Christian

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  • Personnal skills: Technical service provider for member based and client based MFIs / director of MFIs
  • Christian

    1. 1. European Microfinance Conference 2009 Microfinance and its growth in Europe: Consequences, challenges, opportunities Workshop: “ The governance of Microfinance Organizations in Europe: a Motor or a Brake for growth?” Christian Baron – June 2009
    2. 2. Gret, Cerise Who are we ? <ul><li>A French development NGO, </li></ul><ul><li>Projects Implementation / Short Term Expertise / Public Policy / Diffusion of references </li></ul><ul><li>Working Experiences in more than 40 developing countries </li></ul><ul><li>90 employees and volunteers in France and abroad </li></ul><ul><li>Six thematic departments, among them a Microfinance and Small Enterprise Department involved in Microfinance, Micro insurance and BDS activities </li></ul><ul><li>Promotion and support to MFIs that have been institutionalized as Limited Companies (Cambodia, Mexico, Mauritania, Madagascar) </li></ul><ul><li>www.gret.org to know more about us </li></ul><ul><li>Member of Cerise, a French Microfinance Network that has worked on MFIs Governance in 2003/2005 </li></ul>
    3. 3. Main Lessons from Cerise work on Governance Handbook for the analysis of the governance of MFIs http://www.cerise-microfinance.org/ http://www.cerise-microfinance.org/pdf/En/handbook_analisis_governance_mfi.pdf
    4. 4. From Shareholders to Stakeholders <ul><li>Governance is not only related to the Board of Directors or to the relationship between BoD and shareholders  a stakeholder analysis is necessary </li></ul><ul><li>Stakeholders : owners, directors, staff, partners, technical service providers, clients (borrowers and depositors), etc. </li></ul><ul><li>There is no “one-fit-all” governance solution </li></ul><ul><li>Dysfunctions and crisis may be a good source of learning to assess the governance of an MFI </li></ul>
    5. 5. Three main questions <ul><li>Whatever is the choice regarding the legal status and the governance system, there are three main questions to raise : </li></ul><ul><ul><li>Who has the decision making power among the stakeholders ? </li></ul></ul><ul><ul><li>How is this power exercised ? </li></ul></ul><ul><ul><li>How are problems and crisis dealt with ? </li></ul></ul>
    6. 6. The foundation for a good governance  Six fundamental elements <ul><li>A shared strategic vision among all stakeholders </li></ul><ul><li>A reliable and timely MIS </li></ul><ul><li>A clear well adapted and coherent decision making process </li></ul><ul><li>Presence of adequate trainings and skills </li></ul><ul><li>An efficient monitoring system </li></ul><ul><li>An effective crisis prevention and management </li></ul>
    7. 7. A shared strategic vision among all stakeholders <ul><li>Explicit strategic vision (target public, products and services, geographical outreach, etc.) </li></ul><ul><li>Strategic vision formalized in founding texts </li></ul><ul><li>Strategic vision consistent in founding texts and business plan </li></ul><ul><li>Strategic vision understood and shared by all the stakeholders (elected people, staff, etc.) </li></ul><ul><li>Strategic vision coherent with the institutional context </li></ul>
    8. 8. A reliable and timely MIS <ul><li>Information is complete at all levels of the institution (Field level  HQ  BoD  GA + Central Banks + lenders + etc.) </li></ul><ul><li>Availability of portfolio and financial indicators (how long does it take to get the information ?) </li></ul><ul><li>Quality and reliability of the MIS </li></ul><ul><li>Accessibility of the information </li></ul><ul><li>Use of information in the decision- making </li></ul>
    9. 9. Clear, well-adapted and coherent decision making process <ul><li>Formalized decision making process in manuals of procedures (preparation  decision  implementation  control) </li></ul><ul><li>Coherency between the formal decision making process and the real one </li></ul><ul><li>Coherence between the stakeholders and the level of decision-making </li></ul><ul><li>Prevention and good management of conflict of interests </li></ul><ul><li>Accountability of decision makers </li></ul>
    10. 10. Adequate trainings and skills <ul><li>Coherence between training / specialization and responsibilities held </li></ul><ul><li>Existence of an internal training program </li></ul><ul><li>Existence of incentives / disincentives for executing decisions </li></ul><ul><li>Coherency between technical / financial means available and institutional strategy </li></ul><ul><li>Ability to execute decision without external assistance </li></ul>
    11. 11. An efficient monitoring system <ul><li>Clearly defined monitoring chain </li></ul><ul><li>Widespread understanding of the monitoring chain by all stakeholders </li></ul><ul><li>Ability to detect problems and anticipate risks </li></ul><ul><li>Independent, competent and regular audits </li></ul><ul><li>Availability of monitoring and auditing reports (written documents) </li></ul>
    12. 12. Effective crisis prevention and management <ul><li>Internal capacity to detect problems (ICS and Internal Audit) </li></ul><ul><li>Efficient warning system (time between beginning of a problem and its discovery) </li></ul><ul><li>Ability to react quickly and proportionally (time between discovery and reaction) </li></ul><ul><li>Existence of a response plan </li></ul><ul><li>Ability to modify rules and procedures </li></ul>
    13. 13. Some other lessons learnt <ul><li>Governance and access to financial resources  Lenders need to understand the governance of an MFI and to be sure that it works well </li></ul><ul><li>Governance and staff policy  the incentive system may play a role to strengthen the governance depending on the criteria that are used to appraise the performance of the staff (ex : ICS) </li></ul><ul><li>Governance and social performance  a SP assessment and monitoring system is a useful tool </li></ul><ul><li>Governance and crisis  a good governance system may not allow to avoid crisis but to solve them </li></ul><ul><li>Evolution of the governance / Evolution of the MFI  good governance is a permanent challenge </li></ul>

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