Sunday, April 20, 2008

 

Document Engineering for Microfinance in Developing Countries

While I read some papers for my course, ICTD (Information and Communication Technology for Development) reading seminar, I thought of the roles of document engineering for microfinance in developing countries. Microfinance is the provision of financial services, including credit, loans, savings and insurance, to poor and disadvantaged members of society. This has emerged as one of the most effective methods of financial development and poverty alleviation.

For this microfinance, I could find two possible challenges that document engineering could address:

- first, much of microfinance in India is built upon the grassroots group. Individual members in this group deposit money into a common fund, which is in turn lent to other members at a mutually agreed interest rate. This group sometimes forms larger structures by linking with other groups to form a federation to finance much bigger money. Each person, each group, and federation have their own set of complicated ledgers and forms to store and manage financial transactions. However, there are redundant and unnecessary data formats. So, there have been inefficiency in maintaining overlapping documents to exchange information among difference groups, and form a federation. Therefore, there is room for improving this problem by standardizing documents and data format.

- second, there are information asymmetries between groups who are and are not accessible to village banks. Members with easy access can invest in different types of projects with greater returns to scale, which in turn exacerbates polarization even between poor groups. Therefore, equal access to information does really matter. In terms of document engineering, the sharing of information with clear rules and updated news could help eliminate the information asymmetries.

ICTD aims at developing the third world using information and communication technology. So, I think there could be a variety of scenarios, which document engineering can play a role for, as in those two examples of the microfinance.

-Luke Rhee

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Comments:
Document engineering can truly find a niche in microfinance institutions. Efficient storage of data an serve not only the major companies in the country but also the marginal sectors of society. Banks and lending bodies that offer unsecured financing, receivable financing and other forms of funding have an effective system of tracking the borrower's capacity to pay. Such ability, when applied on the microfinance level can largely increase their productivity.

Interesting post. Thanks!
 
Thanks Luke Rhee! Document Engineering means design of a document to meet very specific requirements for clarity or embodiment of rules.In this,document refers to ordered pieces of information used by computer applications or web services.
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