CGAP Launches SmartAid 2009

September 18, 2008    

CGAP's SmartAid for Microfinance Index 2009 is the first ever effort to measure, rate, and compare how well development organizations are set up to effectively provide funding and advisory services to microfinance area. Funders that work in microfinance are invited to participate in this unique exercise. By joining in this effort, funders demonstrate that they have a strong commitment to transparency and accountability.

The Index comprises 10 indicators in five areas: policy/strategy, staffing, accountability, instruments, and knowledge management. It is based on self-reported information and is scored by a group of experts. In addition to receiving a score they can use as a benchmark of their own efforts over time or against the scores of other funders, participating funders receive a report that details strengths and weaknesses, highlights examples of good practice, and suggests improvements.

Senior managers and technical staff of institutions that participated in the 2007 pilot round report that SmartAid sparked internal dialogue and helped management define priorities and strategic objectives. An external evaluation of SmartAid 2007 corroborated those reports.

Nimal Fernando, Practice Leader for Microfinance from the Asian Development Bank, says, “SmartAid helps us rethink our microfinance operations — what works well, what does not work so well.” After participating in SmartAid, staff from the Asian Development Bank worked together to determine the best approach for implementing the resulting recommendations and have submitted an action plan for approval by management.

John Tucker, Deputy Director, Inclusive Finance Unit of the United Nations Capital Development Fund (UNCDF), says that SmartAid 2007 provoked change on different levels: “SmartAid is useful for UNCDF both internally and externally. Internally, we created an action plan to put the recommendations into practice. Not all actions will be completed in the next year, but they are underway. Externally, it has helped us identify where the other agencies are strong and how UNCDF can partner with them.” 

As a direct result of SmartAid, UNCDF is reviewing all microfinance job descriptions to ensure a better match with its ambitious strategy, which includes work at the policy level in addition to its traditional focus on the retail level. Another result is that staff are receiving training to develop their ability to work at the policy level.

As funders undergo increasing scrutiny to deliver results and remain relevant to the people they serve, tools such as SmartAid provide individual institutions with a rigorous and objective assessment of their own efforts and a way to compare themselves with others. Though created specifically for microfinance, SmartAid's focus on core management systems is relevant to other development sectors.