Welcome to the DIRECT!

This resource centre is designed specifically for staff of all types of organizations that fund microfinance programs. It provides a range of practical briefs, case studies and operational tools to help implement good practice in all your microfinance work. Find out more about the DIRECT.

Good Practice Guidelines for Funders of Microfinance E-book

Funder Training Course--Building Inclusive Financial Systems: How Funders Can Make a Difference Training in Dubrovnik, Croatia September 8-12, 2008 - in English Training in Kigali, Rwanda 10-14 novembre 2008 - en français More information on the training courses, including brochures and enrolment forms...

Better Aid for Access to Finance Meeting ...One Year Later In October 2006, CGAP gathered leaders from 30 of the largest funders of microfinance, from regional development banks and development finance institutions to bilateral agencies and foundations to focus on Better Aid for Access to Finance. One year after this high-level meeting, Portfolio, the CGAP newsletter, sat down with Alexia Latortue, who manages CGAP's work on improving the effectiveness of microfinance funding, to discuss CGAP members' efforts to ensure microfinance doesn't become just another poverty alleviation strategy gone wrong. Find this and other articles on the effectiveness of microfinance funding in the October issue of Portfolio.

Do you know about... ...any local—formal or informal—coordination group of funders of microfinance? CGAP would be happy to send relevant publications to these groups. Please help us identifying them!

To help funding agency staff translate guidance into daily operations, CGAP has developed an e-book version of the Good Practice Guidelines for Funders of Microfinance. The e-book version goes one step further than the Good Practice Guidelines that help to raise awareness of good practice and improve the effectiveness of donors and investors' microfinance operations--it provides links to practical operational tools.

The e-book is a work in progress and will be tested through June 2008. We invite you to explore the features and supplemental material the e-book presents. Your feedback, especially suggestions for improvements and priorities for additional operational tools needed, is welcome. Please use the feedback form available at the end of the e-book to let us know what you think.

La deuxième édition du Guide des Bonnes Pratiques pour les Organisations qui Financent la Microfinance est disponible
La segunda edición de la Guía sobre buenas prácticas para los financiadores de las microfinanzas está disponible

Good Practice Guidelines for Funders of Microfinance captures 30 years of lessons learned and translates them into operational advice for development agencies, foundations, social and commercial investors, international NGOs, and others that help build financial systems that work for poor people.

The second edition of this book is now available online in English, French, Spanish, and Japanese. (The Arabic version will be available soon.) Free hardcopies in English, French, and Spanish are available on request.

A PowerPoint presentation, featuring a quick overview of the Guidelines is also available. The presentation is a useful tool to train your staff or microfinance stakeholders and will soon be available in French and Spanish. Tips on how to conduct an effective training session or presentation are on the DIRECT Web site.

CGAP Organizes a Funder Roundtable on National Microfinance Strategies

In the past three years, an increasing number of countries have adopted National Microfinance Strategies (NMS). CGAP presented the results of its review of 29 national microfinance strategies (also sometimes called policies) at a roundtable gathering of key donors that fund them. Participants from the World Bank, UNCDF, GTZ and KfW discussed the risks and benefits associated with national microfinance strategies and how funders can improve their work in them. Overall, participants concluded that donors need to take a much more prudent approach to supporting these strategies because the risks often outweigh the benefits. For example, donors should ensure the sector diagnostics that precede most national microfinance strategies are comprehensive. Donors also should ensure that microfinance strategies are integrated into the broader financial sector context.

Effectiveness Review of Dutch Microfinance Funders

At the request of the Netherlands Platform for Microfinance, CGAP conducted a follow-up to the peer review undergone by the Platform-a 15-member network of Dutch organizations that fund microfinance. The review shows that the members share a commitment to increasing poor people's access to finance but have differing levels of expertise, return expectations, appetite for risk, and business models. The review identified three recurrent themes for the Platform to consider: (1) managing the tension between collaborating and competing; (2) figuring out how to add value in a rapidly evolving microfinance market; and (3) identifying principles to guide the use of subsidies. To read the report, click here.

Analyzing Development Finance Institutions' Funding for Microfinance

The 2006 edition of CGAP's annual survey on development finance institutions' (DFIs) investments is out and reveals some interesting trends:

• DFI investment in microfinance is growing fast and reached $2.5 billion in 2006--this represents an increase of 39% over 2005 survey data.
• DFIs mainly provide debt funding (69% including structured finance debt); most funding comes in hard currency (86%). But equity investments are surging (up 114%), especially in Latin America (LAC), Europe & Central Asia (ECA), and Middle East and North Africa (MENA).
• DFI investments in LAC and ECA account for 81% of total investments. Investments in the East Asia and Pacific (EAP) and MENA regions increased by 109% and 86%, respectively. However, investment in Africa is stagnant (up 5% only from 2005).
• Investments through intermediaries, such as microfinance funds, have doubled compared to 2005, and structured finance vehicles offering leverage to private investors are gaining pace (up 140%).

For more data and a detailed trend analysis, consult the CGAP presentation.

What is the role of Development Finance Institutions (DFIs)?

From March 28 to 30, 2007, the Microfinance Gateway held an online discussion, "IFIs: Crowding Out or Crowding In?" to provide a space for debate following the controversial MicroRate paper on this topic. The discussion featured substantial insights from 20 experts with various perspectives. To read a summary of the discussion, click here. Also, KfW and FMO have co-authored a paper that presents the perspectives of IFIs on their role in a changing microfinance environment.

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Recent CGAP Publications

Toward a Social Performance Bottom Line in Microfinance (November 2007)
This CGAP Brief discusses the industry's growing interest in social performance and new advances in measuring social performance and developing guidelines and tools for reporting.

MFI Capital Structure Decision Making: A Call for Greater Awareness (August 2007)
CGAP and Grameen Foundation recently conducted a survey of MFI managers to better understand MFI capital structure decision-making processes in the face of expanding financing options. This Brief summarizes the study's findings and makes recommendations about ways we can work toward optimizing MFI balance sheets. It is available in English, French, and Spanish.

Sustainability of Self-Help Groups in India: Two Analyses (August 2007)
This Occasional Paper reports on two separate studies of SHG programs. Part I looks primarily at the financial viability of SHG programs. Part II proposes a methodology for designing SHG programs to ensure their sustainability.

For further CGAP publications please have a look on the publications section of CGAP's homepage.

Technical Guides

STAR tool (October 2007)
The STAR tool is a self-assessment mechanism for microfinance funders to evaluate their effectiveness and identify their strengths and weaknesses to improve the way they work, coordinate more effectively, and achieve a better division of labor.

Country-Level Savings Assessment Tool (Draft) (August 2007)
CGAP's draft Country-Level Savings Assessment (CLSA) Tool guides analysts and researchers who wish to undertake CLSAs and governments and donors who wish to commission CLSAs. The tool provides a systematic methodology for analyzing opportunities and constraints to savings mobilization at the country level.

For more technical guides, consult the operational tools section on DIRECT.

If you have a question, write us an email or call us (+33-1-40-69-32-77)