Sunday, April 20, 2008
Document Engineering for Microfinance in Developing Countries
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.
Interesting post. Thanks!