Books and Publications
Sustaining Microfinance in Post-Disaster Asia
Guidance for MFIs and Donors
By The Consultative Group to Assist the Poor
As the communities most affected by the recent devastating
tsunami continue to rebuild their lives, microfinance institutions
(MFIs) can play a powerful part in the path to recovery.
Since the immediate aftermath of the tragedy, MFIs have
been providing and coordinating emergency relief, and a
few are beginning to help local communities reconstruct
homes and return to economic activity.
Against this background, The Consultative Group to Assist
the Poor (CGAP) has published guidelines for microfinance
institutions and donors. The guidelines are intended to
help MFIs provide the appropriate range of emergency and
longer-term assistance to their clients, while enabling
both MFIs and donors ensure that the ultimate mission of
the MFI – to be a sustainable provider of financial services – is
not compromised.
MFIs
The CGAP briefing contains some key principles for MFIs
• maintain a commitment to
sustainable operations;
• customise solutions according
to clients' needs (CGAP suggests that specific criteria
should be defined for loan officers to make decisions
about rescheduling and providing grants);
• be realistic about MFI
role.
Amongst some suggested guidelines, CGAP says MFIs
should lift compulsory savings requirements in branches
affected by the tsunami until the emergency stage has passed
and clients have begun reconstruction. It adds that rescheduling
loans on a case-by-case basis can help MFIs avoid losses
and defaults on their loan portfolio, and ensure that any
cash flow earned by those hardest-hit stays in the household.
Any MFI thinking of going into new areas to provide
emergency financial assistance is advised to plan its long-term
presence in these areas carefully. Clients without prior
knowledge of an MFI's commercial rates and commitment to
sustainability may initially view the organization as another
relief agency or temporary donor programme.
Donor support
CGAP says that donors must understand the options available
to MFIs in post-disaster situations, as well as the corresponding
constraints. Donors should be responsive to the local context,
e nsure the separation between relief and microfinance
( MFIs are not relief agencies) , stick to microfinance
good practices, and avoid setting disbursement targets
(this may tempt an MFI to take on clients who will not
be able to repay their debt).
The full text of Sustaining
Microfinance in Post-Disaster Asia is available, free
of charge, on the CGAP Web site at: www.cgap.org/docs/CGAPBrief_03_03_05.pdf
Microcredit: Sound business or development instrument
Geert van Maannen, Oikocredit/ICCO
The author of this accessible book, Geert van Maannen,
is a former Managing Director and board member of Oikocredit.
This is an ecumenical development cooperative society founded
at the initiative of the World Council of Churches in 1975
as an alternative investment instrument for churches, and
designed to operate closer to the values of the Sermon
on the Mount than to Wall Street".
Microcredit: Sound business or development instrument is
a revised version of a paper presented by Geert van Maannen
during his farewell symposium in June 2001 at the Royal
Tropical Institute in Amsterdam.
As the title indicates, the book examines whether microfinance
institutions should primarily be commercially or development
oriented. In addressing this question, the author provides
an excellent introduction to the world of microcredit.
In fact, this is Geert van Mannen's aim. The publication
is not for experts. Instead, it is a primer for those who
are relatively new to microcredit, which exists to serve
those Mr van Maannen calls "unbankable".
It is worth reading this book for many reasons, and not
least because of the challenging slant the author puts
on familiar facts and figures. For example, today, microcredit
supports around 50 million people. This sounds impressive,
says Geert van Maannen, until one realises that the figure
represents only 5% of those who try to survive on less
than one dollar a day. He also describes this yardstick
as "too simplistic … because, first of all, it creates
the impression that one dollar a day is an acceptable level
and therefore a relevant development target." Even
more challenging are the author's thoughts on what would
be the implications for the distribution of world income
and entitlements if the figure were to be raised from one
to two dollars a day.
In answering the question posed by the book's sub-title,
and when push comes to shove, the author plumps for microcredit
as a development instrument rather than a commercial one.
However, he also believes that sooner or later microfinance
institutions have to stand on their own feet, and not always
depend on friendly donor capital. Discovering how van Maannen
reaches this conclusion is well worth the time it will
take to read his book.
Mobilizing Savings - Key issues and Good Practices
in Savings Promotion
Isabel Dauner Gardiol, Swiss Agency for Development and
Cooperation
This publication is aimed at all those involved in the
promotion of savings services to the poor. As readers of New
Horizons will be aware, this is a topic of current
high interest to microfinance organizations such as ECLOF.
Mobilizing Savings has been developed by Intercooperation,
a Swiss development organization, on behalf of The Swiss
Agency for Development and Cooperation (SDC), which stresses
the strategic importance of savings for development. The
author is from Intercooperation.
In an introduction, SDC says that, "Even poorest
households want to save and do save, be it in kind or in
cash, to overcome difficult periods. They save in financial
institutions if they have access to those institutions
and if they trust in them".
There are four chapters: 1)Why and how do poor households
save?; 2)Mobilizing monetary savings from low-income households:
The institutional perspective; 3)Product development, diversification
and innovation; 4)Legal and economic framework for savings
mobilization. All chapters contain examples and case studies.
Mobilizing Savings is available on the Intercooperation
Web site at: http://www.intercooperation.ch/finance/download/tec-notes-savings/technical-note-saving-final-eng.pdf ,
and is also available in French and Spanish.
New Web site for ECLOF USA
New Horizons is pleased to announce that ECLOF
USA, which supports and promotes the work of ECLOF in the
United States, has launched its own Web site. Check out
what our colleagues have to say at www.eclofusa.org
