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Donor Briefs offer concise two-page presentations of issues affecting microfinance programming and operations by donors.
Savings and credit cooperatives provide financial services to millions, including poor and low-income people in many countries. Thus, donors who want to increase access to financial services, especially savings, often support savings and credit cooperatives. Working with these cooperatives offers many advantages, but, to be effective, donors must learn how to overcome several unique challenges.The latest Donor Brief Working with Savings & Credit Cooperatives provides guidance on how to address these challenges.
Retail financial institutions remain the backbone of financial systems that serve low-income clients. They need complex skills to offer poor people quality financial services on a permanent basis. In most countries, inadequate retail capacity is the main bottleneck to scaling up microfinance. This brief addresses how funding agencies - public donors, international NGOs, private foundations, and investors - can help meet the challenge of developing retail capacity.
New technologies are available to help microfinance providers improve efficiency, track operations more accurately, increase transparency, and reach new customers, yet MFIs struggle to select the right technologies and get the most from their investments. This Donor Brief offers guidance on how to ensure microfinance providers follow good investment and management principles when choosing and implementing new technologies.
Five core elements of effectiveness-- strategic clarity and coherence, strong staff capacity, accountability for results, relevant knowledge management, and appropriate instruments--are key for development assistance agencies and other funders to improve how they support financial systems for the poor, and identify their comparative advantage and best level of engagement.
Supporting microfinance in devastated and fragile communities can be successful when donors work in concert, select qualified partners, are patient, willing to take risks, and prepared to pay higher costs. This brief is the latest in our series of Donor Briefs and it provides information on the characteristics, essential conditions for effective interventions, and how donors can play an instrumental role in these complex situations.
By applying good microfinance practice to housing finance, a range of financial institutions are beginning to offer much-needed housing finance services to low-income people. This brief outlines how donors can support these institutions and expand sustainable housing finance.
Understanding the limited but constructive role governments can play in building financial systems is key to ensuring poor people's permanent access to quality financial services. Experienced donors can support governments to develop sound policy frameworks and encourage vibrant and competitive microfinance, rather than directly providing financial services.
Interest rate ceilings imposed by governments to protect poor people unfortunately often have the opposite effect. Customers do need protection from predatory lending practices and this brief offers other options governments and donors can employ.
This
donor brief builds on the experience of several donor agencies that have long applied a financial-systems approach in their microfinance operations. It outlines a practical way that donors can work, individually or on collaboration, to support pro-poor financial systems that ensure permanent access to financial services for significant numbers of poor people.
Microinsurance is one of the many financial services that can help poor people protect themselves from risk. Understanding the numerous informal and formal strategies employed by poor people to prepare for and cope with risk can help determine whether insurance is an appropriate response. This introductory brief provides practical dos and don'ts for donors interested in supporting this promising but still largely untested field.
Ensuring that poor people in rural areas have access to quality, permanent financial services remains a tremendous challenge for donor agencies. This introductory brief clarifies the confusing terminology related to rural finance and identifies the main constraints to financial services in rural areas. The brief also pinpoints specific issues donor agencies face internally to effectively support financial services for the rural poor, and offers helpful guidance.
Financial services provide just one way to help affected households deal with the economic ravages of HIV/AIDS. This brief cautions against launching financial interventions specifically targeted to persons with AIDS. It also offers tips for how donors can support financial institutions operating in heavily affected areas and suggestions for creative linkages with specialized providers of health and insurance services.
Donors want to ensure a social return on their investment. This brief summarizes evidence about the impact of microfinance on the multiple dimensions of poverty, including income growth, social improvements in health and education, and empowerment. Microfinance could achieve greater impact if it offered a broader range of financial services that better met the varied needs of the poor, including deposit services, microinsurance, and transfer payments.
This simple and clear summary of the increasingly complex issues in microfinance regulation and supervision includes definitions of key terms, clear guidelines, and options for donor action.
Over the next decade, microfinance will either realize its vast potential for improving the lives of large numbers of the poor-or it will remain an unfulfilled promise. This brief summarizes the vision and strategy of the CGAP member donors to bring microfinance to the scale required to serve millions worldwide.
Many multi-sectoral projects have credit components that provide the target group with financial services for the life of the project, and thus miss the opportunity to build long-term financial services and often undermining its achievement. The ways to grasp this opportunity and/or prevent negative outcomes are outlined here.
The eradication of extreme poverty and hunger, education, women's empowerment and the other Millenium Development Goals are rightly the focus of donors and governments. This brief gives the evidence for how microfinance can play an important part in achieving these goals.
Product development in microfinance makes a lot of sense because clients obviously need more than one type of loan or service. MFIs often ask for support to expand their product line, but developing products is not a simple undertaking. Donors who want to make the best use of funds for product development will find these guidelines useful.
Knowing and understanding the components that contribute to "transparency" in microfinance is half of the battle. It is also particularly useful to know, with just a few strategic changes, how donor reports can enhance transparency for the whole microfinance sector.
Why do microfinance institutions (MFIs) charge such high interest rates to the poor? This brief gives donors a quick reference to use when answering questions about the seemingly high microcredit interest rates. It also explains how donors can tell if an MFI's rates are too high and suggests what to do.
Most apex institutions have a dubious track record. This brief explains how donors can recognize a good apex institution and then support it, thus avoiding common donor mistakes with apexes.
Savings really are as important as credit for people with a minimal income. It's the only way to pay for anything other than daily needs. Donors need to know, therefore, how to support deposit services that help poor people improve their lives.
For "water" in this title read donor funds for microfinance institutions (MFIs). Strong (MFIs) have an over supply of donor funds, it seems money is everywhere. But many smaller promising microfinance MFIs cannot get the funds they need to grow. This brief explains how donor funding can become more effective.
Microcredit is just one of many strategies that can alleviate poverty, generate income and promote employment. This brief outlines for donors when microcredit will be successful, when it is inappropriate and what alternative interventions can be used to strengthen the livelihoods of the poor.
Armed with these twelve questions and answers, every donor with a project that includes credit will be able to introduce sound practice into the project and increase its chances of success.
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