VI. Module III: National, Regional, and International Support
VI. Module III: National, Regional, and International Support
international environment. Applying a systems’ perceptive, poverty eradication is recognized as
a multi-scale endeavor with different partners participating at the local, national, regional, and
international levels. Whereas the foregoing discussion has focused on microfinance lessons for
the local level, this section will broaden the scope with lessons that scale up through the state to
the global community.
Acknowledge and Empower African People: Outside intervention should adopt learning
approaches rather than blueprint approaches to microfinancing that recognize and utilize African
insights and experience. In many cases, "outside experts" are paternalistic or distrustful with
resource-poor Africans, holding them responsible for their state as a result of low motivation,
initiative, and education. This attitude reinforces charity and relief rather than the capacitybuilding
of the poor towards self-reliance and development. Outside assistance must employ
bottom-up, participatory approaches that ensure that microfinance schemes are built around
people rather than people around them. Participatory approaches are not only more culturally
appropriate and hence sustainable for local needs, they foster more equitable distribution of
benefits as development is accountable to a more representative community.
Establish Realistic Expectations: Drawing upon participatory input and reliable research, donors
must establish practical and culturally sensitive goals for microfinance initiatives. Institutional
sustainability typically takes between eight to twelve years in Africa, and in many instances selfsufficiency
is not feasible. While an increase in MFI revenue can be achieved by an increase in
volumes of loans, pressure to scale-up and achieve greater outreach can over-extend MFIs,
which are often unable to recruit personnel and establish a suitable infrastructure to sustain such
operational expansion. This is especially true when operating in disadvantaged rural areas, which
incur additional costs associated with low and dispersed population density. Research supports
that the cost of establishing a microfinance network in remote areas is approximately 80% higher
than in more accessible regions. Wherever the MFI operates, it is also important to adjust credit
and production expectations to the material needs of the resource poor. Too often outside donors
base their expectations on assumptions of unlimited growth imported from industrialized
economies; in a world of limited resources, such assumptions are ultimately unrealistic.
Conduct Research: Research is an invaluable tool to better understand and support microfinance
initiatives. An analysis of the local microfinance environment, (i.e. population, organizational
culture, natural resources, and economy), helps to promote microfinance strategies that
complement these realities, utilizing assets of the area, and reinforcing the capacity for social,
economic, and organizational innovation. Institutional appraisal is another research tool that
allows donors to better access and support MFIs' poverty outreach and impact, the quality of the
financial services and the loan portfolio, governance and transparency, management capacity and
efficiency, financial performance, and plans for the future.
Adopt Policies Supporting Microfinance Infrastructure: Policy changes can reinforce a
supporting infrastructure in which MFIs function, influencing the practices of finance ministries,
central banks, the commercial banking system, and donors in the country (Box V). Policies
should encourage MFIs to establish themselves as formal, regulated financial institutions,
provide low minimum capital requirements, and streamline reporting standards. Other important
infrastructure changes should support liberal interest rates so that MFIs can charge necessary
rates to sustain operations; develop financial networks for resource transfers among retail
microfinance institutions; and establish credit ratings on clients, (thus reducing the risk of clients
who repay one institution while borrowing from another).
Create a Supportive Legal Environment: A supportive legal environment builds credence and
confidence in MFIs. With legal authority as a financial intermediary, MFIs are able to improve
their outreach and performance. MFI regulations should be flexible, involve microfinance
practitioners in policy development, and encourage a range of institutions. A legal framework in
which the microfinance community operates can support microfinance standards, and a
competent and uncorrupt judicial process can ensure people of prudence in the managing of
financial transfers.
Develop Standards and Assessment Tools: Policy leaders in the national and international
community can work with microfinance practitioners in Africa to build consensus and
commitment on core principles and standards in microfinance. Microfinance standards include
organizational, operating, financial and reporting standards that will lead to the recognition of
microfinance as a legitimate sector in the financial services industry. Reliable microfinance
standards reinforce trust and confidence in MFIs and can be used to enhance operational
efficiency.
Transform Public Structures: In many cases, an effective infrastructure for microfinance exists
within public agencies, such as the postal system. Postal Savings Banks (PSBs) already exist in
countries such as Uganda, Kenya, Tanzania, and Cameroon. PSBs have a comparative advantage
to develop microfinance services on a large-scale basis. Their geographic coverage of both urban
and rural national territory can offer effective outreach through preexisting networks. This
potential, however, is contingent upon the proper restructuring, guidance, and monitoring of
PBSs.
Supportive Microenterprise Initiatives: It is important to remember that microenterprise
development is a essential extension of microfinance schemes. National and international actors
can promote legislation, business services, and infrastructure to enable African microentrepreneurs
and produces to increase market opportunities, technical know-how, and
management.
Reinforce Staff Training: Staff training improves operational efficiency, sustainability, and
outreach. Training includes financial management, credit and savings management and methods,
and alternative management information systems, using technological resources from the region
when possible. Staff training creates social ties between staff members, and strengthens overall
morale, loyalty, and the MFI's corporate identity. Trainers can train and develop a pool of
trainers from the local population, who are familiar with local languages, customs, and norms.
Typically, qualified trainers who are intimately familiar with the area and people perform better
and are willing to accept sacrifices for the cause.
Utilize pre-existing structures, such as the Postal Savings Banks (PBS): In many cases, an
effective infrastructure for microfinance exists within public agencies, such as the postal system.
Postal Savings Banks offer an important comparative advantage in geographical coverage for
both rural and urban outreach. The transformation of PBSs into microfinance institutions is
contingent upon proper restructuring, monitoring, and the introduction of appropriate technology
and training. Building upon examples elsewhere, such as Japan’s PBS, can reinforce this
transformation.
Promote Networking and Cooperation: National and international actors should reinforce
cooperation and coordination among actors at all levels in the design, management, and
assessment of microfinance initiatives. Mechanisms should be created for the exchange of
knowledge and experience among African microfinance practitioners, including the use of the
Internet, dissemination of written material, field level practitioner exchanges, and best practice
workshops. Regional coordinating committees and sub-regional conferences can bring together
microfinance policy makers, leaders, and representatives from bilateral, multilateral and intergovernmental
development partners to access and compare microfinance progress. Coordination
among various microfinance actors also ensures complimentary rather than competing policies.
Microfinance in Africa: Combining the Best
Practices of Traditional and Modern
Microfinance Approaches towards
Poverty Eradication
VI Module III National Regional and International Support - To learn more about this author, visit United Nations Economic Commission for Africa's Website.
Like this article? Share it with your friends
Microfinance initiatives are more likely to succeed in a supportive national, regional, and
international environment. Applying a systems’ perceptive, poverty eradication is recognized as
a multi-scale endeavor with different partners participating at the local, national, regional, and
international levels. Whereas the foregoing discussion has focused on microfinance lessons for
the local level, this section will broaden the scope with lessons that scale up through the state to
the global community.
Acknowledge and Empower African People: Outside intervention should adopt learning
approaches rather than blueprint approaches to microfinancing that recognize and utilize African
insights and experience. In many cases, "outside experts" are paternalistic or distrustful with
resource-poor Africans, holding them responsible for their state as a result of low motivation,
initiative, and education. This attitude reinforces charity and relief rather than the capacitybuilding
of the poor towards self-reliance and development. Outside assistance must employ
bottom-up, participatory approaches that ensure that microfinance schemes are built around
people rather than people around them. Participatory approaches are not only more culturally
appropriate and hence sustainable for local needs, they foster more equitable distribution of
benefits as development is accountable to a more representative community.
Establish Realistic Expectations: Drawing upon participatory input and reliable research, donors
must establish practical and culturally sensitive goals for microfinance initiatives. Institutional
sustainability typically takes between eight to twelve years in Africa, and in many instances selfsufficiency
is not feasible. While an increase in MFI revenue can be achieved by an increase in
volumes of loans, pressure to scale-up and achieve greater outreach can over-extend MFIs,
which are often unable to recruit personnel and establish a suitable infrastructure to sustain such
operational expansion. This is especially true when operating in disadvantaged rural areas, which
incur additional costs associated with low and dispersed population density. Research supports
that the cost of establishing a microfinance network in remote areas is approximately 80% higher
than in more accessible regions. Wherever the MFI operates, it is also important to adjust credit
and production expectations to the material needs of the resource poor. Too often outside donors
base their expectations on assumptions of unlimited growth imported from industrialized
economies; in a world of limited resources, such assumptions are ultimately unrealistic.
Conduct Research: Research is an invaluable tool to better understand and support microfinance
initiatives. An analysis of the local microfinance environment, (i.e. population, organizational
culture, natural resources, and economy), helps to promote microfinance strategies that
complement these realities, utilizing assets of the area, and reinforcing the capacity for social,
economic, and organizational innovation. Institutional appraisal is another research tool that
allows donors to better access and support MFIs' poverty outreach and impact, the quality of the
financial services and the loan portfolio, governance and transparency, management capacity and
efficiency, financial performance, and plans for the future.
Adopt Policies Supporting Microfinance Infrastructure: Policy changes can reinforce a
supporting infrastructure in which MFIs function, influencing the practices of finance ministries,
central banks, the commercial banking system, and donors in the country (Box V). Policies
should encourage MFIs to establish themselves as formal, regulated financial institutions,
provide low minimum capital requirements, and streamline reporting standards. Other important
infrastructure changes should support liberal interest rates so that MFIs can charge necessary
rates to sustain operations; develop financial networks for resource transfers among retail
microfinance institutions; and establish credit ratings on clients, (thus reducing the risk of clients
who repay one institution while borrowing from another).
Create a Supportive Legal Environment: A supportive legal environment builds credence and
confidence in MFIs. With legal authority as a financial intermediary, MFIs are able to improve
their outreach and performance. MFI regulations should be flexible, involve microfinance
practitioners in policy development, and encourage a range of institutions. A legal framework in
which the microfinance community operates can support microfinance standards, and a
competent and uncorrupt judicial process can ensure people of prudence in the managing of
financial transfers.
Develop Standards and Assessment Tools: Policy leaders in the national and international
community can work with microfinance practitioners in Africa to build consensus and
commitment on core principles and standards in microfinance. Microfinance standards include
organizational, operating, financial and reporting standards that will lead to the recognition of
microfinance as a legitimate sector in the financial services industry. Reliable microfinance
standards reinforce trust and confidence in MFIs and can be used to enhance operational
efficiency.
Transform Public Structures: In many cases, an effective infrastructure for microfinance exists
within public agencies, such as the postal system. Postal Savings Banks (PSBs) already exist in
countries such as Uganda, Kenya, Tanzania, and Cameroon. PSBs have a comparative advantage
to develop microfinance services on a large-scale basis. Their geographic coverage of both urban
and rural national territory can offer effective outreach through preexisting networks. This
potential, however, is contingent upon the proper restructuring, guidance, and monitoring of
PBSs.
Supportive Microenterprise Initiatives: It is important to remember that microenterprise
development is a essential extension of microfinance schemes. National and international actors
can promote legislation, business services, and infrastructure to enable African microentrepreneurs
and produces to increase market opportunities, technical know-how, and
management.
Reinforce Staff Training: Staff training improves operational efficiency, sustainability, and
outreach. Training includes financial management, credit and savings management and methods,
and alternative management information systems, using technological resources from the region
when possible. Staff training creates social ties between staff members, and strengthens overall
morale, loyalty, and the MFI's corporate identity. Trainers can train and develop a pool of
trainers from the local population, who are familiar with local languages, customs, and norms.
Typically, qualified trainers who are intimately familiar with the area and people perform better
and are willing to accept sacrifices for the cause.
Utilize pre-existing structures, such as the Postal Savings Banks (PBS): In many cases, an
effective infrastructure for microfinance exists within public agencies, such as the postal system.
Postal Savings Banks offer an important comparative advantage in geographical coverage for
both rural and urban outreach. The transformation of PBSs into microfinance institutions is
contingent upon proper restructuring, monitoring, and the introduction of appropriate technology
and training. Building upon examples elsewhere, such as Japan’s PBS, can reinforce this
transformation.
Promote Networking and Cooperation: National and international actors should reinforce
cooperation and coordination among actors at all levels in the design, management, and
assessment of microfinance initiatives. Mechanisms should be created for the exchange of
knowledge and experience among African microfinance practitioners, including the use of the
Internet, dissemination of written material, field level practitioner exchanges, and best practice
workshops. Regional coordinating committees and sub-regional conferences can bring together
microfinance policy makers, leaders, and representatives from bilateral, multilateral and intergovernmental
development partners to access and compare microfinance progress. Coordination
among various microfinance actors also ensures complimentary rather than competing policies.
Microfinance in Africa: Combining the Best
Practices of Traditional and Modern
Microfinance Approaches towards
Poverty Eradication
VI Module III National Regional and International Support - To learn more about this author, visit United Nations Economic Commission for Africa's Website.
Like this article? Share it with your friends
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John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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George LudwigGeorge Ludwig is a recognized authority on sales strategy and peak performance psychology. An international speaker, trainer, and corporate consultant, he helps clients like Johnson & Johnson, Abbott Laboratories, Northwestern Mutual, CIGNA, and numerous others improve sales force effectiveness and performance. Though it's George's strategies and processes that help corporations increase productivity and performance, it's his tremendous energy and dynamism that spark the transformation. Again and again, clients remark on his amazing ability to unleash human capacity and inspire men and women to break out of their comfort zones. The result is a whole new type of salesperson. His customized presentations teach achievers to make stunning advances in their lives. From helping salespeople realize cherished dreams to helping corporations exponentially accelerate revenue streams, George Ludwig leaves audiences and individuals empowered, emboldened, and clamoring for more. George is the best-selling author of Power Selling: Seven Strategies for Cracking the Sales Code and Wise Moves: 60 Quick Tips to Improve Your Position in Life & Business. - Visit George Ludwig's Website |
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Jay Kubassek(Jay's Full Bio: EvanCarmichael.com/jaykubassek) In five years, Canadian-born entrepreneur Jay Kubassek went from selling mufflers at a Midas franchise to revolutionizing Internet marketing with the 2004 launch of CarbonCopyPRO, a online marketing education company, now worth over $20 million with customers in over 160 countries.
As an independent film producer, his upstart film fund Aliquot Films is currently producing a films with Spike Lee and Abel Fererra (starring Ethan Hawke and Dennis Hopper.)
Jay's entrepreneurial spirit is irrepressible. He’s the owner of five companies, a professional speaker and trainer, international real estate developer/investor, extreme sport enthusiast and emerging philanthropist. Jay resides in NYC with his wife Jamie, son Milo and dog Cooper. Visit Jay's official website: www.JayKubassek.com - Visit Jay Kubassek's Website |
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