Features

SmartAid and Germany’s GTZ: Strengthening Accountability for Results

October 5, 2009    

In 2006, heads of 29 major development institutions endorsed the creation of an index that would measure and rate the way microfinance funders work. The SmartAid for Microfinance Index is CGAP’s effort to fulfill that commitment. SmartAid measures whether donors and public investors are set up to support microfinance effectively. It is the first index of its kind that promotes external assessments of funders’ management systems. CGAP piloted the index with 7 funders in 2007. Eleven funders joined the 2009 round which will serve as the baseline. Participating funders receive a report that details their strengths and weaknesses, highlights examples of good practices, offers recommendations, and provides an overall score.

Two years after the pilot round, CGAP is interviewing managers and technical staff of funding agencies to learn more about whether and how SmartAid is contributing to internal changes. Recently, we spoke to GTZ’s Cornelia Richter, Director General of Planning and Development. Drawing from her broad experience with change processes within GTZ, Cornelia Richter shared with us her insights about what is needed for change to happen and how SmartAid can be useful.

You’ve experienced and managed a lot of organizational change over your career. What have you learned as being the most important elements of successful change processes?

For me one of the success factors for change is that you must have a vision which is shared by many people and you must have a clear communication style. You also need a clear picture of what kind of people you can win over and convince, and what group of people you will never convince. You will always have obstacles in change processes.

But this was not the case here with these change processes related to SmartAid because we were working at the technical level, which is much easier than making changes in the general organizational processes.

Our managing director was involved very early on in several different discussions and conferences. We also had a delegation of CGAP here to meet with GTZ staff working on microfinance, and we then used the process as a positive example for the entire GTZ through our staff meetings.

We included SmartAid in our internal communications with staff as an example of how to work on progress toward change. We told our staff: “Look, this is how we are being perceived, and these are the conclusions that we have to draw, and this is how we would like to get even better.”

And so our people saw that we were taking it seriously. It’s a style of management and communication.

What was GTZ’s motivation for participating in SmartAid? What is the usefulness of such external reviews?

I’ve been involved in peer reviews that have been carried out by the Development Assistance Committee (of the OECD). I’ve also launched peer reviews for knowledge management within GTZ, which is something we’re quite proud of.

Given this background, we were very willing to participate in SmartAid because we felt this is an excellent idea. GTZ is very interested in benchmarking its performance with others and learning from these kinds of evaluations.

What kind of response did you receive from staff when you communicated about SmartAid?

I think we are an organization whose very essence is change. You find that a lot of our people have undergone training in change management. Nevertheless, we are more than 10,000 human beings with all kinds of different cultural backgrounds and you can’t expect that everyone is applauding when you’re asking for change. You won’t always walk in an open door when you’re asking for change.

What are the specific changes that you identified and implemented out of the SmartAid process?

There were many. One topic which was of particular relevance for us was the SmartAid observations on our systems for accountability and the challenge of demonstrating impact. This was very much in line with our policy here in GTZ but these observations triggered a decision to externally evaluate our entire microfinance portfolio. We also introduced a new evaluation unit within GTZ.

So, close to all GTZ microfinance projects are being externally evaluated, including ex post evaluations of phased-out projects. I think this is very remarkable progress which has been to a large extent triggered by SmartAid.

The second aspect we took very seriously was when SmartAid observed that there is little apparent analysis of how GTZ views its relative capabilities and constraints working at the micro, meso, and macro levels, and whether it has any knowledge about its comparative advantage at all levels. Our reaction was that nowadays we clearly focus on meso and macro level and that we have reduced our interventions at micro level. We now also have a strategic paper between KfW and GTZ where we have agreed on a certain division of labor according to these different levels.

SmartAid also observed a systematic lack of microfinance training in GTZ. Today our junior staff are regularly sent to a microfinance course in Turin, Italy. Our junior staff are also systematically joining missions where they are learning on the job. All our non-junior staff are now hired on the basis of microfinance expertise.

There was another recommendation by SmartAid that we should develop monitoring and evaluation systems. This is the overall goal for 2009 and we’ve agreed that all our programs have to produce more evidence for our reporting and presentation to the public.

Were any of the SmartAid recommendations a surprise to you or did it highlight issues you knew needed action?

We were very much aware of the monitoring deficit. We were not so much aware of the training deficit because in our overall understanding we always provided access to training. Perhaps it’s a more systematic approach right now.

I think overall that SmartAid triggered change in areas where there was already a high level of awareness of the need to improve. In other words, there was a certain preparedness for this kind of change. For example, we were working with monitoring systems before, but we weren’t doing it in such a systematic and strategic way and now there is much more pressure on this.

Will these be lasting changes at GTZ? How do you ensure they take root?

I’m very happy with these kinds of changes, and I think SmartAid was very helpful. When it comes to evaluations, it takes some time. You don’t have a result the next day so we are still implementing the recommendations. This requires collaboration across the agency and many country offices since we are present in so many different regions. We are all working together, from people in the field up to the managing director and the director of our division.

CGAP is speaking with managers and technical staff from diverse group of funding agencies that participated in SmartAid and will be providing further insights into how others have used SmartAid as a tool for change.