By Badhri Jagannathan
Mr Badhri Jagannathan of Thinkchangeindia.org has conducted a two part interview with Dr. Tara Thiagarajan of Madura Micro Finance Limited. MMFL is a company providing microfinance as well as knowledge and market opportunities through its micro education and micro market products to 400,000 women in rural Tamil Nadu.
Excerpts from the Interview with Dr Tara Thiagrajan
Q.In one of your articles in your weblog The Physics of Poverty you have talked aboutThe Madura Experiment involving smartphones and network analysis platforms to help your borrower network better. Can you please provide more insights on how this experiment works and where has this reached till now?
A. After decades of microfinance, we’ve seen that it is not effective in driving anything more than incremental change within the same subsistence paradigm and we have spent time trying to understand why – why microfinance borrowers are not able to make a leap in their thinking and apply it innovatively to achieve larger scale. The hypothesis we are working on, based on several years of observation, dipstick research and insights from academia is that this is because the rural communities (where we work and where most of India’s poverty is concentrated) are a very fragmented network where information and products spread very slowly, if at all.
Our goal is therefore to apply cutting edge scientific analysis to understanding the network structure and dynamics as well as its evolution and then use this to make strategic product interventions that drive faster flow of information, ideas and goods. For instance we could identify and drive links between specific communities that would collapse the average path length in the system and result in a many-fold change in the probability that a good idea gets from one place to another. We will also contribute to scientific understanding of the relationship between network position and demographic outcome. And last but not least, we will have an incredibly sophisticated understanding of our member base that will allow us to segment our market very effectively and put a lot of intelligence into our new product development and approach.
We are currently in the process of setting it up – training our staff, building the back end and establishing research collaborations. By the end of October 500 of our field staff will be out there collecting massive amounts of data about our member demographics, connectivity and behaviour on an ongoing basis. We have embedded all the research questions in fast easy chunks as part of our overall loan proposal and repayment process. For instance, the cashier at the branch office spends 2 minutes asking each of the women who come to remit money three or four questions before giving them the receipt. Each of our branch offices has a throughput of 300 to 600 women per month.