing credit, savings and other essential financial services within the reach of.millions of people who are too poor to be served by regular banks, in most cases because they are unable to offer sufficient collateral. In general, banks are for people with money, not for people without.” (Gert van Maanen, Microcredit: Sound Business or Development Instrument, Oikocredit. 2004)

“(Microcredit) is based on the premise that the poor have skills which remain unutilized or underutilized. It is definitely not the lack of skills which make poor people poor….charity is not the answer to poverty. It only helps poverty to continue. It creates dependency and takes away the individual’s initiative to break through the wall of poverty. Unleashing of energy and creativity in each human being is the answer to poverty.” (Muhammad Yunus, Expanding Microcredit Outreach to Reach the Millennium Development Goals, International Seminar on Attacking Poverty with Microcredit, Dhaka, Bangladesh, January, 2003)

Microcredit belongs to the group of financial service innovations under the term of microfinance, other services according to microfinance is microsavings, money transfer vehicles and microinsurance. Microcredit is a innovation for the developing countries. Microcredit is a service for poor people that are unemployed, entrepreneurs or farmes who are not bankable. The reason why they are not bankable is the lack of collateral, steady employment, income and a verifiable credithistory, because of this reasons they canВґt even meet the minimal qualifications for a ordinary credit. By helping people with microcredits it gives them more available choiches and opportunities with a reduced risk. It has successfully enabled poor people to start their own business generating or sustain an income and often begin to build up wealth and exit poverty. The amount of money thatВґs lended out seldom exceeds 100USD.

Microcredit fits best to those with entrepreneurial capability and possibility. This translates to those poor who work in growing economies, and who can undertake activities that generate weekly stable incomes. For those who donВґt qualify because they are extreme poor like destitute and homeless almost every microcredit institution have special safety programs that offer basic subsistence and later endeavours to graduate this members in their microfinance program making ordinary microcredits available.

Microcredit plays an important role in fighting the multi-dimensional aspects of poverty. Microfinance increases household income, which leads to attendant benefits such as increased food security, the building of assets, and an increased likelihood of educating one’s children. Microfinance is also a means for self-empowerment. It enables the poor to make changes when they increase income, become businessowners and reduce their vulnerability to external shocks like illness, weather and more.

Microcredit has widely been directed by the non-profit sector while commercial lenders require more conventional forms of collateral before making loans to microfinance institutions. But now itВґs successfully growing bigger and getting more credibility in the traditional financeworld. Due to that the traditional banking industry have begun to realize that this borrowers fits more correctly in a category called prebankable. T he industry has realized that those who lack access to traditional formal financial institutions actually require and desire a variety of financial products. Nowadays the mainstream finance industry is counting the microcreditprojects as a source of growth. Before almost everyone where neglecting the success of microcredit in the beginning of the 1970s when pilot projects such as ACCION where released until the United Nations declared 2005 the International Year of Microcredit.

The most of the microcredit institutions and agencies allover the world focuses on women in developing countries. Observations and experience shows that women are a small credit risk, repaying their loans and tend more often to benefit the hole family. In another aspect it´s also seeing as a method giving the women more status in a socialeconomic way and changing the current conservative relationship between gender and class when women are able to provide income to the household. Women are in most cases responsible for children, and in poor conditions it results in physical and social underdevelopment of their children. 1.2 billion people are living on less than a dollar a day. There are many reasons why women have become the primary target of microfinance services. A recent World Bank report confirms that societies that discriminate on the basis of gender pay the cost of greater poverty, slower economic growth, weaker governance, and a lower living standard for all people. At a macro level, it is because 70 percent of the world’s poor are women. Women have a higher unemployment rate than men in virtually every country and make up the majority of the informal sector of most economies. They constitute the bulk of those who need microfinance services.

Giving women access to microcredit loans therefore generates a multiplier effect that increases the impact of a microfinance institution’s activities, benefiting multiple generations.

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