Consultative Group to Assist the Poorest

Hundreds of millions of poor people in developing countries need access to financial services. They

need these services for the same reasons as every­

one else-to save small amounts of money in a safe place, to cover sudden expenditures, to invest in their tiny businesses or their home, or to insure

against risk. Microfinance institutions throughout the world have demonstrated that poor people are

committed and valuable clients of specially de­signed financial services-and that serving this niche can be financially viable. Still, microfinance

practitioners face many challenges and the gap be­

tween the supply of microfinance services and de­mand remains extremely wide: together, all of the thousands of microfinance institutions in the

world serve less that two percent of the poor and even fewer of the very poor. There is much work

to be done to reach a vastly greater scale and to do so without leaving the very poor behind.

Building microfinance institutional capacity and financial strength remain the key challenges to expanding the scale of microfinance opera­tions. Funds far more abundant than the limited pool available from donors will be required and only sound and well-managed institutions will be able to tap commercial sources or should be entrusted with poor people's savings. Shifting gears to scale up the microfinance industry to its

full potential will require microfinance institutions,

donors, banks, investors, and governments to step back and think big, to think in terms of

building an industry that is catering to the needs of the poor and very poor and doing so on a sus­

tainable basis as a permanent part of our finan· cial system.

-

CGA P's mission is to help build a microfinance

industry that is providing poor households

throughout the world with flexible and high­

quality financial services on a sustainable basis and

an ever increasing scale. CGAP was created by the

major bilateral and multilateral donors and

microfinance institutions to act as a standard set­

ter, convener, and catalyst in this rapidly evolv­

ing field. CGA P has been charged by its 29

member donors with: developing microfinance in­

stitution institutional capacity, improving mem­

ber donor practices in supporting microfinance,

deepening the poverty outreach of microfinance,

improving the legal and regulatory framework for

microfinance, and facilitating the commercial­

ization of the industry.

CGAP serves microfinance institutions, donors

and the microfinance industry through the de­velopment of technical tools and services, the de­

livery of training, strategic advice and technical assistance, and action research on innovations. CGA P also has a small grant facility in support

of these activities and for strategic investments in microfinance institutions.

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Consultative Group to Assist the Poorest

Over the past 12 months, the " new economy" has star­

tled us wirh its fragi lity-the result of spectacular growth

huilr on root systems that have proven far too tenuous.

The microfinance community should he proud that much

o f the attentio n in the past year has been below the sur­

face, on building the foundations that microfinance in­

sti tutions and the microfinance industq will require ro

s upport major growth and reach significant numbers of

poor households in the years to come.

CGAP roo has invested much of its energy thi s year on

building the infrastructure and equipment for a robust, sus­

ta inable, and rapidly growing glo bal microfinance indus­

try: high-quality, loca lly a\'ailable management training,

relevant management information systems, financial re­

ports, ratings and evaluations on microfinance institu­

tions that are public and comparable, external auditors

equipped to assess microfinam:e institutions, appropriate

regu latory frameworks, and trained supervisors.

We in microfinance also need to stretch o urselves to de­

ve lop fresh products and methodologies that meet the

needs of people further and further below the poverty line .

Over rhe past year, CGAP's efforts to explore ways for mi­

crofinance to reach poorer people have been woven into

a ll aspects of our work. This focus o n deepening the

poverty outreach of microfinancc is now found in our tra in­

ing courses and technical tools, our resea rch agenda, our

publications, and in the type of institutions we support with grant funds.

Donor services was a third area where C:GAP placed

a lot of its energy this yea r. Donors continue to play a crit­ical role in microfinance and improving the ways that

donors support microfinance is an area where we, as a

donor consortium orga nization , have made less progress

than we would like. To address this, rhe CGA P ream has

focused much more energy this year on ways to improve

donor practices and on improving donor coordination

both in rhc fie ld and at headquarters. The knowledge, tools,

and mechanisms arc in place. CGA P now needs to work

on irs effectiveness in applying them.

This year was marked by CG A P's opening to new con­

nections and partnerships beyond the immediate circle of

our constituency in rhe microfinance community. We have

sought our a connection wi th the many individuals and in­

stitutions tha t are involved in provid ing financial services

to rhe poor through their work on HIV/AIDS, post-con­

flict situations or community development work, bur who

are not part of the microfinance "commun ity." In most of

CGAP's new ventures, we have looked to join forces with

other service providers and donor agencies 111 carrying out

our work, such as offering appraisa ls and co-funding mi­

crofinance insrirurions with member donors ro better serve

borh rhe microfinance insrirurions and rhe donors. This year

the CGAP team also created li nks to support front- line

donor fie ld staff and their national coordinating bodies in

a do1en countries. Finally, the Microfinancc Gateway, w irh

over I 0,000 users a month, is offered as a resource and a

platform for the industry-a place where diverse views are

expressed and debated.

For CGAP and many of its partner!>, this has been an ex­

citing year in microfinance with real progress on a number

of fronts. The industry appears ro ha\'e mo\'ed beyond the

stale and polarized povcrry-susrainabi liry debate, recogniz­

ing that trade-offs are nor simple and that there is much cru­

cial work to be done in pushing both frontiers a r once. The

importance of transparency about microfinance institutions'

performance-both financial performance and performance

in reaching poorer clienrs- is spurring initiatives rhar will sig­

nificantly ratchet up microfinance's potentia l for growth. The

crucial need to listen and learn from poor clients and rode­velop flexible new products that most -.uit their needs is gath­

ering momenrum. Fina lly, commitmenr among microfinam:e

institutions and donors to principles and standards of good

practices is spreading and now seems unstoppable. These are

all exhilarating developments, bur there is much to be done

ro put these principles into practice. As long as there are coun­

tries where 98°10 of the poor lack a safe place to keep rhe lirrle money they can put aside from their earnings and

where a sickness in the family can push it over rhe edge from

pm'crty into dcsrirurion, we ha,·c no rime to lose.

I would like to thank all of rhe many partners with

whom we have worked this year for thei r spirit and team­

work, our member donors for their commitment and their

support, and the CGAP staff fo r their energy and their ded­

ication to CGAP and to the poor people we seek to serve.

Elizabeth Litrlcfield CEO and Director

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INTRODUCTION

This report presenrs CGAP's activities for fiscal year 2001 (July

2000-June 200] ). Following a brief update on CGAP's three

main institutional bodies. this report is structured according

to the activities and services the CGAP Secretariat provided

in fiscal year 200 l to its three principal clienrs: M icrofinance

Institutions and Practitioners, CGAP's Member Donors, and

the M icrofinance Industry as a whole, including those activ­

ities that serve to bui ld the "infrastructure" of a microfinance

industry. The Secretariat seeks to work with each stakeholder

group or clienr to achieve our common goal of improving the

capacity of microfinance institut ions to provide quality fi­

nancial services to the poor, especially the very poor, and to

do so on a sustainable basis and ever-increasing scale.

CGAP TEAM AND GOVERNANCE

The CGAP Secretariat The CGAP Secretariat is a small team of microfinance pro­

fessionals responsible for implemenring CGA P's mandate. It

Figure 1 CGAP's structure

Investment

Committee

Consultative Group

of member donors I

Executive Committee

1

Microfinance

institutions

Clients

+-- Policy Advisory

Group

Annual Report 2001

is housed in the World Bank. This year, the Secretariat solidified

its approach as a service and resource center to the microfi­

nance industry by focusing its services-technica l advice and

exchange, training, technical tools, and funding-towards its

three client groups: microfinance institutions, donors, and the

microfinance industry.

The Secretariat has a lso been reorganized into teams.

Management includes Elizabeth Littlefie ld as Director, Ousa

Sananikone, and Evelyne Fraigneau. Richard Rosenberg and

Robert Chri sten are Senior Adviso rs. The Microfinance

Industry team led by Xavier Reille includes Patricia Mwangi,

Alfonso Vega Acosta, and Natasa Goronja. The Microfinance

Institution team is led by Jennifer Isern and includes Leslie

Barcus and Tamara Cook. The Microfinance Institution

End-Client team is led by Syed Hashemi and includes Doug

Pearce. The Extern a l Relation s, Communications, and

Funding team is led by Ou sa Sananikone and includes

Tiph a ine Crenn. Brigit Helms is a Senior Microfinance

Specialist working on corporate/regional issues. The Budget

team is led by Carmencita Clay and supported by Sarah

Manapol-Brown. The Poverty agenda has been thoroughly

integrated into all of CGAP's work and is no longer a dis­

crete acti vity. Similarly, work on donor services is integrated

throughout CGAP's work and is the responsibility of all

staff. Regional point people and donor relationship managers

remain in place.

Several new staff joined the Secretariat in different capac­

ities thi s yea r. Doug Pearce joined as a microfin ance special­

ist. Alfonso Vega Acosta joined CGAP as a microfinance analyst and Narasa Goronja joined for a one-yea r internship

as a microfinance an;i lyst. Leslie Barcus joined as the Capacity

Building Manager.

The Consultative Group (CG) and Executive Committee (Excom) CGAP's Consultative Group (CG) is effectively its Board of

Directors. Membership of the CG is comprised of 29 bilateral

and multilateral development agencies and private development

organizations. Nemat Shafik, Vice President for Private Sector

Development and Infrastructure at the World Bank, is serv­

ing her second year as the Chair of the CG.

The Annual CG Meeting in May 2001 was co-sponsored

with the Inter-American Development Bank and was held in

Alexandria, Virginia.

The Executive Committee (Excom ) is a representative

sub-set of CG members which fac ilitates communication

among the CG, the Policy Advisory Group (PAG), and CGAP

' Consultative Group to Assist the Poorest

staff. The Execurive Committee is chaired by Karhryn

Imboden. The Excom reviewed and endorsed rhe fiscal yea r

2001 workplan at the CG Meeting in Edinburgh in June

2000. T he Executive Committee also provided valuable inpur on several initiatives and documents, and served as a conduit

for communications between the Secretariat and the CG. All bur one member of the Excom have rotated or will rotate off

the Excom this year and new representatives have been elected

from each of the CG consriruencies effective May 200 l. The

new representatives will be Johan de Waard of the Nerherlands,

David Stanton of the United Kingdom, Heather Clark of

UNCDF, Jean-Claude Lorin of Canada, and Nimal Fernando

of the Asian Development Bank. In April, the Excom and

Excom-elect representatives met with CGAP's CEO in Paris to review the Secretariat's activities in fiscal 200], prepare for

2001 Representatives

Kathryn Imboden, Chair (Switzerland)

Camilla Bengtsson (Sweden)

Guillaume Mourner (France)

Kate McKee (United States)

Abdirahman Be1leh !African Development Bank)

Hans D. Seibel (International Fund for Agricultural Development)

Current m embers Pilar Ramirez (Chair). Centro de Fomento a ln1c1at1vas Econom1cas

Fazle Hassan Abed, Bangladesh Rural Advancement Committee

Rosalind Cop1sarow, formerly of Fundusz M ikro*

Vi1ayalakshm1 Das, Friends of Women's World Banking'

John de Wit, Small Enterprise Foundation

Nabil El Shami, Alexandria Business Assoc1at1on•

Alpha Ouedraogo, Reseau des Ca1sses Popula1res • Alex Silva. Profund International

'Rotated off ri June 2001

the CG Meeting in May, and plan for rhe CGAP review be­ginning in fall 2001.

In the continuing effort to diversify CGAP's funding com­position, several donors made new commitments and in­

creased or exrended previous commitments. The Asian

Development Bank approved a contribution of US$500,000, which marks the first time a regional development bank has

provided fund ing to CGAP since the Inter-American

Development Bank's US$50,000 contribution in 1996. Japan and the United Kingdom both made their first commitments

to CGAP. Swirzerland and the Netherlands have increased

their commitments and several donors have extended their

original three-year commitments to the full five-year Phase

2 of CGAP. More information on donor funding commitments can be found in the Budget section.

Co nstituency

Germany, Italy, Switzerland. United Kingdom

Denmark, Finland, Norway, Sweden

Belgium. European Comm1ss1on, France, Luxembourg. Netherlands

Australia. Canada. Japan, United States

African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, Inter-American Development Bank

International Fund for Agricultural Development, International Labour

Organization, United Nations Capital Development Fund. United Nations Conference on Trade and Development. United Nat ions Development Programme

Former membe rs Muhammed Yunus (former Chair). Grameen Bank Kimanth1 Mutua !former Chair). K-REP Bank

Kamardy Ariel, formerly of Bank Rakyat Indonesia

Nancy Barry, Women's World Banking

Ela Bhatt, Self-Employed Women's Association

Renee Chao-Beroff, Centre International de Developpement et de Recherche (CIDR)

Martin Connell, Calmeadow Foundation Klaas Kuiper, Agency for Business Development Mana Nowak, Association pour le Dro1t a l'lnit1at1ve Econom1que !ADIE)

Maria Otero. ACCION International Sizwe Tat1, Khula Finance Enterprise L1m1ted Lawrence Yanov1tch, Foundation for International Community

Assistance (FINCA) Sukor Kasi, Centro de Fomento a lnic1at1vas Econom1cas

Kerfalla Yansane, Banque Centrale de la Republ1que de Guinee

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Numerous initiatives and inreractions have taken place be­

tween the Secretariat and rhc CG and these arc treated in the

sccnon on member donors.

Policy Advisory Group (PAGI The PAG is composed of distinguished microfinance practi­

t ioners and experts. The PA G's primary role is to support and

advise the CG and Secreta riat on po licies, procedures, and

strategic direction, and to provide guidance on the overall di­

rection of CGAP. Specifically, the PA G's roles are to: bring prac­

titioner viewpoinrs and concerns to influence CGAP Secretariat

and member donor policies, procedures, instruments, and

knowledge; convey best practice messages to rhe microfi­

nance practitioner communi ty and to governments; serve as

the fi rst-tester and user of CGAP tools; and promote and en­

courage transparency in the industry through demonstra­

tion, e.g., disclosing financial and client poverty information

on PAG member institutions.

Pi lar Ram irez of Centro de Fomento a lnitiativas

Economicas (FIE) served the firs t of a two-year term as Cha ir

of the PAG in 200 I. Nabtl El Shami of Alexandria Business

Association, Rosa lind Copisarow, fo rmerl y o f Fundusz Mikro,

Vijayalakshmi Das of Friends of Women's World Banking, and

Alpha Ouedraogo of Reseau des Caisscs Populaires will ro­

ta te off the PAG in J une 200 I. CGAP gratefu lly acknowledges

the leadership and conrribution of these individ uals. Four new

members were selected from nominations received from the

CG and PAC: Fouad Abdelmouni of A l Amana, Shafiq

Choudhury of Association fo r Socia l Advancement, David

G ibbons of Cashpor, :i nd Carlos Laharthc of Compartamos.

The Investment Committee The Investment Committee nets as custodian of the invest­

ment fund and ensures the adherence of the invcstmenrs rec­

ommended by the CGAP Secretariat to the overall strategy

established by rhe Consultative G roup. Specifica ll y, the

Box 3 CGAP's Investment Committee

Jean-FranG01s R1schard (Chair) Vice President for Europe, World Bank Assaad Jabre (Alt Chair). Vice President of Investment Operations. IFC

Carlos Cuevas. Principal F1nanc1al Spec1al1st for Financial Sector

Development. World Bank

Claudia Morgenstern, Director for Financial Markets Advisory, IFC

Christopher Scott, Lead Econo·rnst for Poverty Reduction and Economic Management Network, World Bank

Douglas Webb. Legal Advisor of Private Sector Development and Legal Reform. World Bank

Annual Report 2001

Committee eva luates and approves the Secretariat's recom­

mcndarions on grants to be made from the CGAP investment

fund . The Investment Committee is composed of senior World

Bank Group staff with the experience and expertise to assume

this fid uciary role. Executive Committee members may also

attend investment committee meetings as observers.

Jean-Fra n<;ois Rischard, Vice Pres ident of the Wor ld

Bank fo r Europe, continues ro serve as the Cha ir of the

Investment Committee. Assaad Jabre, Vice President of

lnvestmenr Operations for the IFC, was nominated as the

al ternate chair in cases when Mr. Rischard will be unable

to attend in person. Christopher Scott, Lead Economist, was

selected to replace M ichael Walton, Regional Adviser, w ho

reloca ted to Peru. T his year, the Investment Committee mer

in August and Janua ry a nd plans ro meet in June to review

proposals for grants and projects being proposed by the

Secretaria t. As of May 200 I , e ight proposals were ap­

proved, incl uding one non-objection proposal, total ing

US$5 .525 mi ll ion dollars . hve proposals are planned for

J une, potent ially bringing the total to US$7.2 mill ion for this

year. Sec funding tables for more information.

I. MICROFINANCE INSTITUTIONS AND PRACTITIONERS

Despite the enormous success of a few celebrated microfinancc

inst itutions, most remain small in terms of the numbers of poor

clients served and weak in terms of financia l performance. To

address this cha llenge, CGAP's work with microfinancc in­srirurions centers on developing microfinance instirutions'

capacity to deliver financia l services to the poor on a signif­

icanr sca le and with ever-increasing efficiency and financial

performance.

CGAP provides microfinancc insti tut ions with technical

tools and services, management tra ining and capacity build­

ing, technil:a l adv ice and exchange, a nd direct fund ing.

T hi s year CGAP d eveloped a series of interactive, wcb­

hased serv ices to extend and bui ld upon its ha ll ma rk series

of technical tools in financia l management for microfi ­

nance institutions. These in-depth handbooks and soft­

ware are des igned to help m icrofinance ins titutions

strengthen thei r operations whi le st ill reaching the poor­

est possi ble c lients. In the area of training, the focus this

year was the coa lesc ing of multiple regional cap acity bui ld­

ing programs into one globa l program . T he program a ims

to establish sustainable local institutions that can provide

Consultative Group to Assist the Poorest . - .

high-quality train ing and technical services to microfi­

nance institutions into the future. In the area of technical

assistance and advice to microfinance institutions, most of

CG A P's work this year was in the context of appraising po­tential investments or monitoring current investments.

CGAP also provided direct performance-based grants to mi­

crofinance institutions and networks, funding for techni ­

cal assistance, and US$50,000 awards to the 10 recipients of the Pro-Poor Innovation Challenge.

Technical tools for microfinance institutions Over the years, CGAP has developed an acclaimed series of

detailed operational tools for microfinancc practitioners on ropics such as Business Planning and Financial Modeling,

External Audits, and Management Information Systems

(MIS). With this fu ll set developed, CGAP this year has fo­

cused on extending these tools through developing related

services such as the on-line Audit Center and the on-line MIS

Consumer Report Service, which are described in the Industry Services Section. CGAP also worked with external con­sultants on improvements to existing tools.

• Business and Financial Planning tool enhancements: CGAP

originally developed this technical tool in 1998 as a resource for practitioners to develop sound business plans and fi­nancial projections. Based on an independent evaluation of the Business and Financial Planning Model (Microfin), CGAP commissioned major revisions to make the tool more user-friendly and easier to adapt. The new handbook and

software will be ava ilable by mid-200 I. CGAP has a lso designed a course based on this tool for its capacity build­ing partners.

• Micro(i11ance Product Costing tool: Microfinance insti ­

tutions that cost their products, if they do it at a ll , often

use a top-down approach. The costing tool under <level-

Box 4 CGAP's Capacity Building Program

Hubs and pa rtners

East, Central. and Southern Afr1ca- AFCAP. Na1rob 1, Kenya Francophone Afr1ca- CAPAF, Dakar, Senegal South Asia- EDA Rural Systems Private Limited, Gurgaon, India

Southeast As1a- As1an Institute of M anagement and Punla sa Tao

Foundation, Manila, The Ph1l1ppines China- China M1crofinance Training Center. Be111ng, China

Central and Eastern Europe and t he Newly Independent States-The

M1crof1nance Centre, Warsaw, Poland

opment by CGAP is designed to be a practical tool to help

institutions better understand costs of thei r products in

order to make informed decisions about pricing, product

design, mix, and delivery strategy. The tool applies activiry­based costing (ABC) methods to determine the adminis­

trative cost structure of individual microfinance products. Once product costs are determined, the tool analyzes how

and why costs a rc incurred for that product and how the

product contributes (or not ) to the overall financial via­bi lity of the microfinance institution.

Training and capacity building for microfinance institutions CGAP's global capacity building program aims ro develop local institutional capacity to provide t raining and technical serv­ices to microfinance institutions. As of this year, CGAP's

Skills for Micro(inance Managers series of seven courses and accompanying training of trainers is being delivered in 40 coun­

tries and six languages, through 14 local sustainable tra in­

ing institutions, with 74 CGAP-certified trainers.

Under the program, CGAP assumes responsibility for the design, development, and updating of the course materials, provides training of trainers for each course, monitors early

course deliveries, certifies trainers, and provides limi ted mar­

keting support to hubs and partners. CGAP's partners and their trainers then market and deliver the courses on a full­cosr recovery basis. Until rhis year, all course materials were

only available to CGAP's partners and hubs to a llow rhem to develop their marker position. To provide wider access, and

in response to st rong demand, CGAP will now make course materials available on-l ine, although by arrangement with its partners, the trainer's manuals will not be public until 2003.

This past year CGAP's series of regional capacity build­ing programs became a truly global one as the team brought

together the separate regional initiatives under a common

strategy, branding, and marketing platform. The recruit-

Skills for Microfinance Managers-course topics Delinquency Management and Interest Rate Set ting

F1nanc1al Analysis Accounting for M1crof1nance lnst1tut1ons

Business Planning with M1crofin

New Product Development lin process) Information Systems lin process)

Internal Control and External Audit lin process)

menr of a Ca paci rr Building manager, Leslie Barcus, roman­

age rhe overall program, and ro oversee new courses and new

directions, will he lp CCAP maximize the synergies and learn­

ing among regions.

• Al-CAP update: AfCAP is the Eastern/ Southern African hub

for CGAP and DflD's joinr capacity building program, lo­

cated in Nairobi, Kenya. AFCAP has accelerated its focus

on consulting services and has 35 affiliated associates, most

of them individuals. 111is year, AFCAP has markedly increased

its technical support assignmenrs in rhe region and has cer­

rified a growing pool of trainers a nd consultants. AFCAP and

its partners have offered rhree Training of Trainers courses,

a nd three courses with participanrs from Uganda, Kenya,

Ethiopia, Egypt, Zambia, and Zimbabwe. This year is also

marked by the decision ro co-locate with MicroS,we-A(rica ro build on synergies berween the rwo programs.

• CA PAF update: CA PAF is the Francophone Africa hub for

CGA P's capacity building program located in Dakar,

Senegal and i~ jointly financed by rhe French Ministry of

Foreign Affairs (MAE) and CGAP. Since irs launch, CA PAF

has offered four Training of Trainers courses, certified 25

rrainers, and organized nine courses in Senegal, Benin, Togo,

Burkina Faso, and Madagasca r. Staff from 129 di ffe ren t

microfinance in stitutions have been trained. This yea r,

CA PAf was successfull y restrucrured and a director a nd

new adminisrrative com pany are now in place.

• Asia Capacity R11ilding 11pdate: C:CAP has partnerships

with EDA Rural Systems in India, the Asian Cenrer for Entrepreneurship a r rhe Asian Insrirure of f\ 1anagemenr

(A IM ), and the Punla sa Tao Foundarion in the Philippines

to deliver courses in South and Sourheasr Asia. During fis­

cal 200 I, rhese partners delivered si ' courses and one Training of Trainers. An external e\'aluarion of this regional

pi lot program in November 2000 confirmed the posirive impacr of courses on micro finance insriturions and pro­

vided useful insigh ts and recommendarions for rhc fu­ture. Results of rhe eva luarion a re ava ila ble upon request.

• Chi11a Micro(i11a11ce Trai11i11g Center (CMTC) uf!dc1te: CMTC is CC A P's capacity building partner in China , es­

tablished in late 1999 with rhe Rural Developmenr lnsrirure

in Beijing. CMTC is building a group of loca l certified rrain­

ers, including experienced practitioners, lead ing researchers,

and a small fu ll-rime staff. This year, CGAP faci litated three

7

Annual Report 2001

T ra ining of Trainers courses and C~ ITC delivered its first

rwo courses to practitioners from 10 provinces in

Mandarin. A third course was de li vered in Apri l for 25

UNICEF program staff. As the first trai ning cenrer of its

kind in China, C~ITC faces the challenge of convincing

loca l m icrofinance institutio ns and donors rhar cosr-re­

covery fees a re necessary for the long-rerm sustainability

of CMTC and are jusrified by rhe high qua lity a nd im­

mediately applicable conrenr.

• Micro(i11a11ce Centre update: The Microfinance Centre

for Centra l and Eastern Europe and the Newly lndependenr

States (1\ lFC), CGA P\ capacity building partner in this re­

gion, is based in Warsaw, Poland. CGA P works w ith MFC

both as a rraining cenrer a nd as a nerwork ro promore mi­

crofinance in this region. During this year, ~1 FC offered

o ne Training of Trainers course and five CGAP courses in

addition ro its other training courses. An external eva lu­

arion supported MFC's decision to separate rraining and

rechn ica l assistance from orher acriviries this year.

Courses i11 deuelo/m1e11t: The deve lo pmenr of a Skills (or Microfinance Managers course is an exrensive process. First,

CGAP and it<. capacity building partners brainstorm ropics and

concepts for new courses based on demand. Once a topic is se­

lected, course materia ls arc developed using adult learning tech­

niques, often in consul rarion w ith key experts on rhe topic.

Following rhe drafting of the course and an iterative review of

marerials, a rest rrain ing of trainers is delivered. The course is

rhen revised, piloted by a local training provider, and revised again. Based on feedback from CGAP's capacity building part­

ners, rhe followmg topics were selected for developmenr rhis year:

• /11fim11atio11 Systems course: CGAP completed a d raft of

rhe lnformarion Systems course, w hich includes a case

study. Two Trainings of Trainers are scheduled for mid-

200 1.

• New Product Deuelopment course: The following experts conrribured ro course design ar a fou r-day workshop in

November: Janis Sabcm1, 1\like McCord, Kim Craig, Benediro

~ lurambire, Ni raj Verma, Elma Valen7Uela,Javier Fernandez,

Graham Wright, Dirk Sreinwand, Monique Cohen, Monica

Brand, Zan Northrip, Brigit H elms, Lorna Grace, and lmran

1\ larin. The course materials were then developed by CGAP

and will be resr-pilored rh rough severa l iterations rhrough­

our the spring, anticipating first course delivery in lare 200 I.

• Business P/<11111i11g with Micro(i11 course: Course materi­

als were final iLed following the . ovember Training of

Trainers in Nairobi. The laresr version of the course wa~

delivered by EDA Rural Systems in India in February and

by AFCAP Associates in Uganda in May 200 I.

• / nternal Control and External Audit course: CGAP

hosted a course design workshop in February 200 I that

brought together experts on internal controls and au­

dits to brainstorm on a framework and key messages for

the CGAP course. They included Jennifer lsern, Andre

Hue, Steven Kelly, Pamela Champagne, Howard Brady,

Joyce Lehman, Mike McCord, Patricia Mwangi, Xavier

Reil le, Betty Sabana, Janis Sabetta, and Alex Silva.

CGAP prepared course materials between March and

May. Following an initial review of this draft course,

AFCAP will run the first pilot of the course in late

2001.

Table 1 Support to microfinance institutions and practitioners

(US dollars)

Type of investment

TECHNICAL ADVICE AND EXCHANGE

Appraisals and Technical Assistance (e.g Business Planning)

Nirdhan (MIS Review)

Funding the Poor Cooperative (operations manual)

Pro-Mu1er (TA for business planning)

TRAINING AND CAPACITY BUILDING

M 1cr0Save-Afr1ca

New Course Development

Asia Capacity Bwldmg Extension

FUNDING FOR RETAIL MICROFINANCE INSTITUTIONS

N1rdhan

CGAP Pro-Poor Innovation Challenge

WWB Affiliate Cap1tallzat1on

ACCION International

XAC

Safe Save

M1cr0Finance Network

Jomt FFH/WOCCU pilot

Kashf Foundation

Fonda11on Zakoura

Developpement International Des1ardm

Pro-Mu1er

Total New Commitments as of May 2001

/1al1cs denote grants expected to be proposed 10 rhe Investment Committee

Other Capacity Building Initiatives:

• MicroSave-A(nca: MicroSave-A(nca is a regional center

that conducts action research, develops curricula, and pro­

vides technical assistance to selected microfinance institu­

tions on market research and savings product development

for poor customers. In August 2000, the Investment

Committee approved US$ I .4 million for the ~econd phase

of M1cr0Save-A(rica based on a proposal for joint funding

from CGAP, DFID, and UNDP. MicroSave-A(rica has pub­

lished several high-qualiry papers and has developed a

course on "Market Research for Microfinance" for prac­

titioners in Kenya, Tanzania, Uganda, and South Africa. Two

workshops ro train trainers on this course attracted 35 par­

ticipants from Africa, Asia, Europe, and orth America.

RegionJCountry

Global

Nepal

China

Bol1v1a

Africa

Global

Asia

Nepal

Global

Global

Africa

Mongolia

Bangladesh

Global

Ecuador

Pakistan

Morocco

Global

Bolivia

Amount

294,358

16.000

23,000

17,500

357,851

1,400,000

200.000

96.500

1,696,500

1.000.000

900.000

750.000

500,000

95,000

70,000

50,000

900,000

300,000

300,000

175,000

760,000

5,200,000

7,254,351

MicroSaue-A(rica is an acti\•e member of the CGAP­

coordinared Product Development Task Force and has de­

veloped additional toolkits on pilot-testing products and

costing/pricing financial services. MicroSai1e-A(rica has co­

locatcd w ith AFCAP and is now based in Nairobi, Kcnra.

• Bank Rakyat /11do11esia International Visitor Program (/VP): In 1999, CGAP and USAID made a joint investment

in the BRI International Visitor's Program designed to dis­

seminate lessons learned by BRI to practitioners all over the

world. During this year, TVP offered 12 courses ro interna­

tional visitors, explored new ways to attract clients, and i~

on track to become sustainable after rwo or three years.

However, IVP did nor meet minimum performance thresh­

olds on the number of courses offered and developed, and

1t still need~ to reinforce its business planning and market­

mg strategies. CGAP visited !VP in April ro discuss its per­

formance against the partnership agreement and wi ll make

a decision with USAID on future disbursements.

Technical advice/exchange for microfinance institutions CGAP offers appraisals, business planning support, general

strategic advice, and specific technical assistance to selected

Table 2 Pro-Poor Innovation Challenge Awards

(US dollars)

Recipient

ROUND 1

GRET, Cambodia

Swayam Krish1 Sangam ISKS

Freedom from Hunger

CB IOI BA

ROUND 2

Association Mennonite de Developpement Econom1que

CASHPOR F1nanc1al & Technical Services

Padakhep Manab1k Unnayan Kendra

Uganda M1crofinance Union

Women's Assoc1at1on for Gain both Economic and Social

ROUND 3

Al:ernat1va Solidaria Ch1apas

Local Enterprise Assistance Program

Constanta Foundation

Women Economic Empowerment Consort

Youth Self Employment Program

l)

Annual Report 2001

microfinance institutions and banks. In 200 I, most technical

advice occurred in the context of eight institutional appraisals­

mainly of poverty-focused microfinance organizations-for

grant funding. Several of these grants have been delayed as

CGAP seeks to bring international donors or local apex or­

ganizations into a funding package. CGAP aims to have all

of its investments contribute to, rather than compete with, the

work of its member donors and thus leverage its scarce grant

funds and technical staff resources. The CGAP Appraisal and

Monitoring Service, described in the Donor Service section,

was designed with this in mind. In addition. ongoing advice

to a number of institutions, such as banks downscaling into

microfinance, continues to be a feature of this area of CGAP's

work w ith microfinance institutions .

• XAC, Mongolia: XAC was established in 1998 with the

support of UNDP as a MicroStart project. Ir is the first fi­

nancial institution focus ing exclusivelr on microfinance in

Mongolia. XAC reaches poor clients in both urban and

rural areas with average outstanding loan size of 50 per­

cent of per capita GDP. Since earl y 2000, CGAP, with the

IFC, has been co-managing a technical ass istance pro­

gram ro support XAC. CGAP conducted an appra isal of

Country A mount

Cambodia 50.000 India 50.000 Ghana 50,000 Benin 50,000

Ha1t1 50,000

India 50.000

Bangladesh 50,000

Uganda 50.000

Togo 50.000

Mexico 50.000

Liberia 50,000

Georgia 50,000

Kenya 50.000

Tanzania 50,000

Consultative Group to Assist the Poorest '

XAC in July 2000 and found that XAC had achieved im­

pressive results in its first two years. Following the appraisal,

CGAP continued to support XAC with technical assistance.

XAC is testing CCAP products such as the Microfin up­

date and the audit handbook. CGAP is leveraging its

US$95,000 in technical assistance support by coordinat­

ing with severa l donors that have expressed interest in sup­

porting the planned conversion of XAC to a li censed

bank. Triodos Bank and the IFC ha ve approved loans to

XAC of US$400,000 and US$200,000 respect ively.

• Fundi11g the Poor Cooperative (f PC), China: Funding the

Poor Coopera ti ve, the first microfinance institution in

China, was launched as an action-research program by the

Rural Development Institute o f the Chinese Academy of

Social Sciences in 1993. Using Grameen Bank solidarity

group methodology, FPC serves poor rural households

with an average outstanding loan size of 10 percent of per

capita GDP. CGAP appra ised FPC in September 2000 and

worked with fPC headquarters and two county branches.

FPC is at a pivotal time as it makes the transition from an

action-research project to a professional microfinance in­

stitution capable of broad and deep outreach. CGAP is help­

ing FPC develop an operations manual to standardize

branch procedures and controls . Following the imple­

mentation of the manual, CGAP may provide additional support. CGAP has a lso discussed potentia l funding with

other donors such as AusAI D and the Ford Foundation.

• Pro-Muier, Bolivia: Pro-Mujer, with an average outstand­

ing loan size of abo ut 5 percent of per capita GDP, serves a poorer clientele than most other Bolivian microfinance

institutions. CGAP appraised Pro-Mu jer in September

2000. Pro-Mujer is a solid program and operates sub­

stantially down-market from other microfinance instin nions

in Bolivia. Bolivia is one of the most advanced countries

in terms of microfinance and is nor a place where do nors

o ught to be in vesting signi fi cant new gra nt money.

Nevertheless, CGAP decided to appraise Pro-M ujer because

of its commitment to staying with its very poor clientele,

and moving further down-market if possible. In addition

to technical assistance provided during the appraisal, CGAP

made a small investment to provide some training and

consultancy on business planning and organizational struc­

ture. CGAP is also considering a modest investment to sup­

port the testing of CGAP tools and follow Pro-Mujer's

explorat ion of new systems and products.

I 0

• Kash( Fou11datio11, Pakistan: Kashf is an NGO that

began as an action-research program in 1996 and opened

its first branch in Jan uary 1999. Kash f serves exclu­

sively women from low-income households with an av­

erage outstanding loan size o f 23 percent of per capita

GDP. In October 2000, CGAP appraised Kashf and pi­

loted the new CGAP Poverty Aud it (See Donor Tools for

more information on the Poverty Audit ). A representa­

tive from A usAID a lso joined the appra isa l team in con­

s ideratio n of possible funding. T he appraisal team

concluded that Kash f has a strong commitment to reach­

ing very poor women and achieving profitability for the

long-term stabili ty o f the institution. Given their sol id

credit delivery model and their ability to sustain strong

growth in the coming yea rs, CGAP is facilitating fund­

ing for Kash f. AusAID has a lready committed approxi­

mately US$250,000. CGAP is also working with the

Pak istan Poverty Alleviation Fund (PPAF), a World Bank­

funded apex institution for microfinance and other ac­

tivities, to streamline its procedures and pursue a joint

in vestment in Kashf w ith CGAP.

• Nirdha11 Bank, Nepal: In November, CGAP appraised

Nirdhan, a microfinance bank for poor women in rura l

Nepa l. Its average o utstanding loan size is 25 percent of

per capi ta GD P. This marks the fi rst time that CGAP has re-appraised a microfinance institution. N irdhan ha s

evolved signi fica ntl y since the first CGAP appraisa l in

1996 in rerms of both poverty outreach and profirabil­

iry. To complement the CGAP appraisal, CGAP com­

mi ssioned the Center for Microfinance in Nepal to

determine the re lative poverty of Nirdhan cl ients using

the new CGAP Poverty Assessment Tool; the results cor­roborated Ni rdhan's assertion that it targets the very poor.

following the appraisa l, CGAP commissioned an exter­

nal review of Nirdhan's computerized Management

Informa rio n Sysrem before rolling our rhe system in all

of the branches. Fol lowing th is review, N ird han negoti­

ated improvements wi th the ir local software designer.

CG A P's Investment Comm ittee approved an in vestment

of US$ 1,000,000 to strengthen internal ca pacity and

systems, achieve profitabi lity by July 2002, review cur­

rent loan products, and pilot new products. CGAP is lever­

aging its funds by working with several donors and other

investors who are considering loans, loan guarantees, and

other types of fundin g for Nirdhan based on the CGAP

appraisa l.

• rondatiun Zakoura, Morocco: In November, CGAP ap­

praised Zakoura, an NGO that reaches poor women in rural

and urban areas. Zakoura is the second largest microfinancc

institution in M orocco with 18,000 loans outstanding and

a portfolio of US$ 1.9 million. Zakoura combines an im­

pressive commitment ro very poor clients {average loan out­

standing is 10 percent of per capita GD P) with excellent

repayment performance and full financial susrainabiliry only

fi ve years after its founding. While performance is strong,

Z akoura needs to develop a new MIS, create regional

branches and set up an internal control unit before start­

ing another phase of expansion. Potential CGAP funding

will be based on Zakoura 's new business plan and an as­

sessment of their need for technical assistance.

• Womens World Banking: The Women's World Banking

Facility for Affiliate Capital ization offers equity funding to

affiliates in Africa, Latin America, Asia, and Eastern Europe.

Capital investments are conditioned o n specific perform­

ance improvements on the part of the affilia tes. In

September/ October, CGAP e\·aluatcd the first phase of its

investment in WWB's Affiliate Capitalization Facil ity in con­

sideration of the anticipated second phase tha t would ex­

tend the fund to other el igible affilia tes, a\ well a' ro existing recipients that are able to meet higher performance

targets. A CGAP ream visited three previously capitalized

affiliates (KWl·T in Kenya, WWB-Cali in Colombia, and

ADOPEM in the Dominican Republic) and one candidate

for capita lization {BOSPO in Bosnia and Herzegovina ). The apprais,11 focused on the affiliates' relationship with the net­

work and on the impact of ca pita lization on the affiliaw,'

overall growth and financing strategy, including the abil­

ity ro le\'eragc commercial sources of funding. The

Investment Committee approved a LJS$750,000 grant for

Phase II of rhc capita lization facility. CGAP\ fun ds were

leveraged by the IFC, which approved an additional

US$250,000 based o n CGAP's appraisal.

• A CCI ON Intemat1011al: In December 200 I, CGAP eval­

uated ACCION, including its Gateway hmd, prior ro

considering an investment in ACCION's Africa in itiative.

ACCION has an impressive track record in leading rhe

process of commercialization of microfinance in Larin

America over the past five years . Its expansion into Africa

will bring ACClO'.\l's experience in building of financial

NGOs and their transformation into regulated finance in­

stituti o ns ro African microfinance. The Inves tment

I I

Annual Report 2001

Committee approved a US$500,000 CG.\ P gran t for this initiative. On the basis of CGAP assessment, the I FC ap­

proved a US$400,000 capaci ty building in\'estmcnr from

the Small and Medium Enterprise Department and Capacity

Building Facility.

• I-reed om fro111 I lunger (FFH) al/(/ World Co1111cil of Credit U11io11s (WIOCCU) ioi111 proiect i11 ccuador: FFH has a

credit-with-educa t ion village banking model rhar focuses

on rhe rural poor, especially women. Ra ther rhan start up

its own stand-alone opera tion in Ecuador, FFH has agreed

with WOCCU on a pilot effort to graft l+H's product onto

two strong WOCCU-affiliatcd credit unions. This would

deepen the credit unions' ou treach and extend savings

serv ices to rhe credit-wi th-education clients. A CGAP ap­

praisal found tha t a similar FFH/WOCCU pilot in the

Philippines was performing impressively.

• CAnD and Project D1111gga11on(l'D), Philippi11es: CAR D

and PD a rc two of the leading microfinancc institutions

in the Philippines. Both reach very poor clients. CGAP has

made a financial investment in each institution and has also

invested substantial staff rime in ongoing monitoring and

technical assistance. In particular, CGAP has conducted

several business planning workshops with both institutions.

This year, CARD and PD staff prepared business plans and

financia l projections without outside assistance. CGA P

worked with the two institutions in December ro review

rhe plans and found them technically sound a nd realistic in thei r assumptions.

• Banco do Nordeste, Brazil: Banco do :-.Jordeste, a state

hank, launched its CrediAm1go i\licrofinance Program

in December l 997 and has achieved impressive resu lts.

CrediAmigo is already reaching over 55,000 clients with

an average outstanding loan size of less than 6 percent

of per capi ta GDP. Ir expects to reach over 200,000

c lients in the nex t few yea rs in one of the poorest areas

of Brazi l. The CrcdiAmigo program shows that com­

mercial banks can effectively reach poor clients. CGAP

and the World Bank have worked together to provide on­

going technical assistance and a loan {respectively) to

CrediAm igo o ver the past few ~·cars.

• Szmyam Kris/Ji Sangam (SKS), India: In Ju ly 2000, CGAP

visited SKS, which was one of the four winners of the first

Pro-Poor Innovation Challenge. SKS is a very small insti-

rurion (less than 1,000 clients) working in one of the poor­

est regions of India. After time/efficiency analysis of their

client caseloads, SKS is launching smarrcards as a way to

improve internal controls, increase loan officer efficiency,

and expand outreach. A visit to SKS underscored the use

for the Pro-Poor Innovation Cha llenge to find microfinancc

institutions that normally would nor fir CGAP criteria,

even though they have good potentia l for the future. CGAP

has provided strategic advice and numerous referrals for SKS

and will maintain this link with SKS to document lessons

lea rned.

• Developpement /11temational Desjardins (DID), Canada:

In October, CGAP worked with representatives from

DID, OTIV/ Madagascar, and Pamecas/ Senegal to iden­

tify the lessons learned from the pilot audit project with

DID and its three partners. Preliminary plans for the 2000

audits were a lso di scussed. In November 2000, DID and

CGAP agreed to cancel the current funding to DID,

which is based on performance of three DID partners,

after DID signaled that two partners would nor meet the

minimum performan ce thresholds. In early 200 I, DID

submitted a smaller proposal for technical assistance fo­cused speci fically on strengthening internal controls and

external audit in the three networks, where the per­

formance thresholds would be linked on ly to DI D 's de­livery. This proposal wi ll be submitted to the Investment

Committee.

• The MicroFinance Network (MFN}: MF is a global as­

sociation of leading microfinance practitioners committed

to serving low-income people through profitable microfi­

nance institutions . CGA P and MF 's other funders com­missioned a review of MFN ro determine how members

value their association with the network and the services

provided, and what services might be provided in the fu­

ture. The review revealed that MFN's leading members value

the network, particularly the opportunity to imeracr with

other microfinance practitioners at the annual meeting. In

order to cover some of MFN\ interim costs until the re­

view was completed , CGAP extended its previous invest­

ment in MFN with an increase of US$50,000. CGAP is in

discussions with MF about the future structure of the net­

work and potential funding.

• Compartamos, Mexico: CGA P vis ited Compartamos in

January 200 I to review the status of their operation. In

Ju ly 1996, CGA P made a US$2,000,000 grant to

Compartamos, a microfinance institution doing rural vil­

lage bank lending in poor regions of southern Mexico. The

final disbursement was made in December 1998 to facil­

itate the formation of a licensed finance company. During

the five-year project period, the clientele grew from 17,000

to 64,000, adjusted profitability moved from -26 per­

cent to 45 percent, and the profits contributed to about

US$9 million in equity, allowing Compartamos to capi­

talize the licensed company in October 2000. Comparramos

has successfully leveraged CGAP's investment while re­

taining its poverty focus. As a finance company, it can now

rai se funds for expansion in the commercial market. Its

oriemarion and its success are having a major demon­

stration effect in Mexico. Throughout its partnership with

Comparramos, CGA P has provided ongoing advice about

its operations, products, systems, a nd external audits.

Financial support for microfinance institutions As described above, several CGAP appra isals led to funding

during this year. Sec Table I for details.

Pro-Poor Innovation Challenge: CGAP's Pro-Poor Innovation

Challenge is designed for smaller, younger, o r untested mi­

crofinancc institutions that have difficulty raising capital from

donor wurces. Applications are extremely short, no on-sire due diligence is undertaken, and turnaround rime ts less than a

month. The selection criteria a re depth of outreach, innova­

tion, and commirmem to sustainability. Following the success

of rhe first Pro-Poor Innovation Challenge in Spring 2000,

CGAP decided to extend this program and the Investment

Committee approved US$900,000 to extend the program over three more cycles and document the award recipients' ex­

periences ro maximize industry learning. Short write-ups on

each award recipient are posted on the CGAP website.

12

• Pro-Poor Innovation Challenge II: CGAP received over

180 responses to the second Pro-Poor Innovation

Challenge, most of them from young, small microfinance

institutions. Five awards were made.

• Association Mennonite de Deve/oppement f.conomique,

Haiti is a community bank program working with

very poor people in mounta inous rural areas of Haiti.

It is experimenting with new models of training in lit­

eracy and business skills.

• CASHPOR Financial & Techmcal Seru1ces Ltd. , India

is developing a new loan produce for landless agricul-

rural women workers in one of India's poorest districts

in conjuncrion with training on very small-scale poul­

try rearing. These \'Cr}' small loans (average loan is

US$43) will allow destitute women, who are otherwise

excluded from financial services, ro eventually gradu­

ate to mainstream microfinance.

• Padakhep Ma11alJik U11nayan Kendra, Bangladesh is

serv ing street children, a vulnerable population out­

side the scope of conventional microfinance. In ad­

dition to providing them with financial services,

Padakhep is a lso planning to improve STD and AIDS

awareness.

• Uganda Microfi11ance Union is developing a transfer

mechanism for rural-urban remittances. This will en­

able small traders who face high risks of armed rob­

bery to trade in different markets free from rhe dangers

of carrying cash.

• \Y/0111e11 's Association for Gain both F.conomic and

Social, Togo offers very low loan sizes (US$5 I) with no

preliminary savings ro returning refugees a round Lome

and very poor people in an environmental ly vulnerable

region of Togo.

• Pro-Poor Innovation Challenge Ill: CGA P received 130

applications for this round and five awards were made.

• Alternatiua Solrdaria Chiapas A.C. (A/Sol), Mexico

uses a Grameen Bank peer lending methodo logy in

rural communities in Chiapas, Mexico. The majority

of AISol's clients inhabit some of the poorest regions of Mexico and belong to indigenous communities rhar

have been displaced by guerrilla and religion-related con­

flicts. AISol is developing an insurance product that

would enhance its savings and credit products.

• The Local Enterprise Assistance Program (LEAP), a member of the World Relief Microfinancc Network, op­

erates in Liberia, which has been ravaged by years of

civil war. It has 4,400 very poor and economically vu l­

nerable clients, but is well on its way ro achieving in­

stitutiona l and financial self-sufficiency. In a prevailing

post-conflict, post-disaster situation with too many

ill-conceived programs confusing relief and c red it func­

tions, LEAP sets a strong example of how it is possi­

ble to build sustainable programs based on sound

microfinance principles.

• Constanta Foundation (Constanta), Georgia is an NGO

that is reaching a significantly poorer c li enre le than

most microfinance institutions in the region. Constanta's

Annual Report 2001

initial loan size is US$60 or approximately 10 percent

of per capita GDP. A large share of Constanta's clients

arc refugees and it plans to expand its operations ro more

rural regions using mobile offices.

• \Y/0111en Economic F.111power111ent Consort (\Yll::.EC),

Kenya provides group-based credit, tailored ro the

changing lifestyle of Maasai women. In recent yea rs rhe

Maasai have been faced with severe droughts and

shrinking natural resources rhar have decimated their

cattle herds, restricted their nomadic practices and

forced them ro adapt to a sedentary, less subsisrence­

based, lifestyle. WEEC provides Maasai women with

credit in the form of cattle that WEEC purchases in bulk,

passing on the discount ro cl ients.

• Youth Self Employment Program ( YOSJ-;F()),

Tanzania provides group lending and savings services

ro households, often with HIV I AIDS orphans.

YOSErO plans to introduce a new lending product

rhar will help clients par for high school fees for

st udents. These fees have been preventing man}'

children, especially girls, from gett ing secondary

ed ucation.

• Regular funding application reuiews: CGAP reviewed 46

funding applications for rhe October deadline and 25 ap­

plications for the March deadline. The FFH/WOCCU joint

proposal from Ecuador led to an appraisal and CGAP

supported the review of rhe Microfinance erwork. Funding

decisions are pending on these two investments. CGA P is considering five others for further fol low-up and possible appraisal: Taimako in Niger, CARE and the Ghana Credit

Union Association, APPEND and Oppornmity lnrernational in the Philippines, Project Enterprise in Bosnia and

Herzegovina, and the SEEP etwork.

II. MEMBER DONORS

Donors contin ue to play a significant role in the development

of microfinance. But donors often face impediments within

their organizations rhar limit rhe effectiveness of their mi ­

crofinance programming, such as frequent staff rotation,

limi ted expertise in microfinance, and disbursement pres­

sures. To help donors address rhcsc issues. CGAP develops

tools and services aimed at improving member donor prac­

tices and staff skills, building consensus on policies and stan-

Consultative Group to Assist the Poorest

dards, and promoting coordination among donor agencies at

the inrernational and national level. This year, C:GAP abo

specifically emphasized connecting with local donor staff in

order ro stimulate or support in-counrry donor coordination

and to respond ro demand of local donor staff for C:GAP in­

puts where appropriate.

Given CGAP's small staff in relation ro the number of mem­

ber donors and their staff and other constituencies, services

and rools that leverage the Secretariat's staff resources have

been emphasized over tai lored, individual services. These

types of leveraged, multi-donor products include the Appraisal

and Monitoring Sen·ice, the Poverry Audit for the Appraisal

Format, the Global Donor Porrfolio Database, and training

courses for donor staff.

Technical tools and services for member donors

• Appraisal and monitoring service for CG 111e111bers: There

arc many instances where donors and private invesrors are

interested in funding the same institution. Multi-donor sup­

port to a microfinancc institution typically involves signifi­

can tly higher transaction costs, for the donors as well as fo r

the institution: these costs include multiple appraisab, proj­

ect documentation, negotiation of agreements, monitoring

and rcporring, and external audits. To enhance CGAP's use­

fulness ro member donors, CGAP launched an Appraisal and Monitoring Service this year. Through this service, CC...AP of­

fers to conduct a single appraisal exercise and unified mon­itoring and reporting on behalf of donors who arc 111tcresrcd

Figure 2 Priorities for donor work

Donor

Improving

In-Country Donor Coordination

Appraisal a:Jd P?rctices Monitoring

Service

Deal Syndication

1-1

in appraising and funding the same institution bur have lim­

ited in-house microfinance technical staff. Donor staff can

jom rhe appraisal exercise, bur only one appraisal would be

conducted. Microfinancc institutions, PAG members, and

member donors have been enthusiastic about this concept.

CGAP has offered this service for Nirdhan in Nepal and a

proposed joint project in Ecuador between Freedom from

I lunger and the World Counci l of Credit Unions, although

for riming and other reasons, neither was an ideal case to

test the service. A variation of the service was provided by

CGAP for the IFC in appraisals of Women\ World Banking

and A CCI ON and for AusAID on Kashf. This service is likely

ro be reshaped following further donor feedback.

• Pride Africa appraisal: Ar the request of NORAD, SIDA,

USAID, and U DP, CGAP led an appraisal ream in­

cluding staff from USAID and SIDA to review Pride's op­

erations in i'v1alawi, Zambia, Uganda, and Tanzania as well

as Pride's headquarters in ai robi. Pride Africa is a net­

work of microfinance institutions serving over 80,000 mi­

croenrrepreneurs. The team's report and recommendations

arc serving as the basis for determining the respective

donors' funding relationships with Pride in the future. As

part of that process, representatives from the above donor

agencies mer with Pride management in January ro reach

agreements on Pride Africa's future structure.

• Financial Statement G111de/111es fur 111icruf1111111ce insti­tutions: After an cxrcns1\C con~ultarivc process with

Disclosure Guidelines

Poverty Assessment Tool and

Poverty Audit

and Policies

~--... Consensus Guidelines On Supporting Savings

Institutions

CG and PAG members and microfinance pracririoners,

CGAP released a preliminary ser of "Disclosure

Guidelines for Financial Reporring by Microfinance

lnsrirurions" ro provide an indusrry guide on rhe mini ­

mum informarion rhar should be included in microfinance

insrirurional financial reporrs. Because microfinance in­

srirurion s ofren differ from convenrional financial busi­

nesses in rheir service delivery merhodologies and access

ro granrs and sofr loans, judging a microfinance 111sri­

rurion's financial condirion requires some informarion

that conventional businesses do nor reporr. Following

field resring in rhe audir cycle of 200 I, CGAP will in­

corporare changes inro a final se r of disclosure guide­

lines robe released in mid-2001. These guidelines have

already been adopred by narional networks and several

of rhe microfinance insrirurion raring fund iniriatives <llld

orher initianves geared rowards transparency in rhe mi­

crofinance industry.

• Pouerly Assess111e11t Tool: CGAP finali1ed the develop­

menr of the CGA P Poverry Assessmenr Tool wirh IFPRJ

rhis year. The Tool provides rransparency and compa­

rabiliry on rhc depth of poverty ourreach of microfi ­

nance insrirurions. It assesses data on the povcrry levels

of clients relative to non-clients within the same com ­

munities through rhe consrruction of a mulri -dimen-

Effective coordination between donors operating 1n a country can be cri t 1cal to assuring good practices 1n m1crof1nance and the development of a robust m1crof1nance sector w1th1n that country CGAP ·tself cannot and should not coordinate donor staff. but can support local tn1t1at1ves where

demand exists CGAP published a Focus Note that documents the dif­ferent levels of donor coordirat1on. outlines the challenges to effective coordination. and cites factors for success. For example. keys to effective on-country donor coordination include dedicated and energetic 1nd1v1du­als. strong motivation to accept both the constraints and the benefits of coord1nat1on. and a genuine commitment from all donors to follow best practices on support ing m1crofonance.

As part of CGAP"s effor- to learn more about and support local

donors. CGAP worked with tte following 1ocal donor groups who are at

different levels of coordonat101

• Mongolia

• Morocco

1 • Nepal

I • Senegal

• West Africa

• Kenya • Uganda • Indonesia

Annual Report 2001

sional po,·erry index . Ir also allows for comparison of

poverry levels of microfinance insrirunon clienrs across

countries. The Tool ha s been primarily designed for

donors and investors who wou Id require a more stan­

dardized, globally accurate, and rigorous ser of indica­

rors than whar conventional rargcting tools provide to

make povcrry-focused funding decisions. The tool is de­

signed to be used in conjunction wirh orher appraisal in­

srrumcnt~ (such as rhc CGAP Appraisal formar) to offer

a holistic understanding of microfinance instirurions.

After resting the tool during its development with OTIV

in Madagascar, KWFT in Kenya, SHARE in India, and

ACODEP in ' icaragua, CGAP has furrher tesred and re­

fined the rool and its operational manual thi s yea r with

Nirdhan in Nepal, the Small Enrerprisc Foundarion tn

South Africa, and Comparramos in ,\lexico.

• Micro(i11a11cc l11stil11tio11 Poverty Audit (or the CGAP Appraisal Format: CGAP has revised irs Appraisal Format

ro include a poverty <llldir to bcrter assess the poverry

outreach of a microfinance instirurion. The poverty audit

complements the more financially oriented factors in the

Appraisal Format and seeks to ascerrain an insrirution's

concrete and sustained commitment to poverty a lleviation,

concentrating on stated vision, clicntele and merhodology,

products and services, and poverty impacrs. The revisions

were tested with the appraisal of Kashf in Pakisran and

have been inregra ted inro rhe Appraisal Format as well as

compiled in a stand-alone document.

• Global Donor Portfolio Database: Ar the rcqucsr of rhc CG, rhe CGAP Secretariat de, eloped a web-based Global Donor

Portfolio Database as a rool to promote donor coordina­tion and communication. The database provides access to

valuable informarion on donor projects, connccrs donor staff working on ~imilar projecrs or in rhe same counrrics, and

enables analysis of global trends in donor support for mi­

crofinance. Following the 2000 CG Meeting in Edinburgh,

two-third~ of rhe CG t-. lcmbers committed to providing port­folio data on rheir microfinance projecrs for 1999 and

2000 in a common format. To case data enrry and access

ro informarion, all data is enrercd and compiled in a search­

able on-line d<1tabasc which is password protecred for the

exclusive u~c of parriciparing CG 1vlembers. The software

devclopmenr was complered and dara entry began in

Fcbruar)' 200 I. Aggrcgarc rcsulrs arc expected robe avail­

able by the end of 200 I. Donor staff can already use the

Consultative Group to Assist the Poorest

information thus far received to connect with other donor

staff working on similar types of projects or in the same

regions. Through CGAP's new initiatives with local donor

coordinating bodies, local groups in Indonesia and elsewhere

are working with CGAP to adapt the database for the use

of their national-level donor working groups.

• Banco do Nordeste, a model of best practice for

11111/tilaterals: CGAP is working with the World Bank ro

document the experience with Banco do Nordeste in Brazil,

a commercial bank that has opened a microcredit program.

The paper documents the unconventional approach taken

by the World Bank and addresses the "disbursement pres­

sure" that donors often face. The case demonstrates how

investing small amounts of money in capacity building and

technical assistance upfront can succeed in helping a bank

start a microfinance program in preparation of a poten­

tially large investment down the road. CGA P provides on­

going advice to Banco do Nordeste while ACC!ON

provided technical assistance.

• In-Country Donor Coordination, Focus Note 19: David

Wright, formerly of DFID, was contracted to research and

write a review of in-country donor coordination in mi­

crofinance to draw the attention of headquarters and

local donor staff to the benefits of coordination and the factors for success. CGAP hopes that the research and note

would both stimulate and encourage local initiatives and

headquarters backing of such initiatives. CGAP could

then support directly these local initiatives where de­

mand exists.

• Microfinance and Non-J-inancial Sen1ices, Focus Note

20: After consultation with both microfinance and non­

microfinance donor staff, CGAP published a focus Nore

on "M icrofinance, grants and non-financial responses to

poverty reduction: Where does microcredit fit?" The note

is aimed principally at donors and policy-makers con­

sidering microcredit as a poverty alleviation response.

This note places microcredit as only one option on a

menu of possible interventions to generate income and em­

ployment relating microfinance to other financial and

non-financia l interventions, so that managers can select

a package of tools appropriate for a specific situation. This

Focus ore was written by Joan Parker of DAI and

USA ID's Microenterprise Best Practices Project together

with CGAP staff.

Training and capacity building for member donors CGAP provides different services aimed at upgrading the

knowledge and skills of donor staff involved in microfinance.

• CGAP Donor Training in Asia: CGAP organized two

courses for donor staff in Asia in March and April, hosted

by AusAID and the Asian Development Bank, in Manila.

The three-day "Overview of M icrofinance Principles"

course provided an interactive overview of microfinance in­

cluding sustainability, poverty outreach, regu lation, and

donor roles and coordination. Sixteen donor participants

attended. The four-day "Appraising a Microfinance

Institution" course is based on a case srudy where partic­

ipants apply the CGAP Appraisal Format to evaluate a mi­

crofinance institution for funding. Twenty-four staff

attended. Given the growing importance of local donor and

apex agencies in microfinance, CGAP invited SIDBI in

India and PPAF in Pakistan to join the course. CGAP man­

agement believes it is important to amplify linkages between such institutions and bilateral and multilateral donors.

• Donor Staff Training in Norway: In October 2000, CGAP

delivered a two-day course in Norway for 37 staff of

ORAD, the foreign Ministry, and GOs working in

microfinance. The Norwegian microfinance consortium

requested this training as part of its initiative to create a "mi111-CGAP" within Norway to encourage best practices

and coordination among the microfinance-related organ­

izations. The course built on existing modules on delin­quency management and financial analysis and included two

new modules on external audit and poverty audit.

• UNDP donor training: With CGAP support, UNDP will offer

a field-based course, "From Donations to Investments:

Donors and Sustainable Microfinancc," in Mongolia in June

2001. This course is the third offering following courses in

Bolivia and Egypt in 2000. The course includes exposure to

local microfinance institutions and covers donor-microfinance

institution relationships that promote sustainable microfi­

nance, from the analysis of the initial investment to the sup­

port required over the life of the relationship. This course will

also be offered in Cambodia in ovember 200 I.

Technical advice and exchange with member donors CGAP works with donor staff on several levels. With mem­

ber donor headquarter staff, CGAP sraff relationship man­

agers emure communication of CGAP's donor tools and

services, review papers, projects and proposals, facilitate co­

funding opportunities, and provide regional and technical

background information. At the same time, CGAP is build­

ing connections w ith donor field staff to develop more effective

channels of communication to support frontline donor staff

as well as reinforce in-country donor coordination. While work

with headquarters-based donors is ongoing and too broad to

cite here, CGAP staff's links with national level groups of donor

staff initiated this year are noteworthy.

Building CGAP connections with donor field staff:

• Mongolia: During the appraisal of XAC in July 2000,

CGAP participated in the first meeting of a working group

involving all microfinance actors, donors, and the Centra l

Bank. The group plans to develop an annual microfi­

nance report for Mongolia and decided to meet periodi­

cally to discuss microfinance hot issues and joint initiatives.

• Morocco: While working with Zakoura in November

2000, CGAP co-hosted a donor meeting with USAID for

dono rs to present their microfinance work, discuss solu­

tions to problems in the sector, and find ways to coordi­

nate with one another. The session was found useful and

the group continues to meet periodica lly. T he group has

been successful in influencing the regulatory framework

for Morocco.

• Nepal: During the appra isal o f N irdhan in November

2000, CGAP co-organized a meeting with the Center fo r

Microfinance (CMF) for donor staff involved in microfi ­

nance. The group di scussed conducting a nationa l review

of donor activities in microfinance to serve as a basis for a more coordinated strategy. CGAP offered to help in

thi s process.

• Senegal: ln February, CGAP and USAID co-organized the

first donor coordination meeting on microfinance in Senegal.

All eight of the major donors active in microfinance attended and shared their current and planned acti vities. USAID will

act as the first rotating coordinator.

• West Africa: CGAP participated in the annual coordina­

tion meeting in December 2000 organized by the West

African Central Bank (BCEAO ) with participation o f

donors active in the region. The BC EAO's specialized mi­

crofinance unit presented its activities and work plan, and

each donor representative provided a summary of their ac­

tivities in the region. CGAP met with the BCEAO again

in February to discuss audits, regional databases, and

CGAP's Draft Financial Statement Guidelines. In June,

CGAP participated in the BCEAO's regional wo rkshop in

17

Annual Report 2001

financial and institutional viability of microfinance insti­

tutions in West Africa and di scussed future industry

priorities.

• Tanzania: ln March, CGAP participated in the Annual

National Microfinance Conference, and met w ith partic­

ipating donor agencies on improving donor coordination

and support of microfinance in Tanzania . CIDA is or­

ganizing a follow-up donor meeting.

• Kenya: In March, AFCAP organized a meeting with a

group of local donors in Kenya in order to discuss mi­

crofinance issues, donor coordination. and ways CGAP

might support the donor group. The donor group is in the

process of launching a national joint Performance

Assessment Initiative.

• Uganda: In April, CGAP participated in meetings of the

group of donor sta ff res ponsible for microfinance in

Uganda. The donor group has worked together on the de­

sign of a joint vision and the strategies needed to achieve

the vision, including developing or supporting the devel ­

opment of new products addressing rural need s and

demand-driven capacity building.

• Indonesia: In April, CGAP met with a group of 19 donor

staff working on microfinance in Indonesia. Several donors

are working on the same projects or policy issues and are

planning to use CGAP's on-line global donor portfolio data ­

base to facilitate sharing of information and coordination.

• The World Bank Group and IMF: Due to CGAP's physical

proximi ry to the Bank, the magnitude of the World Bank's portfolio of microfinance projects, and these institutions' po­

tential impact on microfinance, CGAP staff invest in providing advice and technica l inputs to staff, projects, the policy di­

alogue with governments, and the plans of these organiza­

tions. A few examples of these interactions include:

• IMF senior management: In M arch, CGAP organ­

ized a semina r for IM F senio r management to brief

them on issues in microfinance regulation and s u­

pervision. World Bank and IFC microfinance spe­

cia li s ts were in vited to join in order to present

consensus views.

• Rural Finance and Social Fund Thematic Group: CGAP

is actively working with World Bank Socia l Fund and

Communiry Development staff to situate microfinance

among many a lternative interventions, including grants,

infrastructure investments, and legal reform and to

encourage c reative linkages among these va rious rypes

of support. Sessions have been organized on "Social

·~

, Consultative Group to Assist the Poorest '

funds and Microfinance," "Microfinance Linkages ro

Safety Net Programs," "Microcredit and Community­

Driven Development," and "Targeting the Poor."

• Regional staff: CGAP held a series of meetings with

country directors and sector boards to raise awareness

of microfinance best practices and CGAP products

and services available ro staff.

• International Finance Corporation (TFC}: CGA P has

provided input to the IFC on numerous individual in­

vestment proposals this year as well as providing ad­

vice, referrals, or comments on other initiatives. In

addition, CGAP's Director serves as an Investment

Committee Member of the Small and Medium

Enterprises Capacity Building Facility.

• F11nd111g referrals: CGAP institutional grants and tech­

nical assistance have served as preparations for equity

investment or credit lines from the IFC (ACE P,

Compartamos, etc). On several occasions, the IFC has

made dea ls based on CGAP appraisals. XAC in

Mongolia, ACCION International, and Women's World

Banking Facility for Affiliate Capitalization arc ex­

amples of this.

CGAP Working Groups: • Savings: The Savings Mobilization Working Group met

in Edinburgh at the 2000 CG Meeting ro focus irs work and seek a more proactive involvement of its members.

The Working Group decided that, in addition ro the

work of MicroSaue-Africa (which basically functions as

irs operational arm), ir would focus on rhe development

of" Donor Guidelines for Supporting the Development of

Savings Services" ro complemenr the existing guidelines

for supporting the dcvclopmenr of microcredit (com­monly known as "The Pink Book"). The Working Group

worked with Madelaine Hirschland to develop the guide­

lines through a participatory process thar has included the

use of a savings-specific list serve. The drafr of the guide­

lines is being circulated for discussion among the Working

Group members and the final draft was presented for dis­

cussion and approval by CG Members in Washington in

May 200 I.

• Agrirnlt11ral Deuelopment Bank Reform Working Group: The CGAP Working Group on Agricultural Development

Bank (AgDB) Reform has re-opened the dialogue on AgDBs,

arguing to either close them or reform them. The most ac­

tive participants were IfAD, the World Bank, and GTZ as

CGAP members and several non-members: FAO and rhe

regional AgDB associations (RACAs). They jointly or­

ganized workshops on AgDB reform: AFRACA in Africa,

APRACA in Asia-Pacific, and NENARACA in car East

and North Africa.

• Regulation Disrnssio11 Group: GTZ graciously seconded

Stefan Staschen, a microfinancc regulation expert, ro the

Secretariat for six weeks during April and May. He coor­

dinated a virtual e-mail discussion among experts around

the world, with the aim of preparing a joinr policy statement

on microfinance regulation for consideration by the CG.

Ill. MICROFINANCE INDUSTRY

As a multi-donor consortium, CGAP 1s uniquely positioned to

contribute too ls and services for the benefit o f rhe microfinance

industry as a whole. Increasingly, CGAP\ support to the industry

involves fostering the development of rhe "equipment" and in­

frastructure that a strong, healthy, and growing microfinancc

industry will require. This effort involves helping develop the

microfinance capabilities of service providers on which the mi­

crofinance industry will depend, especially local providers.

These service providers include external auditors, supervisors,

information systems specialists, raring agencies, credir bureaus,

and local training and technical assistance providers.

CGAP's work with rhc microfinance industr} centers on encouraging transparent, publicly available 111formation on

the financial strength and performance of m1crofinancc

institutions. Such open and comparable information is a

pre-condition to arrracting commcrc1al capital and to being

entrusted with the savings of poor people. The M1croBanking

Bulletin, the Financial Statement Disclosure Guidelines, and

the Rating and Assessment Fund arc all part of this effort

ro generate the type of shared information that donors, in­

vesrors, banks, and microfinance institution managers need.

CGAP's work for the microfinancc indust ry as a whole

seeks ro share learning on improving rhc sustainability of mi­

crofinance as well as pushing the front iers of the industry to

reach poorer clients. The Microfinance Gateway is designed

as an industry platform for this type of sharing of ,·iews, ideas,

and developments.

Technical tools and services for the microfi­nance industry at large

IS

CGAP website: CGAP's website has become a primary vehicle

for CGA P's output and enables the dcli,·ery of mteractive serv-

ices to thousands of users who may not have access to hard­

copy publications or direct services. Since the launch of the

revamped website in June 2000, visitors have increased from

an average of 2,000 per month (30,000 hits) to about I 0,000

visitor sessions (200,000 hits ). The fo llowing services are lo­

cated at www.cgap.org:

• l11fonnalion Sys/em Consumer Report Service: This new

service is designed to help microfinance institution man­

agers select a Management Information System (MIS) soft­

ware package that best su its thei r organ izational needs.

CGAP's Information System Service has fi ve main com­

ponents: i) a summary comparison of commercially avail­

ab le software applications for microfinance, along with

individual consumer reports; ii ) a step-by-step guide on

how to select and purchase an MIS software; iii) a se­

lection of frequently asked questions; iv) details about the

methodology and the process used to develop CGA P's

consumer reports; and v) a comprehensive glossary o f in­

formation technology terms. The In fo rmation System

Service will also incorporate a user-feedback mechanism

into the on- line service.

• Audit Information Center: This is a new service designed

to provide information and on- line support on externa l

audits for microfinance institutions. Ir is designed to help

Box 6 Connecting with those doing microfinance who may not be part of the microfinance community

CGAP 1s working with social fund managers, community-driven devel­opment spec1al1sts, relief and humanitarian donors and NGOs, and oth­ers doing m1crof1nance from outstde of what 1s seen as the "m1crof111ance

mainstream." CGAP aims to promote good practice 1n m1crofinance. and 1s exploring poverty reduction through safety net linkages, disaster re­sponse linkages with non-f inancial 1ntervent1ons, and business devel­opment skill building through such mechanisms as:

• A Focus Note on how m1crocred1t f its with a range of other avail­able options, both f inancial and non-financial , in poverty-reduction and income-generation interventions

• Advisory workshops and consul tations with World Bank thematic groups, social and human development sectors

• A part icipatory workshop "When 1s Microcred1t Appropriate" at the

Annual CG Meeting, a forum for member donors to discuss and explore

how m1crocred1t fits on a menu of options for interventions in challeng­ing environment s

• Action research and case studies on safety net linkages. for ex­

ample the graduation approach used by IGVGD for the very poor in

Bangladesh which links m1crof1nance to the provision of food and also business training

• A planned focus on agricultural finance for the rural poor, that goes beyond adapting microf1nance methodologies to d1vers1f1ed rural

economies. and 1dent1f1es and learns from less conventional and well· known actors

/9

Annual Report 2001

microfinance institution managers, donors, and external

auditors commission and execute high quality external au­

dits. A separate page is railored to the needs of each user

group. Microfinance institution managers can find guid­

ance on selecting and contracting aud itors, drafting terms

of references, mon ito ring the audit and interpreting the

audit report and management letter. Donors can find

good practice gu idance including actions to support man­

agement on the one hand while demanding accountabil­

ity on the other. Auditors can find guidance on the unique

features of rhe microfinance industry, on assessment of risk

a reas, and the scope of relevant tests. T he facility also has

an e-mail discussion group, an on-line library, and a com­

prehensive glossary.

• Frequently Asked Questions: This service was designed to

respond to many requests for short, official stand-alone

documents from CGAP that could be used to back up

donors, consultants, and practitioners putting the micro­

finance case to government officials or other newcomers

to microfinance. It provides simple answers to some of the

main quest ions in microfinance we a ll are asked, such as

"How does microfinance help the poor?" or "Why do mi­

crofinance institutions charge such high interest ra res to

poor people ?" or "What is the government's ro le in sup­

porting microfinance?"

• Publications: All CGA P publications can be downloaded

from the website: short Focus Notes on current topics,

Occasional Papers tha t provide in-depth discussion of

The M1crofinance Gateway 1s set up as a platform to share ideas. infor­mation. and resources for the m1crofinance industry. Since its launch in June 2000, the following new on-line services for the m1crof1nance in­dustry have been added or are 1n development:

• Audit Information Center A resource for improving the quality of m1-crofinance 1nst1tut1on audits including guidance for m1crof1nance inst1tu­t1ons and investors on selecting and contracting auditors and guidance for auditors on the unique features of the m1crof1nance industry and the

scope of relevant tests

• Information System Consumer Report Service: An unbiased source

for comparing MIS packages available to m1crof1nance 1nst1tut1ons • Rating Consumer Report: Comparing rating methodologies being

used to evaluate m1crofinance 1nst1tut1ons (In development)

• Targeting and Impact Consumer Report : Comparing both targeting

practices of m1crof1nance inst1tut1ons and impact assessment method­

ologies (In development)

• Job Marketplace: A database of available jobs 1n m1crof1nance and experienced consultants

• Devfinance Database: A searchable archive of the substantial post· ings and d1scuss1on threads on this m1crofinance-related l1stserv

Consultative Group to Assist the Poorest

technical topics, Technical Guides addressing major top­ics such as MIS or institutional appraisals, Working Group

Papers on various topics, working drafts, and CGA P

Reports. Most publications are translated into rrench

and Spanish; several have been translated into Arabic.

Microfinance Gateway: The Microfinance Gateway is designed to be an unbiased, open platform for the microfinance industry

to share ideas and resources. Since its launch in June 2000,

it has increased from 4,000 visits per month in its first month to over 10,000 visitors per month (over 230,000 hits per

month ). At present, it conta ins the fo llowing services:

• Document database: This database provides an easy way for

microfinance professionals to access key documents relevant to their work. The bibliographic database includes about 2,000 microfinance documents that have been reviewed,

with key-words recorded and abstracts produced, to create

a unique search engine for microfinance documents on the

internet. In addition, the database has the abil ity to search

all documents on the web that may be relevant to microfi­nance. Many of the publications can be downloaded directly

from the web or can be ordered from the publisher. • job Marketplace: This free service is intended to facil itate

both the supply and demand side of the microfinance pro­

fession. The consu ltant database helps donors and mi­

crofinance in stitutio ns find q ua lified consultants, by

Box 8 Transparency work

Building a m1crofinance industry requires developing publicly available and comparable information on m1crofinance 1nst1tut1ons' financial per­formance and strength. Such information is necessary to attract the commercial funds and savings that the microfinance industry will require to reach significant numbers of poor people. CGAP's transparency work seeks to converge a number of 1n1t1at1ves to provide comparable. broad­

based, and reliable information on m1crof1nance institutions for the pur­

poses of encouraging performance. informing investors and donors. and developing capacities of auditors. raters, and evaluators.

Disclosure

G"'''''°Ll Microfinance ~5v M B k 1cro an 1ng

Audi ts Bulletin

Regional

Mapping

providing a searchable database including expertise and experience. This service also provides a place for em­

ployers to adverti se available microfinance-related jobs

to interested potentia l applicants. This is consistently one of the most popular pages on the website.

• Conferences and training: This database provides in­formation on conferences and courses related to mi­

crofinance. It can be searched by date, topic, or location.

• Web/inks, e-mail lists, and newsletters: The Gateway in­

cludes over 300 links ro microfinance-related websites. It also provides a resource to jo in e-mail d iscussion grou ps and request microfinance-related newsletters.

• Devfinance database: A searchable archive of the sub­

stantia l postings and discuss ion th reads on Devfinance, a

microfinance-related listserve. • Viewpoints: Experts from different perspectives on mi­

crofinance contribute short "viewpoint" articles to the Gateway on topics such as national-level donor strategies,

depth o f microfinance outreach, and governance chal­

lenges. • Highlights: This section is updated every week to high­

light new and interesting items avai lable from CG mem­bers or others th at a re access ible on th e G ateway,

including new documents and training opportunities. It

al so focuses on specific topics of interest such as distance lea rning opportunities or microfinance institution innovations.

Current state of microfinance: Microfinance is evolving ex­

tremely fast and in sta rkly contrasting ways across different countries and regions. CGAP has undertaken efforts to an­

alyze the supply and demand of microfinance services and the main issues faced in different regions. The first two re­

gions assessed are Latin America and Africa .

• Latin America: CGAP's O cca sional Paper No. 5,

" Commercialization and Miss ion Drift: The Transformation of Microfinance in Latin America " was

published in December 2000. This paper addresses the im­

pact of commercialization and increased competition on

the strategy and performance of microfinance institutions

in Latin America. It a lso evaluates the ma jor achieve­ments o f microfinance in the region in financial and so­

cial terms. The Annex provides basic outreach and portfolio

information for over 200 Latin American microfinance in­

stitutions.

20

• Africa: CGAP has collected basic data from more than 170 microfinance institutions in Africa. CGA P is analyzing this

data and is preparing a review on the state of microfinance

in Africa, including current issues, actors and results, and

challenges for the future. Thi s report is expected by

December 200 l.

• New Due Diligence Tool: CGAP is working with

Micro Rate ro develop a tool that auditors, bank supervi­

sors, managers, and consu ltants can use to assess portfo­

lio qualiry of a microfinance product. The tool will provide

evaluato rs with a three-tiered approach to loan portfolio

quality, depending on the depth of analysis and the degree

of certainty the evaluator requires, and the cost and level

of effort the evaluator is w illing to expend. These three lev­

els include: i) a one-day management meeting focused on

review of self-reported portfolio and financial information;

ii ) a multiple-day field visit focused o n qualitative evalu­

ation of the loan approval process and MIS, and visits to

branches and clients; and iii) a two-week loan review

based on a statistical portfolio sampling using a team of

local auditors. Currently, this tool is being piloted with

Banco do Nordeste in Brazil.

Training and capacity building

• Boulder Micro(inance Training Program: This industry­

wide training program is aimed at microfinance profes­

sionals working in microfinance institutions, d o nor

agencies, go,ern menr min ist ries, and as consultants. In

July and August of 2000, CGA P's staff and capacity bui lding parrners rece ived rop rankings for classes they

raught on Financial Analysis, Donor Issues, Poverry O utreach and Impact, and Accounting. Over 200 par­

ticipants from more than 60 countries attended the two three-week ~essions. In exchange for staff time, CGA P

Table 3 Support to Industry

IU S dollars)

Type of investment

TOOLS AND SERVICES

M1crofinance Gateway

Joint CGAP/IDB Rating Fund

Publications and Translation

Due Diligence Tool

ADA Rating Fund for Africa

Total New Commitments as of May 2001

..!. I

Annual Report 2001

was able to offer scholarships ro its paying member

donors and ro PAC members ro attend the program.

For 2001, the Microfinance Training Program has been

relocated to Naropa Un ive rsity in Boulder, Colorado .

Robert C hristen, CGAP Senior Advisor, will continue his

role as the Academic Director and senior CGAP staff wi ll

serve as trainers .

Technical advice and exchange

• New product development task (orce: The product de­

velo pment task force is an informal group comprised of

donor and industry leaders working on issues and/or

tools related to the development or modification o f prod­

ucts within microfinance institutions. Members include

Monique Cohen of USA ID, Graham Wright of MicroSaue­A(rica, Monica Brand of ACCIO , Jan orthrip of

DA I, Dirk Steinwa nd of GTZ, Sylvia Wisniwski of

Bankadem ie, I leather C lark of UNDP, and Brigit Helms

of CGA P. Members of the task force meet regularly as a

group to discuss the need for, and the progress towards,

the development o f a va riety of tools . In this fisca l yea r,

the group met to provide key input over the course of sev­

eral days into the product development course workshop,

a part of CGAP's capacity building initiative.

• Rating Fund: After extensive consultations with the CG,

PAG, and o thers in the industry, CGAP and the IDB

launched the Microfinance Rating and Assessment Fund

in April 200 I aimed at improving the quality and avai lability of information on the risk and performance of microfinance

institutions. Its objectives are to: i) stimulate improve­

ments in performance of microfinance institutions; ii) en­

courage sha red info rmation and transparency of financia l

Region

Global

Global

Global

Global

Global

Amount

450,000

225,000

217,017

52, 112

30,000

974 129

Consultative Group to Assist the Poorest

information; iii) increase access to domestic and interna­

tional financial markets; and iv) encourage expansion of

capacity to perform assessments of microfinance institutions.

The fund will finance assessments/ratings for microfinance

institutions from qualified ratings agencies of microfinance

institution evaluators. The lessons learned from thi., pilot­

test will provide the basis for a larger and more structured

Rating Fund planned for the first quarter of 2002. Various

indi\'idual donor rating initiatives have a lso emerged in re­

cent months and thus, open communication and collabo­

ration will remain critical. CGAP also provided a small grant

of US$30,000 to the European Pilot Project for the

Performance Evaluation of African microfinance institutions

managed by ADA (Luxembourg) and serves on the Working

Croup for the Pilot.

• Safety net linkages. CGA P published a case study ac­

companied by workshops on the Income Generation for

Vulnerable Groups Development (IC VGD) prowam, a

partnership between a microfinance institution and a tra­

ditional safety net program. The IGVGD is a colL1bora­

tive food sernnry intervention jointly led hy th e

government of Bangladesh, bilateral donors, the World

Food Program (WFP), and the Bangladesh Rural

Advancement Committee (BRAC), Bangladesh's largest

NGO. Targeted towards women who are too poor ro par­ticipate in microfmancc institutions, IGVGD provides a

graduated program of food support, business training and

marketing, and finally incorporation into regular rnicro­

finance programs. Of the one mi llion women reached mer

I 0 years, two-thirds have succeeded in becoming clients

of regular microfinance institutions.

• /11 s11ra11ce linkages: CGAP and MicroSave-Africa worked

with SEWA in Ind ia to learn about its program of life,

health, and property insurance for 26,000 clients and to

develop a case stud y. CGAP provided several weeks of

technical assistance to SEWA in December 2000 and

January 200 l to develop its business plan and transfor­

mation strategy for the insurance program and is also d is­

cussing options with SEWA and interested CG members

to provide funding and technical support.

• Sa(eSave case study: "Exploring client preferences in mi­

crofinance: Some observations from SafeSa\'e" was pub­

lished in October 2000. Preliminary data from SafeSave,

a small microfinance institution working in Dhaka's slums,

))

shows how clienrs respond to unconventional products.

SafeSave's c li ents, who may be men, women, or children,

open individua l accounts and are not organized into

groups. They are visited every day in their own home or

workplace, so the client does not ha\•e to ,·isit a branch

office or attend meetings. The study concludes that flex­

ible services attract poorer clients and can be delivered safely

and sustainably.

• MicroBa11king B11lleti11 update: After being housed at

Calmeadow for two yea rs, the MicroBanking Bulletin

was set up in February 200 I as an independent project on

CGAP premises that will be associated with, but separate

from, CGAP, to maintain the confidentiality of individual

institutions' information. Fiscal 200 I has been a produc­

tive year for the Bulletin staff. Issues 5 and 6 were pub­

lished in September 2000 and April 200 I focused on

reaching the poor and on productivity, respectively. About

125 microfinance institutions pro,·idcd the financial in­

formation required to construct benchmarks by peer

groups. Participation increased from institutions in Africa

and Eastern Europe due in part to collaboration with

local networks and PlaNet Rating, a rnicrofinance rating

agency. In add ition to preparing performance reports for

participating microfinance institutions, the Bulletin staff

abo provided several networks and researchers with re­ports customized to their requirements. Staff arc now working with major raring agencies to standardize finan­

cial appraisal methods and roob.

• Co111p11/sory us. uo!tmtary scwi11gs: CGAP collaborated with MicroSave-Africa to review the savings experience of the

Association for Social Advancement (ASA) in Bangladesh.

The purpose of this review was to draw lessons about the

process of offering vo lun tary deposit services when an in­

stitution simultaneously maintains a strong commitment

to its "compulsory" savings feature.

• 1-inancial Seruices Associations: The Story So Far: This

paper, posted on the CGAP website, draws from existing

literature on Financial Services Associations (FSA) to re­

view performance to date and raise key questions on is­

sues related to institutional s ustainabi li ty. Topics covered

include FSA products and services, outreach, financial sus­

tainability, competition, gcl\'ernance, formal sector link­

ages, legal and regu latory en\'lronment, and donor

support.

• i'v'ltlrket fJole11tial (or 11rba11 111icro(i11a11ce i11 Chi11c1: CGA P <lll<l rhc World Bank funded a srud y by !PC ro J e­

rermine rhe marker demand for urban, sm a ll, and micro­

finance. The srud y confirmed the large unmer de ma nd

a nd proposed a model for serring up specialized lend­

ing operations within an existing bank. The study abo

confirmed rhar borrowers cared much more about ava il­

ab ility of c redit than abour irs interest rate. Based on the

study's findings, the People's Bank of China is se lecting

two or three urban hanks to pilot-test urban mic rofinance

models.

BUDGET AND CONTRIBUTIONS

Donor Contributions to CGAP In a speech to the Development Commirree of Ministers ar

the Spring ~teerings of rhe World Bank and L\ff empha siz­

ing the importance of srrengrhening partnerships, World

Bank President James Wolfensohn said, "I would ask the

M inisters to consider an equal parrnershi p in funding such

important partnerships. CGAP is a prime example, which helps

bu ild a full -scale microfinance industry that can provide hun­

dreds of millions of the poor wirh susrainable access to financial

services credir, savings, and insurance. Access helps the poor

build incomes, smoothen consumprion , a nd reduce rheir \'ul­nerability ro shocks."

In coming ye<t rs, CGAP will require greater fin a ncial p.1rriciparion from c c; members orher rhan rhe \Xlorld lhnk

for se,·era l reasons. hrst, a rrue multi -donor parrnership musr ha ve more balance in rhe contributions of its funders than

is currently C:Gt\ P's case. Second, the World Bank\ current mechanism ro fund CGAP, the Deve lopment Grant hteili ry

(DG F), has been limired ro funding only up to 15 percenr

of the rota I budgcr of multi -donor initiatives such as CGA P.

Fina lly, and mosr crirically, further DGf support of CGAP

is conditional upon a demo nstrated disengagement strategy:

rhc World Bank's proportion of overall funding therefore

must be gradually and systematically reduced. Given rhat

rhe DGF currentlr provides the ma joriry of CGAP's fund­

ing, these conditi ons will require additional resources for

CGAP from CG members, w ithout contem plating an increase

in rhe overall budget. Ta ble 4 shows fun ding comm1rmenrs

for fiscal 2000-2002.

For fisca l 200 I, almosr all donors mai nta ined or i ncre.1~e<l

their contributions from fi scal 2000. Howe\'e r, CGA P re-

Annual Report 2001

ceived abour US$350,000 less fro m rhe~e donors in fiscal 200 I

because of fluctuarions in exchange rares. Several members

have made their firsr contributions ro CGA P and severa l

others have increased their contributions in response to this

need to reba lance CGAP's sources of funds. japa n made its

first contribution of US$300,000, Australia increased its con­

tribution by about US$60,000, and Switzerland is process­

ing an additional US$ 100,000 fo r fiscal 2001. After a

Table 4 Commitments to CGAP

(U.S. dollars)

FY2000

Bilateral Members

Australia 232.650

Belgium 383.040

Canada 328.250

Denmark 250,000

Fm land 268.110

France'

Germany 176.630

Italy 283,220

Japan

Luxembourg 297,400

Netherlands 488,640

Norway 377,640

Sweden 328.100

Switzerland 300.000

United K1ngdom3

United States 400.000

Bilateral s ub-total 4,113,680

Multilateral Members

African Developmenl Bank

Asian Development Bank

European Commission

IFAD

ILO

Inter-American Dev Bank

UNCDF

UN CT AD

UNDP

World Bank 6.994,000

Multilateral sub-total 6,994,000

Total 11, 107,680

1!J' _,pledged hL • nc.: vE:: rece "ed

FY2001 FY2002

295,500 148,662

262.400

328.250 324.044

250.000

235.689

135.741

176.630 176,630

278.700

300.000 300.000

263 700

399 690 872,585

341 700 330.677

293 542 293,542

300 0002

400.000

300000

4,025,8 01 2,92 1,881

250.000

7,500,000 7.125.000

7,500,000 7,375,000

11,525,801 10,296,881

1 France JS tund~ 1he c1s· of one GA;> sta•t .appro, ma·t•ly VS.SJ' I 133 651 over t'NO years,

FYOl.()2 France's cor .. 1hL.t1~ IOI ~Y2002 s s: SiJb1ec! ~o nego:ia1 or

2 S\•. :..-erlar<S tS proce: ng cw add1t>0flcli USS100000 1or CGAP fY2001

:j 't.e U i!ed 'ngr1:i~ 1s 1.Jr~ 1g 50% vt t..,e oo .... ert\i "Aam ('1$$1~ 0001 IOI i::V2QOI

Consultative Group to Assist the Poorest

significant decl ine in World Bank support from the first phase of CGAP (US$30 million for 3 years), the World Bank in­

creased its contribution between fiscal 2000 and 200 l by

US$506,000. The DGF has budgeted to reduce this amount

by at least $375,000 in 2002.

for fiscal 2002, the Asian Devel opmen t Bank has com­mitted US$500,000 for two years and the United Kingdom

made its first comm itment of US$400,000 per annum for

three yea rs. CGAP is waiting for confirmation from sev­era l other donors on the extension of their initial 3-year

contributions. CGAP is also working with IFAD an d the

African Development Bank to secure contributions. For fis­

cal 2002, the Netherlands has doubled its contribution to

US$8 12,000 a nd others are considering increases as well. Two priva te development organizations have joined CGAP

and wi ll a lso contribute in fi sca l 2002. The World Bank's share of funding should decrease from 65 percent in fis­

cal 200 I to 56 percent o r less in fiscal 2002 pending final

commitments.

Table 5 Operating budget for CGAP•

(US dollars)

Microfinance Institutions

Technical advice and exchange

Training and Capacity Bu1ld1ng

Tools and Services

Grants to MFls

Member Donors

Technical advice and exchange

Training and capacity bu,ld1ng

Tools and Services

Microfinance Industry

Technical advice and exchange

Training and capacity budding

Tools and services

Overhead

Total

·These f1gves are based on acuals from March 31 and p101e<;ted spending for FY2001

Operating Budget Table 5 shows CGAP's operating budget for fiscal yea r 2001. This budget includes all costs associated with implementing

the CGAP program including disbursements to grantees, staff

costs for technical assistance, t raining, technical tool devel­opment, investment appraisal and monitoring, operational

travel, meetings with the CG, Executive Committee, and PAG,

fundraising costs, administrative support, and office costs. Staff costs a re allocated to CGAP activities using a time recording

system. Overhead costs are only 7 percent of CGAP's fiscal

yea r 2001 budget. This includes management, budget and ad­

ministration, staff costs not a llocated to projects, all rent, and o ffice expenses. Due to CGAP's multi-year partnerships

and investment projects and the fact that most donor fund­ing is received only mid-way through the fisca l year, CGAP's

operating budget is about US$ 1.7 million less than commit­ments received for the year. Most of these funds are already

designated for a specific project but will not be disbursed unti l next fiscal year.

FY2001

Budget

5,676,501

894.282

2,002,748

92.243

2.687.228

828,183

494,307

278,786

55,090

2 ,578,854

1, 193,536

154.526

1,230,792

659,628

9,743,166

FY2001

Percentage

of Total

58%

9 %

26%

7%

ANNEX

Table A1 CGAP commitments, Fiscal 1995-2001

Investment

TOTAL SUPPORT FOR MICROFINANCE INSTITUTIONS

Technical Tools

Business Planning and Financial Modeling

Tools Dissemination

Training and Capacity Building

CGAP-France CAPAF

M1cr0Save-Africa

CGAP-DFID AFCAP

BRI International V1s1tors Program

Pilot Capacity Building ln1t1at1ve 1n Africa

Pilot Capacity Building ln1t1at1ve 1n Asia

China Capacity Building lrnt1at1ve

M1cr0Finance Centre

New Course Development

Product Manager

Capacity Building 1n Sn Lanka

Technical Advice and Exchange

Appraisals and Technical Assistance

Banco do Nordeste do Brazil

Funding the Poor Cooperative (operations manual)

Pro-Mu1er (TA for Business Planning)

N1rdhan (MIS Review)

Funding for Microfinance Institutions

ACODEP

Compartamos

SHARE

Pro1ect Dungganon

CARD

Nirdhan

Pro-Poor Innovation Challenge

K-Rep Bank

ACEP

Vietnam Bank for the Poor

Save the Children, Middle East Region

Ahantaman Rural Bank

Nsoatreman Rural Bank

Centenary Rural Bank

Government Savings Bank

Safe Save

Aga Khan Rural Support Foundation

) -_)

Country

Global

Global

West Africa

Africa

East Africa

Global

Africa

Asia

Asia

Poland

Global

Global

Asia

Global

Brazil

China

Bolivia

Nepa

Nicaragua

Mexico

India

The Philippines

The Philippines

Nepal

Global

Kenya

Senegal

Vietnam

Jordan. West Bank. Lebanon

Ghana

Ghana

Uganda

Thailand

Bangladesh

Pakistan

Annual Report 2001

Committed

3:..,620,925

333,500

235,500

98,000

9 ,222,200

2.400.000

1.400,000

1,375.000

1,200,000

847,000

600,000

440,000

438.000

300,000

200,000

22.200

458,500

352,000

50,000

23.000

17,500

16,000

14,068,000

2,000,000

2,000,000

2,000,000

1.600.000

1.200.000

1, 100,000

1,100.000

900,000

500,000

285,000

250,000

225,000

225,000

220,000

90,000

70.000

50.000

· Consultative Group to Assist the Poorest

Table A 1 continued

Investment

Doveriye

Kato J191new

Rural Finance Facility

Zambuko Trust

FECECAM

Centre for Self-Help Development

Funding Microfinance Institutions through Networks

ACCION International Gateway Fund·

BancoSol

Banco Sol1dano

Ban Genre

Compartamos

Fmamenca

M1banco

Women's World Banking Facility for Affiliate Cap1tal1zat1on Phase 1

Cali

Popayan

Bucaramanga

Mede/Im

ADOPEM

Women's World Banking Facility for Affil iate Cap1tal1zat1on Phase 2

Developpement lnternauonal Des1ard1ns

NYESIGISO

OTIV

PAMECAS

ACCION International Phase 2

Funding Networks

FINCA International

M1cr0Finance Network !Phase I and II)

SEEP Network

CASHPOR. Inc.

Katalys1s

PRIDE Africa

Credit and Development Forum

Foundation for Development Cooperation

Freedom from Hunger

INDNET

PHILNET

DEVCAP

TOTAL SUPPORT TO DONORS

Technical Too Is

Poverty Assessment Tool w ith IFPRI

Global Donor Portfolio Database

Country

Russia

Mall

South Africa

Zimbabwe

Benin

Nepal

Latin America

Bolivia

Ecuador

Veneuela

Mexico

Colombia

Peru

Latin America

Colombia

Colombia

Colombia

Colombia

Dominican Republic

Global

Africa

Mali

Madagascar

Senegal

Global

Africa, Latin America

Global

Global

Asia and Pac1f1c

Latin America

East Africa

Bangladesh

Asia

West Africa

India

The Ph1lrpp1nes

Global

Global

Global

Committed

50.000

50.000

50.000

50,000

40.000

13,000

6 , 750,000

2.500.000

2,500,000

750.000

500.000

500.000

2 , 788, 725

1,260,000

450,000

326, 125

323,000

98,600

56.000

50,000

50,000

50,000

50.000

50.000

25.000

1,484,878

377, 178

286,000

91,178

-

Annual Report 2001

Table A 1 continued

Investment Country Committed

Training and Capacity Building 877,200

Staff training UNDP-CDF Global 800.000

Donor training Global 77,200

Technical Advice and Exchange 230,500

Consultative Group Forum 111 Global 119,000

Consultative Group Forum VI Global 35.000

M1cr0Save-Africa Evaluation Global 30,000

Donor Mainstreaming Global 46.500

TOTAL SUPPORT TO THE INDUSTRY 6,009,250

Technical Tools 4,959,803

Guatemala Credit Union Raurg Agency (WOCCU) Guatemala 1,775,000

M1crobank1ng Standards Pro1ect (Phase I & II) Global 957,500

M1crof1nance Gateway Global 649,000

External Audit Capacity Building Global 550,000

P1.blicauons and Translations Global 330,800

MIS Handbook and Audit Standards Global 300.000

Apex study Global 202.503

West Africa Study of PARM EC Law West Africa 65.000

Short book on the M1crof1nance Revolution Global 50.000

Media for International Development Global 35,000

CGAP Website Global 35,000

Impact Assessment Methodologies Virtual Meeting Global 10,000

Training and Capacity Building 113,900

M1crocred1t Summit and Meeting of Councils Scholarships Global 66.000

Mexico M1crocred1t Workshop Mexico 20,000

Conference on Regulated F1ranc1al lnst1tut1ons 1n M1crof1nance Latin America 10,000 City of London Seminar Global 8.100

INIASE Workshop Global 5.000 Argentina Micro-finance ForLm Argentina 4.800

Technical Advice and Exchange 935,547 C~ina M1crofinance Forum and Policy Work China 297,647

West Africa High Level Policy Forum West Africa 250.000

Poverty Assessment Global 242.400

Grameen Bank Securit1zauor• Bangladesh 50,000

World Development Report Impact Study Globa1 45,500

Bank for the Poor-Peru Peru 20,000

Conference on Regulation and Supervision Latin America 15,000

Village Banking Workshop and Study Tour Tunisia 15,000

TOTAL COMMITMENTS 41 , 115,053

} -- I

..

Consultative Group to Assist the Poorest

All CGAP publications and tools are available at www.cgap.org

FOCUS Notei

No. 1 The Consultative Group to Assist the Poorest-A Micro-finance Program

No 2 Max1m1z1ng the Outreach of M1croenterpnse Finance-The Emerging Lessons of Successful Programs No. 3 Missing Links Financial Systems That Work for the Ma1ority

No. 4 Regulation & SuperY1s1on of M1cro-f1nance lnst1tut1ons: Stabilizing a New F1nanc1al Market (no longer available)

No. 5 Financial Sustainability, Targeting the Poorest, and Income Impact Are There Trade-offs for M1cro-f1nance lnst1tut1ons7

No. 6· The Challenge of Growth for M1cro-f1nance lnst1tut1ons: The BancoSol Experience

No. 7: Effective Governance for M1cro-f1nance lnst1tut1ons No. 8: Introducing Savings 1n M1crocred1t lnst1tut1ons. When and How 7

No. 9: Anatomy of a Micro-finance Deal · The New Approach to lnvesung on Micro-finance lnst1tut1ons No 10 State-owned Development Banks 1n Micro-finance

No. 11 How CGAP Member Donors Fund Micro-finance lnst1tut1ons

No 12 No 13

Commercial Banks 1n M1cro-f1nance. New Actors 1n the Micro-finance World

Savings Mob1hzat1on Strategies: Lessons from Four Experiences No. 14 Pilot lnit1at1ve 1n Africa· What have we learned7

No 15 Raising the Curtain on the 'M1crofmanc1al Services Era'

No. 16 No. 17

Those Who Leave and Those Who Don't Join Insights from East African M1crofmance lnst1tut1ons

M1crofinance and Risk Management A Client Perspective

No 18 No 19

Exploring Client Preferences 1n M1crof1nance: Some Observations from SafeSave

In-Country Donor Coord1nat1on

No. 20

No 21 M1crofmance, Grants, and Non-Financial Responses to Poverty Reduction: Where Does M1crocred1t F1t7

Linking Mlcrofmance and Safety Net Programs to Include the Poorest. The Case of IGVGD in Bangladesh

Occasional P pers

No. Mlcrocred1t Interest Rates

No 2 Cost Allocation for Mul!l-SeMce M1cro-f1nance lns11tut1ons No 3 Measuring M1crocred1t Delinquency: Ratios Can Be Harmful to Your Health

No. 4 The Rush to Regulate: Legal Frameworks for Microfmance No. 5 Commerc1ahzat1on and M1ss1on Drift The Transformation of M1crof1nance in Laun America

Technical Tool ..

No 1 Handbook for Management Information Systems for Mlcrofmance lnst1tut1ons (available from PACT Publications, www pactpub com) No 2 Using Mlcrof1n 3.0 - A Handbook for Operational Planning and Financial Modeling (ava lable from PACT Pubhcat1ons) - This handbook, to be published in 2001, replaces the 1998 Business Planning and Financial Modeling No 3 A Handbook for the External Audit of M1crof1nance lnst1tut1ons (available from PACT Publ1cat1onsl No 4 The CGAP Appraisal Format for M1crofmance lnsutuuons (available from CGAPI

No. 5 . Poverty Assessment Tool (under development)

Box A2. CGAP teams

Management: Elizabeth L1ttlef1eld, Ousa Sananikone, Evelyne Fra1gneau

Senior Advisers: Richard Rosenberg, Robert Christen Microfinance Industry Team: Xavier Re1lle, Patricia Mwang1, Alfonso Vega Acosta, Natasa Goron1a

Microfinance Institution Services Team: Jennifer lsern, Leslie Barcus. Tamara Cook

Microfinance End-Client Team: Syed Hashem1, Doug Pearce External Communications and Publications: Ousa Sananikone, Tiphame Crenn

Corporate and Regional: Brigit Helms Budget Team: Carmencita Clay, Sarah Manapol-Brown

Eastern and Southern Africa

Francophone Africa East Asia

South Asia

Latin America and the Caribbean Eastern Europe and NIS

1 Middle East and North Africa

2S

Patr1c1a Mwang1 Jennifer lsern

Xavier Re1lle

Syed Hashem1 Richard Rosenberg

Doug Pearce

Jennifer lsern

Annual Report 2001

Elizabeth Littlefield, Director. Ms. L1ttlef1eld iooned CGAP as the Director 1n 1999. Ms Littlefield came to CGAP from the 1nvestmert bank JP Morgan, where she was the Managing Director ,n charge of f1nanc1ng on Central, Eastern. and Southern Europe, Central Asia, the Middle East. and Africa. Her

respons1b11it1es involved oversight of financing (public. private. structured, and derivative) to governments, corporations. and banks, and related adv1· sory work such as debt management and credit rating advisory Prior to this pos1t1on. Ms. L1ttlef1eld held pos1t1ons at JP Morgan as a Voce President

and head debt trader for extenal and local debt on Africa. Eastern Europe, and Asia, and as a Dorecteur on JP Morgan's Paris office on Corporate Finance. among others. She 101ned JP Morgan on 1983. In parallel to her career on investment banking, Ms Lottlefoeld spent a year and a half on 1989-90 on sec· ondment to the Gambia Women's Finance Co. and several mocrofonance 1nst1tut1ons on West and Central Africa During this period she also provided

consultancy seN1ces to the m1croenterprise sector 1n Pakistan. Ms. L1ttlef1eld seNed on the Board of Trustees of Women's World Banking from 1992· ·94 and on the Executive Comm1t•ee of the Board as Treasurer from 1994-99 Ms. Ltttlef1eld os a graduate of Brown University and the Fondatoon Natoonale

des Sciences Pol1t1ques on Paris

Leslie Barcus, Capacity Building Product Manager. Ms Barcus 1ooned CGAP on 2001 as a member of the M1crof1nance lnst1tut1ors Team and as the

Capacity Building Product Ma~ager By the end of 2001. she will assume full management for CGAP's relatoonsh1ps with ots capacity building panners

and hubs. oversee the continued development and maintenance of CGAP courses. and continue to foster other CGAP capacity buo dong relationships. Prior to 101ning CGAP. Ms Barcus was the Dorector of Lending for ACCION New York, an associate member of ACCION USA and ACCION International

Before 101ning the m1crofonance industry, Ms. Barcus worked 1n training, corporate banking, and economic development consulting Ms. Barcus has

also led training programs on small business and public sector development for African. Asian. and Laton American pan1c1pants. She holds a master's

degree 1n 1nternat1onal development from the American Un1vers1ty on Washington. DC.

Robert P. Christen, Senior Adviser. Mr Christen 1oined CGAP 1n 1998. He works on issues related to commerc1alizat1on and regLlat1on and supervo·

s1on He 1s also the Dorector of the M1crof1nance Training Program (at Naropa University on Boulder. Colorado) and is the Chaor of the Editorial Board of

The M1crobankmg Bulletm, an industry publication devoted to financial sustainabili ty and benchmarking. Before 101nong CGAP. Mr Christen advised com­mercial banks interested on mocrofonance. central banks and bank superintendencies interested on the regulatory framework for m1crof1nance. and donors interested on performance standards. Mr Christen also worked for ACCION International Mr Christen 1s the author of several put;lica11ons related to

sustainable m1crof1nance. He received a master's degree from Ohio State University

Carmencita B. Clay, Budget Officer. Ms. Clay 101ned CGAP on 1995. She handles all budget issues. administers CGAP's trust funds, and works with

member donors on commitments to CGAP. Before 1oon1ng CGAP, Ms Clay worked at USAID/Ph1hppones, the Asian Development Bank, and various de· partments 1n the World Bank. Ms. Clay received a bachelor's degree 1n commerce (accounting maier) from the Ph1l1pp1nes College of Commerce

Tamara Cook, Microfinance Analyst. Ms. Cook 1rnned CGAP 1n 1996 She monitors CGAP's investments, manages funding appl1cat1ons, conducts 1n­st1tut1onal appraisals, and corducts research for CGAP publications and programs. She os also responsible for reponong to CGAP stakeholders and os managing the Global Donor Ponfoho Database She os on the M1crof1nance lnst1tut1on SeNoces Team. Ms. Cook graduated from the George Washington

University where she studied 1nternat1onal development and business adm1nistra11on.

Tiphaine Crenn. Publications Manager. Ms Crenn iooned CGAP 1n 1998 She works on the production and transla11on of all CGAP publications and

tools She also works on the CGAP Website and with the capac1ty-bu1ldong team Before ioonong CGAP. Ms Crenn worked as a trarslator and bilingual lexicographer. She has a master's degree on t ranslation from the University of Ottawa. Canada

Evelyne Fraigneau, Director's Assistant. Ms Fra1gneau 101ned CGAP on 1999 She provides assistance to the Dorector. handles 1nformat1on requests. and plans meetings for CGAP and its stakeholders Before ioonong CGAP. M s. Fra1gneau worked 1n the World Bank's Africa Regier and at the French mission to the United Nations office 1n Geneva, Swotzerland . She studied translation at St. Ben1gne Institute 1n D11on, France, and Georgetown University

Natasa Goronja, Microfinance Analyst. Ms. Goron1a 101ned CGAP 1n 2001 She works on the Mocrofonance Gateway and programs on Eastern Europe. Sre os on the M1crof1nance Industry Team Before 101nong CGAP. Ms Goronia. a native of Bosnia and Herzegovina, worked on the m1crofonance sector there as a loan officer. m1crof1rance trainer. consultant. and policy adviser She is completing a master's 1n European Studies from the Ur1vers1ty of Bologna.

University of Saraievo. and the London School of Economics.

Syed M. Hashemi, Poverty Specialist. Dr. Hashem1 1ooned CGAP 1n 1999 He 1s working on 1dent1fyong pro-poor innovations and d1ssem1natong best practice lessons related to poverty outreach. He 1s the leader of the End-Client Team Before ioonong CGAP. Dr. Hashem1 had dorected the Program for

Research on Poverty Al leviation at the Grameen Trust since 1994. The program strives to make research relevant to the lives of the poor and the pow·

erless. Before that, Dr Hashem1 taught development studies at Jahang1rnagar University 1n Bangladesh for 12 years He has conducted research on m1crocred1t. NGOs. and gender subord1nat1on on rural Bangladesh . Dr Hashem1 holds a Ph.D. on economics from the University of Cal1forn1a at Riverside.

Brigit Helms, Senior Microlinance Specialist. Dr. Helms iooned CGAP 1n 1996 She specializes 1n m1crof1nance capacity building on Africa and Asia

and has conducted several 1nst1tut1onal appraisals on Latin Amenca. Asia. and Africa Dr Helms spearheads CGAP's involvement on m1crof1nance prod·

uct development and helped aunch CGAP's on1t1at1ve to deepen the poverty outreach of m1crofonance. She has also contributed to several CGAP tools

and pubhcat1ons and seNes as a trainer at the Mocrofonance Training Program on Boulder. Colorado Before jo1n1ng CGAP. she worked n the Latin America

and the Caribbean D1v1s1on o' IFAD. supeN1s1ng the formulation, appraisal. and superv1s1on of IFAD proiects with s1gnof1cant mocroenterprise and m1-crof1nance components In add1t1on. Dr. Helms worked as a desk officer for Central America at the U S. Department of Commerce. rnplementong small

business development programs. Dr Helms holds a Ph .D on development and agricultural economics from Stanford Un1vers1ty

Jennifer lsern, Senior Microfinance Specialist. Ms. lsern Joined CGAP 1n 1996. Her work focuses on investments. donor seNices, regulation, new

product development, and capacity building and has worked worldwide. Ms lsern coordinates CGAP's donor courses. leads the development of sev-

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eral CGAP tools and publications. and has conducted numerous appraisals in Afrrca and Asra She rs the leader of the M1crofrnan:e lnstltutron Services

Team and 1s responsible for Francophone Afrrca and the Middle East North Afrrca regions. Before 101n1ng CGAP. Ms lsern was the Regional Technical Adviser for economic development 1n West and Central Africa with CARE lnternat1onal. the m1crofinance coordinator for CARE Togo. and proiect man­

ager for CARE Niger In these capac1t1es she supported the design, training, 1mplementat1on, and evaluation of CARE's m1crofinarce programs 1n Africa

In add1t1on, she has worked for USAID 1n Senegal and Central America. the United Nations Development Programme, and AT&T Ms lsern received her master's degree from the Woodrow Wilson School at Princeton Un1vers1ty

Sarah Manapol-Brown, Budget Assistant. Ms. Manapol Brown 1oined CGAP in May 2000 She works closely with Carmencita Clay on budget is­sues. consultant contracts, and payment transactions Prior to 101n1ng CGAP she worked for the World Bank's Private Sector Development Department­Corporate Restructuring and Governance Unit

Patricia Mwangi, Microfinance Specialist. Ms Mwang1101ned CGAP 1n 1999 She is working on the capacity building 1nrt1at1ve. monitoring invest­

ments, the f1nanc1al statements disclosure guidelines. and the audit program She 1s on the M1crof1nance Industry team and 1s responsible for the Eastern and Southern Africa regions. Prror to 101ning CGAP. Ms. Mwang1 worked as an external audrtor and management consultant wrth Price Waterhouse,

Kenya She performed statutory audits for two years for commercial ent1t1es and non-profrt organizations In her six years of management consulting,

she managed proiects, conducted 1nst1tut1onal performance assessments. and did f1nanc1al management training and training design She worked mostly rn East Afrrca with m1crot1nance inst1tutrons, public and private sector organizations, and in Zimbabwe. India. and the Phrl1pp1nes She received her mas­ter's degree rn adm1nrstrat1on from the Australian Catholic University and is a CPA

Doug Pearce, Microfinance Specialist. Mr Pearce 101ned CGAP in 2001 He is on the End-Client Team and 1s responsible for the Central and Eastern

Europe and the Newly Independent States region. Prior to 101ning CGAP. he was a Principal Economist in the Markets. Finance and Enterprise Group

of the Natural Resources Institute 1n the UK. In Bosnia Herzegovina as Sector Coordinator for CARE, he set up and managed a m1crofinance 1nst1tut1on. and 1n Bolivia for MEDA he managed an IDB credrt union program. He has also worked as a consultant with DFID. the EBRO. and the World Bank. He

brings experience in m1crofinance 1nst1tut1on and pro1ect management. rural finance, capacity building, policy advisory work. and m1crof1nance through the banking sector Mr. Pearce received a master's degree in agricultural economics from Wye College at the University of London

Xavier Reille, Microfinance Specialist. Mr. Rerlle 101ned CGAP 1n 1999 He is working on the IS information center. the Audit Support Program, and

the M1crof1nance Gateway. He has conducted several inst1tut1onal appraisals for CGAP and contributed to the donor training courses. He 1s the leader of the Mrcrof1nance Industry Team and 1s responsible for the East Asia reg ion Before 101n1ng CGAP. Mr Re1lle worked with Catholic Relief Services

(CRSI, where he was the Regional Mrcrof1nance Adviser for Southeast Asia During his three-year assignment with CRS. he set up a maior investment

company for rural banks 1n Indonesia and developed a ratrng methodology for rural banks. Before CRS he was Operations Director at Soc1ete d'lnvest1ssement et de Developpement International (SIDI), where he played a role 1n the creation of Profund (an equity fund fo· m1crof1nance inst1tu­

t1ons 1n South America) and the development of Centenary Bank (a rural bank in Uganda) . Mr Re1lle has a master's degree in inte•nat1onal frnance from the Un1vers1ty of Pans .

Richard Rosenberg, Senior Adviser. Mr Rosenberg 101ned CGAP in 1995 He has conducted several appraisals of m1crof1nance institutions and has contributed to CGAP's tools and publications. including the External Audrt Handbook. Appraisal Format, and two Occasional Papers He rs a core fac·

ulty member of the M1crofrnance Training Program rn Boulder. Colorado. and also assrsts wrth other donor training. He is responsible for the Latrn American

and the Caribbean region. Before 1oin1ng CGAP. Mr Rosenberg was Deputy Director of USAID's Center for Economic Growth, which provides most of USAID's Washington, D.C -based expertise 1n areas of private sector and agricultural development He also spent nine years in Latu' America. manag­ing portfolios totaling $600 million 1n export and investment promotion, prrvat1zat1on, pension reform, and development finance lespec1ally m1crofinancel

Prior to USAID Mr Rosenberg practiced antitrust and contract law with Boodell Sears in Chicago, and private investment management with the prin­cipal owner of the Parker Pen Company in Washington. He holds a law degree from Harvard University

Ousa Sananikone, Microfinance Specialist. Ms. Sanan1kone 101ned CGAP in 2000. She leads the External Communications and Publrcatrons Team.

She is also working on the Rating Fund lnit1at1ve and has conducted several appraisals of m1crof1nance 1nst1tut1ons since 1oin1ng CGAP Prior to CGAP. Ms Sanan1kone was 1n the Small and Medium Enterprise (SMEI Development unit of the World Bank. where she task managed a number of SME and

m1crof1nance lending pro ects and economic and sector work 1n Africa and Asia She holds a master's degree in 1nternat1onal affairs from the School of

Foreign Service at Georgetown University

Alfonso Vega Acosta, Microfinance Analyst. Mr. Vega 101ned CGAP 1n 2000 He works on the M1crof1nance Gateway and CGAP's website, supports rnst1tut1onal appraisals and pro1ects, and conducts research. He is also working on several poverty-related proiects like the Pro-Poor Innovation Challenge

and the Information Systems Service. He 1s on the M1crofinance Industry Team. Mr. Vega graduated from Brown Un1vers1ty where he studied devel­

opment studies and economics.

Annual Report 2001

CGAP Secretariat c/o The World Bank 1818 H Street NW Washington, DC 20433 Tel: 202.473.9594 Fax: 202.522.3744 E-mail: cgap@worldbank.org Website: www.cgap.org

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