GTZ
GTZ Letter to Management
July 2003
Executive Summary
A team comprising Nimal Fernando of AsDB, Craig Churchill of ILO, and Alexia Latortue and Eric Duflos of CGAP conducted a Donor Peer Review of GTZ in Eschborn from 14 to 18 July, 2003. The review is part of a 17-agency initiative launched by Development Ministers, head of agencies, and CGAP to concretely tackle aid effectiveness by using microfinance as a test case.
The Peer Review team focused on the internal procedures, practices and processes of GTZ to identify the success factors and constraints that influence the effectiveness of the agency’s microfinance operations. The Financial Systems Development (FSD) Section provided the team with an orientation to GTZ and organized meetings with 66 people throughout the agency, including consultation with country departments, field- level staff and external partners. The team briefed Managing Director Eisenblätter, and several department heads and staff on its initial findings on 18 July 2003.
The team found the review timely, considering the current re-organization taking place at GTZ, which includes management by objectives, increased focus on impact and evaluation, and crossfertilization through the creation of horizontal priority areas. The team was impressed by the strengths of GTZ in financial systems development and hopes that this letter to management will enrich the internal discussions and provide ideas of how GTZ can further increase its effectiveness in microfinance. This letter outlines GTZ’s strengths and challenges, and presents specific recommendations. A matrix at the end of the letter provides a summary of the key findings and recommendations.
The peer review team makes five concrete recommendations to management to enable GTZ to improve its microfinance operations. The team hopes these recommendations will also prove helpful for enhancing GTZ’s overall effectiveness.
- Sharpen focus on core competencies. GTZ should concentrate its operations on micro and rural finance, and continue working at the micro, meso and macro levels.
- Balance business acquisition with quality. GTZ needs to protect its brand name while it seeks to diversify its client base by screening new program proposals and by re-affirming the importance of technical ability within the organization.
- Redefine the role of the FSD Section. Management should explicitly task the FSD section to provide adequate backstopping during project implementation. The FSD section needs to increase its quality assurance function, build on its strengths in knowledge management, and establish closer links with the rest of GTZ.
- Maintain technical expertise in-house. Considering its high level of technical expertise, GTZ should use outsourced expertise prudently, push for performance based incentives for technical staff, and make full use of the potential of the regional sector networks.
- Build strategic alliances. GTZ should seek additional strategic cooperation with multilateral
and bilateral agencies, capitalize on the synergy with KfW, and enhance relations with German stakeholders.
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