Research & Analysis

What Is a Network? The Diversity of Networks in Microfinance Today

Throughout the development of the microfinance industry, network support organizations (NSOs) have played a critical role in launching new institutions, developing standards, wholesaling funds, providing technical services, implementing knowledge management, and leading policy reform efforts. Given their experience, NSOs can be an effective channel for donor microfinance. Donors with limited staff or technical capacity can leverage their funds by investing in well-managed networks. Such NSOs are often in a better position to provide microfinance institutions (MFIs) direct financial and technical assistance, to develop innovative products, and to advocate for policy change. Donors have found it difficult, however, to distinguish networks from one another because they encompass organizations that have as many differences as similarities.

To address this difficulty, CGAP and the Small Enterprise Education and Promotion (SEEP) Network invited network leaders and donors to a workshop in October 2002 to discuss the roles and comparability of networks. Subsequent consultation through April 2003 led to the development of a Network Support Organization Profile. Thirty-three NSOs were asked to summarize basic organizational information and to place themselves along a series of spectrums intended to differentiate key dimensions of their operations, including partner type, services, funding, ownership and governance, and transparency. Rather than classify NSOs into broad categories, the self-profiles seek to clarify how specifically the NSOs differ.