European Commission (EC)
European Commission (EC) (--Edited Version--)
March 2003
Executive Summary
A team comprising Henri Dommel of IFAD, Gisela Strand of Sida, and Brigit Helms and Eric Duflos of CGAP conducted a Donor Peer Review of the European Commission (EC) in Brussels from 24 28 March, 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 the EC to identify success factors and constraints that influence the effectiveness of the agency’s microfinance operations. The Economic and Commercial Cooperation Unit of the “C” Directorate of the Europe Aid – Cooperation Office (AIDCO), in conjunction with DGDEV and the thematic sub-group for microfinance, provided the team with an orientation to the EC and organized meetings with 80 people throughout the RELEX family, including extensive consultation with field- level staff and partners. The team briefed AIDCO Deputy Director Marc Franco, Cabinet Member Kristian Schmidt and several department heads and staff on its initial findings on March 28th.
The Peer Review team found its visit to be timely given the current reforms at the EC aimed at improving development cooperation overall. The team hopes that this management letter will enrich the internal discussions and provide specific ideas of how the EC can improve its effectiveness in microfinance. Although the letter encompasses the entire RELEX family, much of the analysis and recommendations pertain to operations, and thus the focus is on AIDCO. This letter outlines the EC’s opportunities 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 the European Commission to improve its microfinance interventions:
- Make a choice on EC level of involvement in microfinance. Management should decide whether the EC should continue to work in microfinance. In the event that it wishes to remain engaged, the remaining peer review recommendations seek to help align the EC’s microfinance work more fully with good practice standards.
- Build a common EC vision and commit to it. This implies (i) sending a clear message from top management to work according to good practices, (ii) continuing a consultative process of reviewing in- house and outside experiences, and (ii) building a common understanding of good practices.
- Work through strategic partners. The EC should identify partners with specialized microfinance expertise, complementary instruments and shared objectives to manage its microfinance operations.
- Improve quality control and accountability. Microfinance guidelines should include rules of the game (dos and don’ts) that match existing instruments, financial regulations, and systems. The EC should develop specific tools to operationalize these dos and don’ts.
- Enhance staff capacity. More effective EC intervention in the sector will require investments in human resources, such as (i) creating one or two full time microfinance focal points in AIDCO, (ii) recruiting specialized expertise for selected regional offices, and (iii) strengthening the existing sub-thematic group.
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