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Workshop: Capacity building Workshop: Capacity building for social inclusionfor social inclusion

Annual EMN Conference “2010: A Changing Europe combating poverty, supporting enterprise”

London, 24th of June

Michael Unterberg

9 June 2006Microfinance in Western Europe - a synopsis - 2

Capacity Building in European MicrofinanceCapacity Building in European Microfinance

Building what?

What is it good for?

What kind of organisations are meant?

How is it connected to social inclusion?

Let’s build the case for capacity building in European Microfinance

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MF in Europe: A sector under constructionMF in Europe: A sector under construction

Example RomaniaExample Germany

It‘s about building...

Frameworks

Markets

Organisations

Strong policy interest in recent years

A new national guarantee fond was set up in 2010

Aim: Building up a nation wide supply of micro-loan providers

Legal framework for microfinance changed markedly in the last 5 years

Dedicated microfinance organisations becoming banks

New providers with commercial orientation

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Organisations in MicrofinanceOrganisations in Microfinance

They don't cover the microcredit market as a main business proposition

They favor efficiency for more profitability

They have organisational structures built for providing many different financial services

Banks

They are doing microcredit as part of their mission e.g. employment offices

They have only weak incentives for efficiency in place

They have organisational structures built for administration tasks

(Semi-)public bodies

They are dedicated to microcredit provision

They favor efficiency as a pre-condition for outreach and growth

Their organizational structures are flexible

MFI

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What are the organisational challenges for What are the organisational challenges for European MFI?European MFI?European MFI are..

target groups that are hard to reach

niche markets

limits of efficiency in inclusion lending

constant changes in funding conditions

unfavorable and/or changing legal frameworks

In Western Europe:

Small and realtively young

Non-banking organisations

Socially oriented

In Central/Eastern Europe:

More matured organisations

Some „semi-banking“ organisations

More commercially oriented

European MFI have to deal with...

Are European MFI capable of meeting these challenges?

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Capacity building is not...Capacity building is...

…a concept with strict definitions and goals

…a concept confined to improving the profitability of MFI

…a task that European MFI can fulfill on their own

…a broad concept for organisational and institutional development, closely connected to technical assistance (TA)

…a tool for social inclusion as it allows to reach excluded target groups more efficiently

…a long-term, continuing process, in which all stakeholders have to participate

Capacity building in MF: What is it, and what not?Capacity building in MF: What is it, and what not?

Institutional capacity in MFI can be broken down in different dimensions:

Capacity of structures (e.g. policies, processes, infrastructure)

Capacity of people (e.g. staff, human resources, expertise)

Capacity to plan (e.g. vision for MF, strategies, funding models)

Capacity to perform (e.g. outreach, growth, impact)

Status Quo: MFI Capacity levels in EuropeStatus Quo: MFI Capacity levels in Europe

5 dimensions of capacity

self-assessment questionnaire

interviews and focus groups

visualization in spider diagrams

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Pilot Study in eight European countries

Results for Western Europe Results for Central and Eastern Europe

low overall capacity levels

underdeveloped systems for performance measurement and analysis

average capacities in human ressources

lack of sustainable funding models

need to further develop already existent performance and impact measurement systems.

Need to adapt these systems to changing regulations and monitoring requirements.

flexible MIS to cope with the demanding monitoring requirements of regulation

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Who are the stakeholders?

How to work with an advisor?

What is the role of the networks?

Which standards & specialised solutions are available?

Is there any public support for my organisation?

What lessons are to learn from successful MFI?

What are the needs in my organisation?

Important Questions from a MFI perspective on capacity building:

How to make Capacity building work in EuropeHow to make Capacity building work in Europe

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Aim of the Workshop: Bring different perspectives Aim of the Workshop: Bring different perspectives together to „make it happen“together to „make it happen“

Speaker: Cyril Gouiffés, EIF, Luxembourg

EIF‘s Vision on MF in Europe

Role of TA in fostering the European MF sector

The JASMINE programm for TA

Speaker: Piotr Korynski., MFC, Poland

Role of networks in capacity building

How to monitor capacity levels of the members?

Role of MFC in the JASMINE programme

Donor‘s perspective

Network‘s perspective

Practitioner‘s perspective

Speaker: Georgi Breskovski, Mikrofond, Bulgaria• Past experiences of Mikrofond with capacity

building • Recent capacity building needs of Mikofund• Experiences in working with external advisors

Participation in JASMINE programme

Speaker: Aldo Moauro, Microfinanza Rating, Italy

• Status Quo of capacity for MF in Europe

• What have advisors/TA-provider to offer?

• Tools and strategies for capacity building in inclusion lending

Advisor‘s perspective