New Horizons > June 2001

This issue focuses mainly on issues arising from the Latin American and Caribbean Regional Workshop held in Lima in December last year. The lead article highlights a presentation by Ms Susana Pinilla, the Executive Director of Instituto para el Desarollo de la Micro y Pequeña Empresa (Institute for the Development of Micro and Small-scale Enterprise–IDESI), on current trends in micro finance in Latin America, and Peru in particular.

The presentation raised issues that are common in other regions as well. They include:

Ms Pinilla concluded that the continuously changing environment requires micro finance institutions (MFIs) to develop appropriate products and methodology to keep up with the changes.

This is also one of the findings of our own recently published evaluation report, The Impact and Management of Fair Credit: An examination of the operation of the Ecumenical Church Loan Fund Programmes (see page 16). The report emphasises the importance of doing this in a timely and systematic fashion if ECLOF is to remain relevant to the people it serves. This is even more the case for those programmes that operate in financial and politically volatile environments.

In this respect, the experiences of Colombia, Ecuador and Peru were presented at the workshop (see When all does not go smoothly, page 7). We have also shared some of the current debate on insurance and micro enterprises. There are many other cases, particularly in Africa, where the problems are compounded by the scourge of HIV/AIDS. Lessons from these countries indicate that those who are effective are the micro finance organizations that know their environment thoroughly, have development-appropriate products and new risk management tools, and are quick to adapt their programmes. Others, sometimes in more stable environments, are tempted to use ‘external’ factors as an excuse for ineffectiveness, and yet are reluctant to consider the closure of their programmes.

The presentation by Ms Pinilla raised the question of formalising credit activities by the creation of regulated financial institutions, and the possible impact of this on target groups.

Ms Pilar Ramirez, Director of Private Financial Fund, FIE, deals further with this in her article Shareholders’ interests and the management of micro finance institutions (see page 11). Ms Ramirez concludes by posing a question: "If maximising profits is guiding present MFI activity, how will this affect our clients’ access to the benefits of our services?"

The article Talents must be used!, by Ms Alice Kengne Youmbi, president of ECLOF Cameroon, touches on the issue of ownership and governance, and the role of national ECLOF committee members. This reflection by a new committee is a refreshing look at the role of NEC members and provides food for thought for all of us.

We share the experience of having client representatives as members of National ECLOF Committees in the article All aboard! We hear from the Director of ECLOF Zimbabwe, which is the first NEC to implement the policy, and from one of the client representatives on the board. ECLOF Zimbabwe made the required changes in their statutes in accordance with ECLOF’s global policy guidelines to "develop the structures and processes needed to enable representatives of ECLOF’s poor and excluded clients to participate in the NEC’s decision making bodies with dignity and real influence."

Commenting on this, the recently concluded evaluation report states:

"One interesting and potentially very valuable innovation in some countries is the inclusion of direct representatives of the client group on national ECLOF committees. Experience in many countries and across many organizations (and now ECLOF) has shown that developing a sense of ownership to include clients is a very important influence on efforts to maintain relevance, which may in itself contribute directly to longer term sustainability."

ECLOF Zimbabwe and a few other NECs have set the pace. The year 2001 should be the year when all NECs make provision for their clients to become members and elect their own representatives.

Grace and peace to all our readers. Keep the readers’ letters page active!

Muhungi Kanyoro