AFRICA-MIDDLE EAST REGIONAL MICROCREDIT SUMMIT Nairobi, Kenya, April 7-10, 2010
WHAT IS NEEDED TO HAVE WHOLESALE MICROFINANCE  FUNDS WORK IN AFRICA AND THE MIDDLE-EAST?   ************************** Quaz...
<ul><li>Despite microfinance institutions (MFIs) in Africa recording strong growth and encouraging performance during the ...
<ul><li>Removing market imperfections, both in the </li></ul><ul><li>demand and supply sides, apparently remains a </li></...
<ul><li>Recognizing that the country context and socio-economic circumstances will be different around the world, apex org...
<ul><li>CREATING A CONDUCIVE ENVIRONMENT FOR EMERGENCE OF SUSTAINABLE* MFIS   </li></ul><ul><li>PROMOTING THE CONCEPT OF ‘...
<ul><li>INSTITUTION BUILDING APPROACH  </li></ul><ul><li>FINANCING THE MFPs OF MFIs LIKE QUASI-EQUITY PARTICIPANTS </li></...
<ul><li>FINANANCING THE MFPs OF MFIs ON A CONTINUOUS BASIS TILL THEY REACH THE TARGETED OUTREACH </li></ul><ul><li>FINANCI...
<ul><li>APEXE FUNDS WOULD BE BUSY IN LAYING THE FOUNDATIONS OF  SUSTAINABLE MFIs IN THEIR EARLY STAGE OF DEVELOPMENT;  </l...
<ul><li>APEX FUNDS WOULD BECOME BUSIER IN RESOLVING SECOND GENERATION CHALLENGES OF A MATURED MICROFINANCE SECTOR </li></u...
<ul><li>PROMOTION OF ‘DEVELOPMENT MICROFINANCE’  </li></ul><ul><li>CONTINUATION OF INTEGRATING OF PRO-POOR DEVELOPMENT PRO...
<ul><li>TWO-TIER STRUCTURE OF GOVERNANCE: GOVERNING BODY AND THE GENERAL BODY TO BE FORMED. MEMBERS OF THE GOVERNING BODY ...
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AMERMS Workshop 9: Wholesale/Autonomous Microfinance Funds in Africa/ME (PPT by Quazi Ahmed)

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FULL TITLE:
What Is Needed to Have Wholesale/Autonomous Microfinance Funds Work In Africa and the Middle East?
ROOM: Aberdare Hall
Translated session: English & French
PANEL:
Chair: Mr. Praful Patel, President, Centennial Africa & Middle East (CAME), USA
Panelist: Dr. Quazi Mesbahuddin Ahmed, Managing Director, Palli Karma-Sahayak Foundation (PKSF), Bangladesh
Panelist: Mr. David Ferrand, Director, Financial Sector Deepening (FSD Kenya), Kenya
Panelist: Ms. Marilou Uy, Sector Director, World Bank, USA

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AMERMS Workshop 9: Wholesale/Autonomous Microfinance Funds in Africa/ME (PPT by Quazi Ahmed)

  1. 1. AFRICA-MIDDLE EAST REGIONAL MICROCREDIT SUMMIT Nairobi, Kenya, April 7-10, 2010
  2. 2. WHAT IS NEEDED TO HAVE WHOLESALE MICROFINANCE FUNDS WORK IN AFRICA AND THE MIDDLE-EAST? ************************** Quazi Mesbahuddin Ahmed Managing Director Palli Karma-Sahayak Foundation (PKSF) (Rural Employment Support-Fund)
  3. 3. <ul><li>Despite microfinance institutions (MFIs) in Africa recording strong growth and encouraging performance during the past decades, they continue to face many challenges and will need to seek new cost-effective models to scale up. </li></ul><ul><li>Assuming that the role of public policy in countries with existing or potential MFIs is to create conditions for the emergence of sustainable, profitable MFIs, one can also surmise that wholesale microfinance funds are devices introduced by donors and/or governments in order to address problems that may not be resolved by markets and/or to pursue goals that may not be entirely achieved by market forces alone. </li></ul>ROLE OF APEX FUNDS IN SCALING UP OF MICROFINANCE IN AFRICA AND THE MIDDLE-EAST
  4. 4. <ul><li>Removing market imperfections, both in the </li></ul><ul><li>demand and supply sides, apparently remains a </li></ul><ul><li>difficult and long-term task. </li></ul><ul><li>On the demand front, building financial and human capital of the poor, specially of the hardcore-poor, is also an arduous and long-term task. This notion requires admission on all hands. </li></ul><ul><li>On the supply side, for meeting the challenges emanating from the poor people, there is an obvious need for a new set of financial institutions i.e MFIs. The process of their institutionalization is a long-term venture. </li></ul>APEX FUNDS IN SCALING UP OF MICROFINANCE
  5. 5. <ul><li>Recognizing that the country context and socio-economic circumstances will be different around the world, apex organizations for MFIs need to be created as permanent institutions from the very beginning. CGAP has shown the reality that wholesale funds, which were originally designed as temporary funding mechanisms, became permanent entities in most cases. </li></ul><ul><li>When MFIs can grow up and be able to borrow at commercial rates, apex funds can also charge same rates from them. Meanwhile, much water would flow through a Kenyan river when poor people would be capable of handling larger financial leverages and the MFIs had learnt to continuously battle with the trade-off between social and efficiency goals. </li></ul>APEX FUNDS IN SCALING UP OF MICROFINANCE (Contd.)
  6. 6. <ul><li>CREATING A CONDUCIVE ENVIRONMENT FOR EMERGENCE OF SUSTAINABLE* MFIS </li></ul><ul><li>PROMOTING THE CONCEPT OF ‘DEVELOPMENT MICROCREDIT’ </li></ul><ul><li>WORKING AS KEY INSTITUTIONAL DEVELOPMENT AGENTS FOR MFIs </li></ul><ul><li>SERVING AS CATALYST IN INTEGRATING DEVELOPMENT PROGRAMS WITH MFP FOR MAKING AN EFFECTIVE DENT IN POVERTY REDUCTION </li></ul><ul><li>* Includes both financial and institutional sustainability </li></ul>APEX FUNDS IN SCALING UP OF MICROFINANCE (Contd.) With the above premise, we indicate the following roles for an apex:
  7. 7. <ul><li>INSTITUTION BUILDING APPROACH </li></ul><ul><li>FINANCING THE MFPs OF MFIs LIKE QUASI-EQUITY PARTICIPANTS </li></ul><ul><li>PERFORMANCE-BASED FINANCING </li></ul><ul><li>SOCIALLY MOTIVATED FINACING APPROACH IN PLACE OF COMMERCIAL FINANCING </li></ul>STRATEGIES OF APEX FUNDS
  8. 8. <ul><li>FINANANCING THE MFPs OF MFIs ON A CONTINUOUS BASIS TILL THEY REACH THE TARGETED OUTREACH </li></ul><ul><li>FINANCING THE INSTITUTIONAL DEVELOPMENT ACTIVITIES OF MFIs </li></ul><ul><li>SETTING UP PERFORMANCE STANDARDS FOR MFIs </li></ul><ul><li>MONITORING AND SUPERVISION OF MFPS AND ID ACTIVITIES OF MFIs </li></ul><ul><li>ENCOURAGING MFIS IN DIVERSIFYING FINANCIAL SERVICES FOR THE POOR </li></ul><ul><li>ENCOURAGING AND ENABLING THE MFIs IN INTEGRATING PRO-POOR ACTIVITIES WITH THEIR MFPs </li></ul>FUNCTIONS OF APEX FUNDS
  9. 9. <ul><li>APEXE FUNDS WOULD BE BUSY IN LAYING THE FOUNDATIONS OF SUSTAINABLE MFIs IN THEIR EARLY STAGE OF DEVELOPMENT; </li></ul><ul><li>APEX FUNDS WOULD BE BUSY IN </li></ul><ul><li>BUILDING AWARENESS ABOUT THE CONCEPT OF DEVELOPMENT </li></ul><ul><li>MICROFINANCE AMONG MFIs AND THE SOCIAL ENTREPRENEURS </li></ul><ul><li>FORMULATING POLICIES AND SYSTEMS FOR MFIS </li></ul><ul><li>IMPARTING TRAINING ON FUNDAMENTALS OF MICROFINANCE </li></ul><ul><li>MANAGEMENT </li></ul><ul><li>SETTING THE PERFORMANCE STANDARDS </li></ul><ul><li>SCREENING APPLICATIONS OF POTENTIAL MFIs </li></ul><ul><li>FINANCING MFPs OF MFIs FOR INCREASING HORIZONTAL </li></ul><ul><li>OUTREACH OF MFIs </li></ul>ROLE OF APEX FUNDS IN COUNTRIES HAVING MICROFINANCE SECTOR IN A NASCENT STAGE
  10. 10. <ul><li>APEX FUNDS WOULD BECOME BUSIER IN RESOLVING SECOND GENERATION CHALLENGES OF A MATURED MICROFINANCE SECTOR </li></ul><ul><li>APEX FUNDS WOULD BE BUSY </li></ul><ul><li>ENHANCING CAPACITY OF MFIs TO SERVE DIFFERENT SEGMENTS OF HETEROGENEOUS POOR POPULATION </li></ul><ul><li>INTEGRATING SYNERGIES OF NON-FINACIAL SERVICES WITH MFP </li></ul><ul><li>INSTITUTIONAL DEVELOPMENT OF MFIs WITH SPECIAL FOCUS ON </li></ul><ul><li>GOVERNANCE AND POLICY ADVOCACY </li></ul><ul><li>PROMOTING ICT BASED MF FOR DIVERSIFYING RANGE OF SERVICES </li></ul><ul><li>AND REDUCTION IN COST OF SERVICES </li></ul><ul><li>INFUSING NET FINANCIAL RESOURCES TO TARGETED CLIENTS FOR </li></ul><ul><li>ENBLING THEM TO MAKE REQUIRED INVESTMENTS FOR GRADUATING OUT OF POVERTY   </li></ul>ROLE OF APEX FUNDS IN COUNTRIES HAVING MICROFINANCE SECTOR IN MATURED STAGE
  11. 11. <ul><li>PROMOTION OF ‘DEVELOPMENT MICROFINANCE’ </li></ul><ul><li>CONTINUATION OF INTEGRATING OF PRO-POOR DEVELOPMENT PROGRAMS WITH MFPs </li></ul><ul><li>ENHANCING CAPACITIES OF MFIs TO SWITCH FROM A SINGLE TARGETED MFP TO MORE INCLUSIVE FINANCING PROGRAMS </li></ul><ul><li>ENSURING PERFORMANCE-BASED CONTINUOUS FINANCING OF MFPs OF MFIs </li></ul><ul><li>CREATION OF CONDUCIVE ENVIRONMENT FOR DIVERSIFICATION OF FINANCIAL SERVICES AND REDUCTION OF COST OF OPERATIONS THROUGH APPROPRIATE USE OF ICT </li></ul><ul><li>INFUSION OF NET FINANCIAL RESOURCES TO THE TARGETED POOR </li></ul>GUIDING PRINCIPLES FOR NEXT GENERATION APEXES
  12. 12. <ul><li>TWO-TIER STRUCTURE OF GOVERNANCE: GOVERNING BODY AND THE GENERAL BODY TO BE FORMED. MEMBERS OF THE GOVERNING BODY TO BE COOPTED FROM GENERAL BODY. GOVERNING BODY TO BE ACCOUNTABLE TO GENERAL BODY </li></ul><ul><li>PRESENCE OF DONOR/GOVERNMENT STAFF IN THE GOVERNING BODY OF APEX FUNDS MIGHT BE AVOIDED TO EVADE POSSIBLE DILUTION IN SENSE OF OWNERSHIP </li></ul><ul><li>PRESENCE OF GOVERNMENT NOMINATED MEMBERS INCLUDING THE CHAIRMAN OF THE BOARD WOULD LIKELY MAKE THE APEX MORE CREDIBLE AND SUSTAINABLE. THEY SHOULD NOT BE GOVERNMENT SERVANTS THOUGH </li></ul><ul><li>MEMBERS OF THE BOARD MUST HAVE PROVEN GOOD TRACK RECORD IN THE FIELD OF PRO-POOR DEVELOPMENT ACTIVITIES, MICROFINANCE AND INSTITUTIONAL DEVELOPMENT </li></ul><ul><li>TENURE OF MEMBERSHIP SHOULD BE ‘ADEQUATE’ FOR ENSURING STABLE POLICY-MAKING </li></ul><ul><li>CEO TO BE APPOINTED BY THE GOVERNING BOARD </li></ul>GOVERNANCE STRUCTURE OF APEX FUNDS
  13. 13. Thank You

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