There are numerous examples of transforming microfinance institutions in which the alignment or misalignment between the personal interests of key decision makers and the long-term interests of the institution affected the ultimate outcome and future of the organization. Yet to date there has been little formal analysis or discussion of this issue. Without open discussion on how to treat personal interests, the issue is too often relegated to whispered conversations in back rooms. The resulting cost, in terms of institutions not transformed or transformed in an unsatisfactory manner, is not easy to see, but it may be quite significant.

In this paper, the focus on aligning interests speaks to the human elements at play during the decision making about the future of transforming MFIs. The people involved in the transforming MFI—general managers, board members, staff, and even clients—have a personal stake in the outcome of the transformation. The aims of this paper include:
- situating this paper relative to larger issues for the industry and transforming MFIs;
- defining the challenge of aligning interests, within the context of transformation from non-profit to for-profit operating paradigms;
- using examples and cases from actual industry experience; and
- proposing some tentative solutions to these issues in the form of suggested “good practices” and areas that require further industry collaboration.

This paper is available in a shortened version (CEN1E) and in a longer version with case studies (CEN1LE)

Brian Busch and Stephanie Dolan also authored this paper.

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**If you have trouble downloading this paper, please:
click here for English
click here for Spanish

Rarely a day goes by without someone mentioning how financial inclusion can be boosted by new delivery channels. Yet for all the talk about reaching the “unbanked” and other low-income groups, it is banks, mobile operators, and retailers that have been experimenting with new delivery systems to reach the poor. As the group that is closest to the niche segment, microfinance institutions (MFIs) seem conspicuously absent from the discussion. Or are they? Based on research, it appears that while some experimentation is indeed occurring, significant obstacles remain.

This paper outlines ten challenges that are holding MFIs back from deploying alternative channels and provides a roadmap for MFIs—and broader stakeholders—who seek to overcome these hurdles. The paper concludes with a description of competitive advantages that MFIs have in this space to make them more effective in reaching low-income groups using innovative channels.

**If you have trouble downloading this paper, please use URL http://www.centerforfinancialinclusion.org/Document.Doc?id=731

This paper provides current market information and analysis to support the ongoing dia¬logues among policy makers and providers about the goal of full financial inclusion and how to achieve it in Mexico. The paper defines financial inclusion to include a full suite of products offered at a high quality and introduces the Financial Inclusion Scorecard as a basis for measuring Mexico’s current status and future progress. The paper also identifies who is excluded, projects trends forward to 2020 to identify areas where gaps could be most persistent, and highlights some of the top opportunities for closing inclusion gaps.

The microfinance industry has become a model of responsible finance that remains resilient and growing amidst a steep economic down-turn. The growth and increasing purchasing power of the vast global market of low-income people is attracting private sector attention across sectors. In finance, the success of the microfinance movement shows the business viability of financial services for the poor.

In her book, Elisabeth Rhyne demonstrates that providing financial services to the poor is a viable business prospect that allows investors to be socially AND financially responsible. Microfinance for Bankers & Investors provides the readers with a road map showing where and how businesses can invest in greater financial inclusion, guided by the stories of companies already leading the way.

This project is about encouraging private businesses to engage in financial inclusion. The project was conceived by the private sector members of the UN Advisors on Financial Inclusion, a high-level body formed to continue the work of the United Nations International Year of Microcredit (2005), and financed by Visa, Inc.

The electronic version below is an EXCERPT only. To purchase the book in its entirity, please choose the hardcopy version or visit Amazon.com (discount available at Amazon.com).

In 2006 an estimated U.S.$300 billion in remittances—over 2 percent of U.S. gross domestic product in the same year—were sent worldwide by approximately 150 million immigrants. With such high volume it is no wonder that financial institutions, payment companies, and moneytransfer organizations have been trying to tap into this market, not only to offer money-transfer services, but also with the hope of providing access to financial services to this generally unbanked client base. This InSight presents some of the key findings as well as the opportunities and challenges that ACCION International has identified in the banking of recipient households. It presents recommendations of six key elements that financial institutions should to take into account in order to develop an effective strategy to bank recipients of remittances.

Past-due or non-collectible loans are part and parcel of the financial sector. As past-due rates surpass expected limits, though, this piece of the credit cycle can become a true problem. While often seen as a final step in the lending cycle, collections actually plays an integral role in the overall process. Drawing from the experiences of collections programs throughout Latin America and through the implementation of initial collections activities in India that are mainly focusing on Individual lending methodology, this InSight explores “best practices” and considerations that an MFI should take into account when attempting to successfully implement collections activities.

This paper discusses the Initial Public Offerings/listings of the four leading microfinance institutions that have carried out such transactions—Bank Rakyat Indonesia, BRAC Bank (Bangladesh), Banco Compartamos (Mexico) and Equity Bank (Kenya). The study attempts to determine the conditions under which a public offering or listing is suitable for a microfinance organization. It does this by analyzing the development of each of the four institutions and how that development influenced the decision to "go public." It also examines the purpose, structure and process of the offerings and listing in order to extract applicable lessons. The Council hopes that this research will be helpful to all that are involved in microfinance, especially investors and microfinance institutions seeking new entries to capital markets.

ACCION International's "Model for Social Change" seeks to explain what we do, why we do it, and why our approach is unique. Step by step, it bridges from the broad aspirations set forth in our mission statement to the specific objectives and metrics of the new strategic plan for 2008–2011.

A vast unmet demand exists for housing finance for low-income populations in the developing world. Though solutions have yet to reach significant scale, either at governmental or private levels, the microfinance industry has recently made great strides in this area. Housing microfinance (HMF) has shown signs of its potential to reach scale.

ACCION International and Habitat for Humanity International joined efforts to conduct a study covering ten of ACCION’s partners in Latin America, representing more than 90 percent of the ACCION Network’s housing portfolio. The objective of this research was to learn about the key success factors as well as challenges and barriers for reaching scale in housing.

Investment in microfinance, particularly cross-border investment, is booming. Where is this investment coming from? How is it being absorbed? What types of advances need to occur to build a healthy infrastructure for debt and equity investments into microfinance? How do we manage the risks investors face? These questions were discussed as part of the second annual Microfinance Cracking the Capital Markets conference, hosted by ACCION International and sponsored by Credit Suisse. The conference highlighted the growth in microfinance investment, recent innovations in structured deals, and ways in which microfinance institutions (MFIs) need to develop to integrate more fully into the capital markets.

On April 19, 2007, Banco Compartamos became the first Latin American microfinance institution (MFI) to offer equity though an Initial Public Offering (IPO). This InSight provides detailed information about the transaction – its rationale, process, results and key success factors.

This InSight describes a framework that microfinance institutions can use to assess and report on their social performance. ACCION has applied this framework to analyze how six leading microfinance institutions in Africa, Asia and Latin America adhere to these social performance criteria. The results of this application inform this InSight.

Microfinance is on its way to becoming mainstream. This transition creates tremendous opportunities for the service providers involved and, more importantly, for the millions of people who will, as a consequence, newly have access to financial services. Today, we can optimistically predict that in the coming decade the promise of microfinance will be substantially achieved. However, the road to fulfilling this promise is not without significant challenge and uncertainty.

This article, by Elisabeth Rhyne and María Otero, was published in the Winter/Spring 2007 issue of MIT's innovations journal.

Output of working group convened by Standard and Poor's to discuss microfinance rating methodology.

Hardcopies only--electronic download not available. Cost of shipping and handling will be charged for each copy ordered.

This monograph tells the story of Uganda Microfinance Union (UMU), and its years preparing for licensing to become a regulated deposit-taking institution, Uganda Microfinance LimitedUganda Microfinance Union. It highlights the unique aspects of UMU’s transformation process, including the operational, structural, and financial challenges it faced as it evolved from a young entrepreneurial NGO to one of the first licensed microfinance deposit-taking institutions in Uganda.

This monograph guides institutions through the process of incorporating consumer protection principles into their organizational philosophies and operations. This monograph is part of the pro-consumer initiatives of ACCION International and the MicroFinance Network. The first stage of this initiative was to develop and adopt a Pro-Consumer Pledge in 2004 among network members. The Pledge defines principles to equip microfinance customers with rights – and knowledge of these rights – while minimizing the operating costs so that MFIs can remain sustainable in the long-term. This report outlines tangible ways in which MFIs are currently integrating the ideals of the Pro-Consumer Pledge into their operations.

Please note that hardcopy sales of this monograph will not be mailed until May 25, 2006.

This paper envisions the future of microfinance, primarily by identifying the major factors that already are driving change in the industry and discussing the likely impact these forces will have on the shape of things to come. Some of these forces will propel microfinance forward, while others pose challenges to be overcome. We are on the path for microfinance to realize its grand vision of creating access to finance for all. The developments of the last decade allow us to fast forward ten years and see enormous and astounding advances.

This paper outlines the history of the microenterprise field in the United States, the characteristics of the current microenterprise market, and the challenges presently facing the field. It describes the creation in the late 1980s and early 1990s of organizations providing credit and business training to self-employed Americans lacking access to traditional bank loans. Two decades later, despite rapid growth in the number of microenterprise institutions, the field has still reached only a tiny percentage of the estimated number of small business owners who have never had a bank loan. It faces increased competition from banks and financial institutions, as well as uncertain sources of future funding. The author concludes that achieving scale and financial self-sufficiency should the primary goal for the field of microenterprise. He proposes increased specialization and consolidation of existing groups as important steps for the microenterprise field to take to develop into a microenterprise industry.

This InSight explores the following questions: How great a threat does exposure to foreign exchange rate risk represent to microfinance institutions (MFIs)? What motivates MFIs to acquire liabilities in a foreign currency? Do MFIs understand the exchange rate risks involved, and if so, how do they manage them? ACCION International presents the results of a survey of its Latin America affiliates on these questions.

This report evaluates the poverty levels of microfinance clients at Apoyo Integral in El Salvador relative to national and international poverty lines. The study also describes certain client characteristics and how they vary with poverty level. Finally, the authors describe the tool they developed for Apoyo Integral to monitor the poverty distribution of clients on a regular basis, using data collected during the credit evaluation process.

On February 5 and 6, 2006, ACCION International, Corporación Andina de Fomento (CAF) and Deutsche Bank, together with partner Developing World Markets hosted a conference in New York - “Who Will Buy Our Paper: Microfinance Cracking the Capital Markets?” More than 225 bankers, investors, money managers, investment funds and MFIs looked at recently completed local and international debt instruments, experiences of mainstream rating agencies with microfinance evaluations, the role of equity investment, and the challenges that remain to make microfinance investment an asset class. This InSight discusses the main themes of the conference. It describes successful cases of debt and equity financing in microfinance, at local and international levels, as well as exploring constraints and opportunities for the microfinance industry as it continues to seek more financing from the capital markets.

This InSight describes the case of Financiera El Comercio, a regulated microfinance institution in Paraguay. El Comercio has implemented a partnership—the only one of its kind in Paraguay— with silos that enables it to provide small loans to single-crop soybean farmers despite their higher risk profile. This InSight evaluates the conditions that are needed for this type of credit, and describes the lessons learned from this type of credit and other successful models of financing single-crop farmers.

This Insight describes Accion International’s ABCs of Business training program for microentrepreneurs that employs adult learning techniques to teach management skills. Since 1999, it has provided more than 548,000 classes to participants in 14 Latin American countries. This InSight explains the business model of the ACCION ABCs of Business training program, and its efforts to promote financial viability in its own operations and the operations of the institutions to which it licenses its training materials. It also details lessons ACCION has learned about providing sustainable business development services and how these lessons were incorporated into the program’s structure.

This monograph describes ACCION’s experiences with poverty measurement at four microfinance institutions in Latin America and the Caribbean. It explains ACCION’s research objectives and different approaches to the measurement of poverty that ACCION considered before developing its own poverty assessment tool. It also details major findings of the poverty assessments at four microfinance institutions and describes general lessons learned on the collection and analysis of poverty data. The monograph concludes by explaining how information from the poverty studies has been used at the four case study institutions.

This paper considers the key change agents and challenges that the authors see shaping the microfinance industry through the next ten years. The authors consider in depth the impact on the industry of four main drivers of change: competition, technology, commercial entry, and policy and regulatory environment. They also identify the key challenges facing suppliers of financial services to the poor, including political risk. Predictions are made about the future of the microfinance industry with an analysis of current trends, judgments about the effects of the four change agents, and the thoughts of many other microfinance leaders. The paper encompasses the global microfinance industry, and highlights regional variations.

In the previous decade and a half scores of microfinance institutions (MFIs) throughout the developing world have transformed into for-profit entities from non-profit origins or established themselves as brand new, specialized MFIs. While still few in number, shareholder-owned MFIs form an increasingly significant part of the financial landscape in developing countries and have joined banks and other traditional institutions as full-fledged members of the formal financial sector. Many of these institutions continue to experience rapid growth and must work constantly to increase their capital base. The ability of such MFIs to attract additional capital, above all from the private sector, will in large part determine the long-term success of their efforts.

Transforming Microfinance Institutions provides guidelines for regulators to license and regulate microfinance providers, and for transforming MFIs to meet the demands of two major new stakeholders -regulators and shareholders. As such, it focuses on developing the capacity of NGO MFIs to mobilize and intermediate voluntary savings. Drawing from worldwide experience, it outlines how to manage the transformation process and address major strategic and operational issues inherent in transformation including competitive positioning, business planning, accessing capital and shareholders, and how to "transform" the MFI's human resources, financial management, MIS, internal controls, and branch operations. Case studies then provide examples of developing a new regulatory tier for microfinance, and how a Ugandan NGO transformed to become a licensed financial intermediary.

This publication is available for purchase at: http://publications.worldbank.org/ecommerce/catalog/product?item_id=5646933

This report presents ACCION's findings regarding the poverty levels of microfinance clients at BancoSol, Bolivia. The third in a series of poverty analyses, the authors analyze client expenditure data to evaluate client poverty levels relative to national and international poverty lines. The study also identifies indicators that can be used as proxies for poverty, and compares the data collected during credit evaluations to data collected through a more detailed household survey for the same client population. Finally, a system is presented that makes use of credit evaluation data to automatically generate reports on outreach and client performance by poverty level. Such a system enables BancoSol to gain improved understanding of how their client base is changing over time and to develop products and policies to better serve poorer clients.

This InSight describes the ABCs of Business training program for microentrepreneurs and the premises upon which it was developed. It details lessons ACCION has learned about adult education and how these lessons were incorporated into the interactive training style the program applies.

This InSight analyzes ACCION’s experience with its guarantee fund, the Latin American Bridge Fund. It addresses the factors that helped or hindered its success and discusses the factors that led ACCION to revise the original Bridge Fund concept and create the new Global Bridge Fund in 2005. Among the questions this report addresses are: how well the Bridge Funds helped microfinance institutions access commercial capital, the sustainability of the Fund itself and the returns the Fund has provided to its investors.

Every year the challenge of finding funds to finance millions of microloans requires microfinance institutions (MFIs) to tap increasingly large pools of funds and to find sources that are reliably available at an advantageous cost. This edition of the Small Enterprise Development (SED) Journal is dedicated to the theme of financing microfinance. The first three articles examine equity funds created for investing in MFIs, while the latter three articles examine debt-based strategies for funding MFIs. Two of the articles on debt-based strategies describe financing that are common in mainstream finance, but are new to microfinance. Regular features such as Crossfire and book reviews are also included.

This statement on corporate governance for shareholder-owned MFIs provides practical guidance for stakeholders in governance – investors and prospective investors, board members, and senior MFI managers – to use in and assessing the governance of their own MFIs. Although numerous statements are available on corporate governance and even corporate governance of microfinance institutions, the Council wrote this document to provide guidance tailored to shareholder-owned MFIs and to contribute to an active process of improving governance among its members and the microfinance industry as a whole.

The study examines the state of the microfinance industry in Latin America today and looks at the challenges and opportunities in the coming decade. It also provides recommendations about the role of banks, specialized microfinance institutions, NGOs, regulators, donors and governments in assuring a healthy industry with an ever-broader outreach. These analyses are based on statistical data from approximately 100 MFIs and interviews with 28 microfinance players.

This study examines the phenomenon of shareholder-owned microfinance institutions (MFIs) at a global level, with a focus on two issues central to this model: ownership structure and corporate governance. Members of the Council of Microfinance Equity Funds have shared a keen interest in researching and analyzing the issues presented in this study, which, to the Council’s knowledge, is the first of its kind to be undertaken globally. It is the Council’s hope that this study will prove useful not only to its own members, but to all parties interested in microfinance as a means to improving the financial well-being of low-income workers throughout the developing world.

Remittances - money sent from an immigrant to his or her home country - is an important service for microfinance clients and represents a significant market opportunity for microfinance institutions. This InSight details the results of ACCION's research to understand the motivations of remittance senders and recipients, to explore product enhancements that could help both senders and recipients meet their financial goals, and to understand the characteristics important for a remittance delivery system.

In the past two years, ACCION has worked with several institutions in Latin America and Africa to institute or expand rural lending programs. These efforts have resulted in successful rural penetration as well as a range of microcredit products adapted for rural areas. This InSight briefly describes the experience of ACCION’s affiliates and partners in rural areas and relates lessons gleaned from that experience on how urban, commercially-oriented microfinance institutions can enter rural markets.

In most developing countries, the need for more and improved housing for low-income families is tremendous. ACCION and other microfinance organizations have developed techniques that are coming to be known as housing microfinance. Housing microfinance is a non-subsidized, sustainable tool that applies the best practices developed over the years for microenterprise finance to the housing needs of micro and small entrepreneurs. This InSight reports on the results of pilot projects in ACCION affiliates in Central America: FAMA in Nicaragua and Integral in El Salvador.

This InSight shares the achievements and challenges from ACCION’s PortaCredit program, an innovative technology employed at microfinance institutions (MFIs) that collects and tracks microloans through the handheld computers of loan officers. PortaCredit replicates and expands upon the paper-based microloan application with the ultimate goals of reducing the operational costs of MFIs, automating and standardizing the credit application process and increasing the productivity of loan officers and other staff. This InSight chronicles the main technological and operational challenges to implementing PortaCredit at an MFI, and shares lessons from institutions in Ecuador and Venezuela.

This publications seeks to address different ways to evaluate and increase the effectiveness of product and service delivery and the performance of MFIs. Drawing together two and half days of presentations, discussions and debate, the report provides access to ideas and experiences from leaders in microfinance from around the world.

Supervising and Regulating Microfinance examines the regulatory framework for microfinance in three countries: Bolivia, Colombia and Mexico, each with very different experiences in financial reform, financial crisis and microfinance. It explores the impact of financial reform and crisis on the choices regulatory authorities have made about microfinance, and in turn, explores how these choices have affected the character of the microfinance industry in each country. This monograph also addresses the elements of good microfinance regulation, beginning with the financial sector environment needed to advance microfinance and continuing with preparation of supervisors and specific norms adapted for microfinance. These topics are illustrated by comparing the experiences and policies on the three subject countries.

For the first time, Marguerite Robinson’s seminal work, The Microfinance Revolution: Sustainable Finance for the Poor is available for sale in Spanish. The first of a three-volume series, the Microfinance Revolution focuses on the shift in microfinance from government and donor-subsidized credit systems to self-sufficient microfinance institutions providing voluntary savings and credit services. It draws together rich empirical data and institutional experiences from microfinance institutions in 17 different countries to explore the reasons for the massive gap between the low level of microfinance generally available and the extensive worldwide demand for such services. It also evaluates the main streams of literature on the theory of microfinance, and contrasts them with the ways microfinance markets work.

The “microfinance of housing” is an emerging and promising practice among microfinance institutions. Housing microfinance merges elements from microenterprise finance and traditional housing finance. This InSight publication summarizes the results of a case study on the largest housing loan program in the ACCION Network, Mibanco’s Micasa product in Peru.

This report presents ACCION's analysis and findings regarding the poverty profiles of microfinance clients at Mibanco, Peru. In this first institutional analysis in ACCION's Poverty Outreach project, the authors analyze client income data to compare borrower poverty levels with urban, national and international poverty lines. The study also compares demographic and socio-economic characteristics of clients and non-clients. Finally, an on-going monitoring system is proposed to enable MFIs to better understand their clients and trends in their portfolios, quantify the fulfillment of their social missions, and develop new products and policies focused on poorer levels of clients.

ACCION International has developed relationships with several commercial banks to launch and expand microfinance operations through an approach known as the service company model. This paper describes how the service company model addresses the key issues in commercial bank entry into microfinance, identifies success factors for establishing a well-functioning microfinance services company, and presents results and lessons from the two microfinance service companies with the longest experience, SOGEBANK/SOGESOL in Haiti and Banco del Pichincha/CREDIFE in Ecuador.

This InSight publication is intended to guide readers through the processes necessary to implement a successful market intelligence program at an MFI. It highlights the activities and tools that ACCION has developed in each phase of the market intelligence process. It also walks the reader through two ACCION technical assistance projects, one in Latin America and the other in Africa, to demonstrate how these market intelligence tools have been applied in the field.

This edition of InSight offers an analysis of the poverty outreach of ACCION's affiliate SOGESOL in Haiti. It is the second in a series of ACCION poverty assessments performed as part of our Poverty Outreach project. Here, we evaluate the poverty levels of SOGESOL clients relative to the Haitian national and urban populations as well as international poverty lines. We also examine demographic, socioeconomic and microenterprise characteristics of clients in relation to their level of poverty and compare characteristics of SOGESOL clients with Haiti's national and metropolitan populations.

This publication summarized the proceedings of the Challenges to Microfinance Commercialization conference held in Washington, D.C. in June 2001. Commercialization and its challenges have become extremely important considerations for any institution working in microfinance. The conference focused on five key areas within the broader context of commercialization: transformation and expansion; governance, regulation and supervision; keeping up with competition; new products and services; and effective risk management. Conference participants engaged on the complex issue of commercialization of microfinance - its usefulness, its challenges, its promise and its limitations.

To understand and measure the poverty level of microfinance clients, ACCION is undertaking a multipart poverty assessment project. This document lays out the analytic framework for the analysis that will be employed to compare income, expenditure and socio-economic characteristics of ACCION partners' clients with international and national poverty lines. The objective of this framework document is to propose a structure for the initial poverty assessment.

This report provides a profile of 15 clients from one branch of MicroKing Finance in Harare, Zimbabwe, using information provided by clients and observed by loan officers during the credit evaluation process. This profile of MicroKing clients is part of a larger poverty assessment project in which ACCION is engaged. The project aims to analyze what types of people ACCION's partners serve, how poor these clients are, and how they compare to non-clients in the same country, using both quantitative and qualitative measures of poverty.

Financial transparency - the widespread availability of relevant, accurate, and comparable information about an institution - is increasingly recognized as a cornerstone in the evolution of microfinance. Transparency opens the door for microfinance to become integrated into financial systems because the participants and guardians of the financial system demand high quality information to guide their informed judgments about microfinance institutions. This policy paper describes how ACCION's commitment to transparency is realized.

Published by Kumarian Press, The Commercialization of Microfinance documents the issues that have arisen from the entrance of microfinance into the commercial realm. The book explores how institutions have managed the transformation process, supervisory and regulatory concerns and governance issues. It also examines the role of private investment, the impact of credit unions, and the introduction of competition to the field. Country and institutional case studies provide real-life examples of these complex issues.

The Commercialization of Microfinance is published under the Microenterprise Best Practices project of Development Alternatives, Inc. (DAI), funded by USAID.

The U.S. microenterprise development field has matured considerably in recent years. However, as this guide argues, to reach scale, microlending organizations need to become more adept at conducting market research in order to retain current clients and attract new ones. The quantitative and qualitative results of market research conducted across the ACCION USA Network are presented, along with thorough explanations of market research techniques. This publication is one of the first practical guides on conducting market research for the U.S. microenterprise market made available to the public.

In many countries, microfinance institutions are losing their monopolistic control over the market, and customers are becoming experienced purchasers of a wide variety of financial services. The emerging reality of increasing competition and a more discerning clientele necessitates a different approach to microfinance. This publication proposes a new formula, one in which MFIs seek feedback from customers, incorporate that feedback into product design and service delivery, and thereby build loyalty in existing customers. This guide first shows the positive economic impact of customer loyalty on both the customer and the institution, and then gives MFIs step-by-step guidelines for increasing customer loyalty.

The history of the microfinance movement in Latin America is brought to life through the lens of the Bolivian experience in Mainstreaming Microfinance. Microcredit in Bolivia grew and became successful in only a decade, lifting an enormous segment of the country's population into the financial mainstream in the process. Drawing on participant interviews, Elisabeth Rhyne, details how Bolivia's special breed of social entrepreneurs found the keys to unlock the huge unmet demand of informal clients.

New technologies are redefining financial services, and they present significant opportunities to microfinance institutions. Some microfinance institutions — even ones that serve the poorest clients — already use automated teller machine (ATM) networks, smart card operations, and credit scoring technology. This publication provides a broad view of innovative banking technologies that are relevant to MFIs, while keeping in mind various institutional cost structures and capabilities. The publication focuses most on forward-minded inventions and less on management information software. It is not a technical guide; rather, it is designed to inspire and motivate microfinance providers and support institutions to explore the benefits that technology can offer. By doing so, microfinance institutions can identify cost-effective ways to use technology to improve efficiency and customer satisfaction, which are becoming requirements of survival in an increasingly competitive microfinance industry.

The Microenterprise Best Practices (MBP) Guide to New Product Development is designed for staff of financial institutions and nongovernmental organizations (NGOs) interested in developing new products and services for their clients.

Many microfinance institutions are faced with competitive pressures and increased performance demands from donors, investors and regulators. This ACCION monograph focuses on strategic and operational approaches to maximizing the efficiency of microfinance institutions. It provides microfinance organizations' management, boards, donors, investors and regulators with a framework for measuring and analyzing efficiency. It also provides frameworks by which institutions can analyze their mission, strategy, organizational structure, processes, and human and technological resources to maximize outreach and revenue while minimizing costs.

At the turn of the millennium, the field of microfinance is poised to make revolutionary advances in technology, methodology and outreach, all of which are creating a new landscape for MFIs. This paper summarizes the proceedings of a 1999 conference held in Bangladesh which focused on efficiency, customer satisfaction and commercialization.

This publication provides concrete advice on establishing internal control mechanisms in MFIs of all types and sizes. It guides institutions on how to better manage the five major types of risks that MFIs face: credit, liquidity, interest rate, operational, and fraud. Using a risk management framework, it describes the process of selecting, testing, and implementing cost-effective ex-ante (before operations) and ex-post (after operations) controls. A special chapter also details a step-by-step approach to conducting branch audits. Practical examples from leading MFIs, including BRI(Indonesia), ASA(Bangladesh), ABA (Egypt), and BancoSol (Bolivia), illustrate how these concepts have been applied successfully in the field.

"This book should be required reading for anyone wrestling with a credit program - individual or group - who wants to improve the program's methodology." - Elisabeth Rhyne

This comprehensive publication is the first effort to document the methodology of providing small and microloans to entrepreneurs without using a group as collateral. Through a detailed analysis of the credit methodologies of five leading microfinance institutions - ABA (Egypt), BRI (Indonesia), ADEMI (Dominican Republic), Calpia (El Salvador) and Cajas Municipales (Peru). This book identifies key lessons in managing the costs and risks of providing individual microloans.

The author documents discussions with microfinance experts on the following topics: vision setting, institution building, performance monitoring, staff and client development, the role of donors, governance and regulation, and supervision. The discussion reflects the range of consensus and debate that exists within the microfinance field today. With experts from a cross- section of practitioners and institutions from around the world, representing diverse geographical and philosophical perspectives. This think-piece summarizes the key thoughts and lessons in microfinance and prepares us for the challenges yet to come.

The Effective Governance of Microfinance Institutions conference convened board members and managing directors from approximately 50 leading microfinance institutions worldwide. Together the participants agreed to these guidelines, which are applicable to all MFIs looking to improve their structure and systems of governance. This document addresses governance issues unique to credit unions, for-profit MFIs and NGOs, as well as overall governance issues that pertain to MFIs in general.

The drive towards financial self-sufficiency, along with fewer donor funds, has led microfinance practitioners to consider commercialization. This document illustrates the range of commercialization models and highlights the common issues specific to the transformation process. It addresses the regulatory, financial and operational issues involved in the process and highlights the general costs, benefits and key issues in creating a formal financial institution. Part I identifies the key challenges faced by transforming microfinance NGOs; Part II presents three transformation case studies: CARD Bank (Philippines); K-REP (Kenya); and Mibanco (Peru).

In preparation for the Effective Governance of Microfinance Institutions conference held in Washington D.C. in 1998, an anonymous survey was sent to board members and managing directors of 42 microfinance institutions worldwide, asking questions which focused on board member motivation, conflict and resolution, composition and structure, and the role of the board. This paper summarizes the findings and presents indicators of possible trends and shortcomings in microfinance institution governance.

This study presents the methodology, findings and conclusions of ACCION's study of how microenterprises that have received credit from the first six ACCION U.S. programs have fared over time. The quantitative results of the analysis of financial data collected from participating microentrepreneurs are presented, along with qualitative interviews with a sample of clients. This publication is the first evaluation of how credit affects microentrepreneurs in the United States to be made available to the public.

The 1997 Microfinance Network Annual Conference in Egypt focused on three main topics: ownership, competition and control. This paper examines these three issues for MFIs and summarizes the findings of the conference.

This discussion paper documents ACCION's experience with CAMEL™, the financial diagnostic instrument adapted in 1993. It provides microfinance managers insight into financial and managerial areas through which they can build strong, sustainable institutions. It also enables third parties - donors, lenders, investors and technical assistance providers - to assess the strengths and weaknesses of microfinance institutions.

Based on the conceptual framework of the original CAMEL (Capital Adequacy, Asset Quality, Management, Earnings, and Liquidity Management), ACCION developed its own instrument. Although the ACCION CAMEL reviews the same five areas as the original CAMEL, the indicators and ratings used by ACCION reflect the unique challenges and conditions facing the microfinance industry.

This best-selling manual offers practical applications of traditional financial topics to microfinance institutions. The author addresses interest rate policy, management of assets and liabilities, and capital and portfolio risk - all key issues for microfinance institutions. The manual presents the theoretical framework along with numerous examples, allowing the reader to deepen his/her understanding of the subject matter.

National interest in microenterprise as a strategy for poverty alleviation and economic development is growing rapidly in both the public and private sectors of the United States. Based on cumulative experience in Latin America and the United States, ACCION and its network of six U.S. associates have developed a model combining the social aim of improving the lives of the marginalized self-employed with the financial aim of reaching institutional self-sufficiency. This document explores the three goals (impact, scale and self- sufficiency) that form the core of the ACCION U.S. model and assesses the evolution of the microenterprise field in the United States.

The 1996 Annual Conference in Canada focused on three main topics: governance, best practices and access to capital markets. This paper examines these three issues and summarizes the findings of the conference.

This monograph examines the transition of microfinance institutions to regulated financial intermediaries. By linking into the financial systems of their countries, these institutions are strengthening their ability to access international capital and capture the savings deposits of their clients and the public. From Margin to Mainstream expands upon the proceedings of a 1995 conference sponsored by ACCION that convened high-level representatives from bank supervisory agencies in Latin America and United States. Much of what is presented can be applied to work in Africa and Asia in establishing links to the formal financial sector. It aims to provide useful guidance on supervision and regulation of microfinance institutions.

This paper attempts to promote a greater understanding of the appropriate regulatory and supervisory approaches for MFIs. Drawing on the case studies presented in Occasional Paper No. 2, this publication outlines the risk profile unique to microfinance institutions, and makes recommendations to regulate MFIs, either within the existing regulatory framework or by establishing a special regulatory framework.

This publication features case studies from nine countries that have experience regulating microfinance institutions. The countries include Indonesia, Bangladesh, Bolivia and the Philippines. The cases highlight different approaches to the regulation of microfinance institutions and draw conclusions on approaches to regulation and supervision.

This monograph examines the ways in which women simultaneously manage microenterprises and their households and identifies factors that enhance or constrain their efficiency in these dual roles. Nearly 700 microentrepreneurs, all clients of ACCION affiliate organizations in Bolivia, Brazil, Colombia and Guatemala, participated in the surveys upon which this study is based. The authors also offer recommendations for improving financial institutions in order to better serve women microentrepreneurs.

The 1995 Microfinance Network Annual Conference in the Philippines focused on three main topics: supervision and regulation, financing sources and expansion of MFIs. This paper examines these three issues and summarizes the findings of the conference.

This guide delineates a methodological framework for microcredit programs using individual credit methodology, including the identification of the target population, the first contact with potential clients, program requirements, and mechanisms for efficient collection and repayment of loans. In addition, it addresses the establishment of client services parallel to the provision of credit — such as training and technical assistance — and offers guidance for setting credit policies according to the needs of the program.

This manual provides a comprehensive framework for solidarity group credit programs providing savings and loan services to rural communities. All aspects are covered, from the approach towards rural communities to the formal establishment of solidarity groups administered by their own members.

Based on various case studies, this manual gives loan officers a model for analyzing credit, and provides tools for the financial and non-financial evaluation of potential microenterprise clients. The manual aims to eliminate the gathering of unnecessary client information and minimize risk while at the same time improving overall financial assessment.

This manual deals with the theoretical and operational elements which help loan officers identify the scope of their work, the types of loan officers and the roles that they play. It also looks at various types of enterprises and entrepreneurs, as well as their traditional sources of credit. Finally, it provides an operational model for the efficient management of daily activities.

The new world of microfinance encourages institutions to achieve larger scale and reach economic self-sufficiency by linking to the formal financial sector. This book explores the major elements underlying this approach to microenterprise finance, and evaluates various methodologies to provide financial services to the poor. The final section is devoted to case studies of Bank Rakyat Indonesia, BancoSol (Bolivia), the Association of Solidarity Groups (Colombia) and the Kenya Rural Enterprise Program.

This monograph analyzes institutional strengths such as financial structure, staff productivity and the types of services provided by several of the most highly regarded microfinance organizations. Case studies include Bank Rakyat Indonesia, BancoSol in Bolivia and Grameen Bank in Bangladesh. The authors identify those elements that enable institutions to become self-sufficient, attain significant scale and continue to grow.

Guarantee fund mechanisms can potentially increase financing for microentrepreneurs in developing countries beyond the funding levels available from donors. Three distinct guarantee fund models are proposed here based on the experiences of small enterprise guarantee programs. ACCION International’s own guarantee program, as well as case studies from Ecuador and Colombia, illustrate the positive effects that guarantee funds can have.

Nonprofit microfinance institutions confront a tremendous gap between the demand for their credit services and their own capacity to respond. This monograph suggests a set of characteristics NGOs should possess before engaging in financial intermediation. It offers examples of how NGOs have formed links with the formal financial sector. The final chapter outlines policy and program recommendations for governments, donors and implementing agencies.

This monograph explores the methodology of group lending, including the delivery of savings, training and other client services. A review of ACCION affiliates in Bolivia, Colombia and Guatemala - in addition to the Grameen Bank and other programs in Asia and Africa - identifies the keys to successful peer group lending.

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This document analyzes the impact of interest rates on microentrepreneurs and on credit programs. Experiences of institutions in Chile, Colombia and the Dominican Republic prove that efficient microenterprise programs can charge interest rates that reflect the cost of lending and foster self-sufficiency, without impeding the borrowers' ability to increase incomes and profits. This paper also explores the shift in interest rate policy from subsidized credit by MFIs to higher, unsubsidized rates of interest.

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Effective marketing for producers.

Though delinquency is an important measure of a microfinance program's success, the absence of a universal definition makes it difficult to interpret delinquency rates. This paper identifies the weaknesses of the current treatment of delinquency and encourages the use of appropriate and clearly-established measures of portfolio quality. It discusses the many definitions and formulas presently employed to report on delinquency and portfolio quality, and argues that microenterprise programs control their own levels of delinquency.

This monograph summarizes the results of an international conference held in Ecuador on the roles of the public and private sectors in microenterprise development. It reviews the progress of government involvement in the informal sector and the participation of private development organizations in microenterprise development. It also analyzes government and private sector approaches to microenterprise development in six Latin American countries.

This document highlights the main issues related to savings mobilization and gives examples of savings schemes in various microenterprise programs, including the Grameen Bank and several ACCION affiliates. It provides a rationale for engaging in savings mobilization among low-income populations and suggests guidelines for structuring a savings product in a microenterprise program.

This document summarizes the most significant methodological aspects of ACCION's work with microenterprise development. It discusses issues that are significant to professionals who work with the informal sector and suggests various approaches based on lessons drawn from experience.

ACCION's affiliated programs in Latin America provide the context for this analysis of the process of microenterprise program expansion, including the formulation of a vision based on massive outreach, development of efficient information systems, and policies for human resource development. Common constraints to program expansion are also explored.

As the informal sector steadily grows in Latin America, it is important to discuss the efficiency of the microenterprise assistance programs directed towards this population. This document seeks to redefine the measures of the benefits derived from microenterprise programs. It analyzes three key areas for project sustainability: volume, institutional capacity and program repayment rates.

Donors and development professionals emphasize the importance of client graduation from microenterprise assistance programs to the formal financial sector. This study takes a critical look at graduation as a program goal and examines the experiences of 10 microenterprise programs in six Latin American and Caribbean countries to identify principal factors that affect graduation.

Although moneylenders are perceived as exploitative sources of credit, they can provide useful financial lessons that can be applied to microenterprise programs. This discussion paper focuses on financial and economic factors in informal lending that lower the costs of borrowing for the microentrepreneur and result in greater income for the lender.

This guide serves as an introduction to the practices and methodologies used by ACCION to manage microenterprise projects. Topics include defining the informal sector, steps for planning and implementing projects, program monitoring and evaluation, fundraising and public relations.

This monograph defines an evaluation system to assess the impact of solidarity group programs in 22 of ACCION's Latin American affiliates, and analyzes the various components, benefits and characteristics of an impact evaluation process. The monograph proposes a conceptual framework for impact analysis, which defines four areas of impact: the beneficiary, the program, the institution and the local context.

This monograph analyzes the early experiences of solidarity group lending programs in Latin America. This lending technology has been an effective approach to reaching the urban working poor with credit, financial training and technical assistance. The document highlights the main components of solidarity lending programs and discusses challenges that confront practitioners.