Agence Francaise de Developpement (AFD)
Agence Française de Développement (AFD) Letter to Management
March 2003
Executive Summary
A team comprising Camilla Bengtsson of Sida, Roland Siller of KfW, and Brigit Helms and Eric Duflos of CGAP conducted a Donor Peer Review of AFD in Paris from 10-14 March, 2003. The review is part of a 17-agency initiative launched by Development Ministers, Heads 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 AFD to identify the success factors and constraints that influence the effectiveness of the agency’s microfinance operations. The Department for Finance and Private Sector (TFP) provided the team with an orientation to AFD and organized meetings with 60 people, including extensive consultation with field- level staff and partners. The team briefed Director General Jean Michel Severino, several department heads and staff on its initial findings on March 14th.
The Peer Review team found its visit to be timely given the recent reorganization and management reforms at AFD. The team hopes that this management letter will enrich the internal discussions and provide specific ideas of how AFD can build on its experience and become an internationa l reference in microfinance.
This letter outlines AFD’s strengths and challenges, and presents a number of specific recommendations for change. A matrix at the end of the letter provides a summary of the key findings and recommendations. The Peer Review Team suggests six key recommendations to enable AFD to improve the effectiveness of its microfinance interventions:
- Clarify the role of Microfinance at AFD. Management should re-affirm support to microfinance and explain its crucial role for financial sector development.
- Operationalize and refine the financial sector strategy. AFD should disseminate the strategy through its implementation and transform it into a living document.
- Further adapt the role of IFI (“Ingenierie Financiere”). The microfinance staff should be more field oriented, IFI should increase cross fertilization among its team members, include a rural finance expert, and leverage available AFD and external resources.
- Capitalize on existing expertise and knowledge. AFD should create a network of internal specialists and adapt dissemination of knowledge and expertise to the needs of its field offices. It should capitalize on its experience in rural finance, and widely share it.
- Optimize the use and efficiency of funding instruments. AFD should use several instruments in a sector-based approach, adapt their size and content to recipient institutions, and look for cost sharing partners.
- Improve portfolio quality and management. AFD should improve the quality of its operations by developing performance-based contracts and indicators.
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