Stories of Change: SmartAid Accelerates Change at GTZ
February 2, 2010
The SmartAid for Microfinance Index measures whether donors and public investors are set up to support microfinance effectively. Two years after the Index was piloted, CGAP is exploring whether it has helped participating funders improve their effectiveness. In a series of stories, management and staff from microfinance funders share their experiences with SmartAid and their insights on change management practices more broadly.
For Lutz Zimmerman, head of Economic Development and Employment at Germany’s GTZ, the SmartAid for Microfinance Index provides a chance to promote the importance of microfinance within his organization and to ensure that progress on improving performance continues.
“SmartAid presented us with a nice opportunity to bring the topic of financial systems development to the top of the agenda, and to the minds of our management,” Zimmerman said. “So now there is a higher level of expectation, and we have to continue to improve and meet these expectations.”
The SmartAid report, which highlights strengths and weaknesses and lays out recommendations, proved to be useful in focusing attention on areas where change is most needed. “SmartAid helped us attain a higher speed with our change processes. It is quite clear in its suggestions and on the points where we need to change,” adds Zimmerman.
With the microfinance team benefiting from the high-level discussions on accountability and results during the SmartAid process, other technical teams within GTZ may themselves begin to examine the merits of a similar external review process.
Zimmerman and other GTZ managers stressed that the SmartAid evaluation provided independent support and accelerated programmatic and management changes they had already identified within their organization. In particular, GTZ wanted to pursue more effective monitoring and evaluation of its microfinance work, strengthen its training, and work with fellow German development institution KfW to more clearly distinguish their respective competencies in microfinance.
| “SmartAid helped us attain a higher speed with our change processes. It is quite clear in its suggestions and on the points where we need to change,” says Lutz Zimmerman, head of Economic Development and Employment at GTZ. |
Cornelia Richter, director general of the Planning and Development Department, feels that SmartAid helped convince GTZ leadership of the merits of having microfinance operations be subjected to a full external evaluation, an extensive process that is restricted to only two technical topics within GTZ each year.
“We were working with monitoring systems before but we weren’t doing it in such a systematic way. Now there is much more attention to this,” Richter said. “We have introduced a new evaluation unit in GTZ, and this year microfinance is one of the main topics of our external evaluations. This has, to a large extent, been driven by our participation in SmartAid.”
SmartAid also contributed to GTZ’s efforts to clarify its comparative advantage in microfinance, helping senior managers better focus the agency’s efforts and align its activities with those of KfW, a challenge that had emerged in an earlier peer review. SmartAid reinforced the peer review’s findings and enabled managers to win support to focus GTZ more on the policy and market infrastructure levels of the financial system where the agency was seen to have particular strengths. Following the SmartAid recommendations GTZ also decided to implement a more systematic training plan for staff in microfinance by securing training contracts with three institutions in Europe, North America, and Asia.
For funding agencies that participate repeatedly in SmartAid, the Index highlights progress over time. Karen Losse, senior advisor of Financial Systems Development, noted an improvement from the previous round. “Preparing the second submission made us realize what had and hadn’t happened,” Losse said.
Zimmerman stated that GTZ will continue to improve in the SmartAid Index as a result of the changes now underway. “Our main focus now is to improve our monitoring and evaluation systems. I think we will be ready with that by the end of this year,” he said. “If we do the same review next year, we will see whether our performance really has improved or not—it’s something I take quite seriously.”
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