annual report 2002 - world bank...integrating microfinance into the established financial sector and...

CONSULTATIVE GROUP TO ASSIST THE POOREST

ANNUAL REPORT 2002

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Photographs, front cover (background, then leftto right): Two women holding money, Cambodia(Tim Hall/Getty Images); Women removing fishtraps, Okavango River, Botswana (PeterJohnson/Getty Images); Farmer on carriage,Egypt (Hisham F. Ibrahim/Getty Images);Woman selling flowers at market stand, Ecuador(Corbis); Bulls pulling carts on a rainy day, India(Corbis).

Photographs, back cover (background, then left toright): Outdoor market, Bombay, India (EyewireCollection/Getty Images); People making food,Burkina Faso (©1993, The World Bank PhotoLibrary/Curt Carnemark); Woman weaving,Kenya (© The World Bank Photo Library); Manwith water buffalo cart, Philippines (©1975, TheWorld Bank Photo Library/Edwin G. Huffman).

Consultative Group to Assist the Poorestc/o The World Bank1818 H. Street, N.W.Room Q4-400Washington, D.C. 20433

Tel: (202) 473-9594Fax: (202) 522-3744email: [email protected]://www.cgap.org

CGAP ANNUAL REPORT 2002

JULY 1, 2001-JUNE 30, 2002

CONTENTS

From the Director 1

Financial Services for the Poor: The Basics 5

About CGAP 9

Organization • Evaluations • Donor Commitments • Operational Budget

CGAP Services & Activities, FY2002 17

Activity Highlights, 2001-2002 • Information Dissemination

Donor Effectiveness 23

Financial Transparency 27

Policy Framework 31

Poverty Outreach 35

Institution Building 39

Annex 1: List of Consultative Group of Member Donors 44

Annex 2: CGAP Staff Biographies 47

Annex 3: Historic Budget Commitments of CGAP Member Donors 51

Annex 4: Websites & Publications 52

Annex 5: CGAP Investments (1995-2002) and Pro-Poor Innovation Challenge Award Recipients 56

Acronyms Used in this Report Inside back cover

Two women holding money, Cambodia. (Tim Hall/Getty Images.)

CGAP Annual Report 2002 1

MICROFINANCE works. It hasproved to be a powerful instrumentfor poverty reduction that enables the

poor to build assets, increase incomes, and reducetheir vulnerability to economic stress.Microfinance is sustainable. There is greater con-sensus than ever before about what is needed tomake microfinance sustainable, such as cost-cov-ering interest rates, demand-driven products, anda relentless focus on efficiency. Yet, with anunserved market of nearly one billion poor peoplestill lacking access to basic financial services, espe-cially the very poor, the microfinance challengeand opportunity remain ahead of us.

This is the decade in which microfinance musteither realize its vast potential to equip truly largenumbers of people to improve their own lives, orfade into an unfulfilled promise. Success requiresthat we refuse to accept a status quo in which it isconsidered normal for a country’s financial systemto serve only a tiny minority of its population,while the vast majority remains outside the sys-tem. It requires understanding the dramatic andsubtle differences between poor people and theirneeds. It requires recruiting and deploying manymore distribution channels to build on and com-plement the success of existing microfinance insti-tutions. And it requires delivering a far wider vari-ety of financial services to the poor and the verypoor, in rural and urban areas, in large countriesand in small.

To achieve this we must change how microfinanceis perceived–from a specialized niche of develop-ment to one of the cornerstones of any poor coun-try’s financial system. Building financial services forthe poor on this scale calls for a variety of distribu-tion systems with different objectives andapproaches for different market segments of thepoor population. Legal and supervisory systemswill be designed to stimulate, support, and ensurethe soundness of a range of organizations that mayinclude donor-supported non-profit organizations,

FROM THE DIRECTORFINANCIAL SERVICES FOR THE POOR

cooperatives, and insurance or credit card compa-nies. The term “microfinance” will no longer benecessary as we remove the walls–real and imagi-nary–that separate the microfinance communityfrom the much broader world of financial systems,markets, and development.

Opening up microfinance to embrace a diversityof organizations and models is urgent. Right now,the growth of poverty and unrealized humanpotential is outpacing the incremental growth ofmicrofinance. But it is also well within our reachbecause many of the elements needed to scale upand diversify financial services to the poor are inplace. A great deal of knowledge about therequirements of sustainable microfinance alreadyexists through the experience of microfinancepractitioners to date. Remarkable cost efficiencyhas been achieved by several vanguard microfi-nance institutions. Elsewhere, advances in infor-mation technology promise to lower costs, andrisks, further. Some large banks and other organi-zations with nationwide distribution systems arebeginning to take an interest in reaching poorerclients or in leveraging their existing networkswith new services. Enabling policy frameworksare slowly being put in place and some unsup-portive ones are being dismantled. Financialreporting and other standards are coalescing,eliminating unnecessary expense and the duplica-tion of effort.

Integrating microfinance into the establishedfinancial sector and deploying more delivery chan-nels will require patient and creative experimenta-tion with different models, mechanisms, products,

“The term ‘microfinance’ will no longer be necessary as we remove the walls–real andimaginary–that separate the microfinancecommunity from the much broader world offinancial systems, markets, and development.”

and services. It will require strengthening success-ful existing microfinance institutions. It willrequire generous, timely, and effective informa-tion-sharing on experiments and lessons learned.And it will require far higher and more consistentreporting standards, especially greater transparen-cy about the financial strength and performance ofmicrofinance operations.

Subsidies will always be required for certain func-tions. Clarity about clients reached and the rolesplayed by different organizations is essential inorder to allocate these scarce subsidies. On theother side, donor agencies will need to overcomeinternal limitations to their effectiveness and provide financial support that is demand-driven,efficient, and complementary to other funding.

FROM THE DIRECTOR

CGAP Annual Report 20022

“Success requires that we refuse to accept astatus quo in which it is considered normalfor a country’s financial system to serveonly a tiny minority of its population,while the vast majority remains outsidethe system.”

This is the mission CGAP seeks to achieve throughits work with its many partners worldwide. Simply,we are committed to helping build flexible, con-venient, and affordable financial services for thepoor and the very poor on a global scale.

We would like to sincerely thank our memberdonors for their steadfast support and engage-ment. Deep thanks also to the staff of the manynetworks, service providers, donors, and microfi-nance organizations who are our partners. It isonly through collective action that we will suc-ceed–in this decade and on the breathtaking scalebefore us–to truly build financial services for allthe poor who require them, enabling them tobuild assets, educate families, seize opportunities,and chart their own path out of poverty.

Elizabeth L. LittlefieldAugust 2002


LIKE everyone else, poor people need anduse financial services all the time. Theyneed financial services to take advantage of

business opportunities, invest in home repairs andimprovements, and meet seasonal expenses likeschool fees and holiday celebrations. They needfinancial services to prepare for life-cycle events likethe wedding of a daughter or the death of a grand-mother. They need financial services to cope withemergencies like the sudden death of a wage-earn-er or a monsoon that wreaks havoc on their village.

To address these myriad needs, the poor utilize awide range of financial services–and have done sofor centuries. Although in many cases they lackaccess to the formal financial system, the poorenter into a variety of financial relationships.Informal systems like moneylenders, savingsclubs, rotating savings and credit associations, andmutual insurance societies are pervasive in nearlyevery developing country. The poor also use assetslike animals or gold as a form of savings to be“withdrawn” through sales when the need arisesor opportunity knocks. Cash buried in the backyard or stashed under a mattress are very popularmeans to save among the poor. For specific pur-poses, to buy fertilizer, for instance, they may beable to obtain credit from input suppliers or com-mercial vendors. Finally, some poor people areclients of formal institutions like savings andcredit cooperatives, government-owned develop-ment banks, or post banks.

The informal (and some formal) financial servic-es currently available to the poor, however, haveserious limitations in terms of cost, risk, andconvenience. Moneylenders, for example, chargeexorbitant interest rates on loans. Buying inputson credit is far more expensive than paying incash. Local rotating savings and credit circlesoften allow deposits and loans only at very spe-cific time intervals and in strict amounts. A cowis not a divisible asset that can be sold to meetsmall cash needs–and it can be stolen, get sick,

FINANCIAL SERVICES FOR

THE POOR: THE BASICS

or die. Existing financial institutions may notoffer financial products that are appropriate tothe needs of the poor.

Recognition of the need to extend access to formalfinancial services to the poor is not new. Beginningin the 1950s, development projects began to intro-duce subsidized credit programs targeted at specificcommunities. For example, governments anddonors focused on providing subsidized agricultur-al credit to small and marginal farmers with the goalof raising productivity and incomes. These subsi-dized schemes were rarely successful because thefunds did not always reach the poor, ending up con-centrated in the hands of better-off farmers.Repayment rates were low and rural developmentbanks suffered massive erosion of their capital basedue to subsidized lending rates.

The general failure of large subsidized creditschemes inspired social entrepreneurs in develop-ing countries to test alternative ways to providecredit to poor people. Beginning in the 1970s,experimental programs in Bangladesh, Brazil, and afew other countries extended tiny loans to groupsof poor women for the purpose of investing inmicro-businesses. This type of microenterprisecredit was based on solidarity group lending inwhich every member of a group guaranteed therepayment of all members.

Through the 1980s and 1990s, microcredit pro-grams throughout the world improved upon theoriginal methodologies and bucked conventionalwisdom about financing the poor. First, it wasshown that poor people, especially poor women,

“Through the 1980s and 1990s, microcreditprograms throughout the world improvedupon the original methodologies andbucked conventional wisdom about financing the poor.”

FINANCIAL SERVICES FOR THE POOR: THE BASICS


repay their loans. Near perfect repayment rateswere common among the better programs–unheard of in the formal financial sectors of mostdeveloping countries.

Second, the poor were willing and able to payinterest rates that allowed microfinance institutions(MFIs) to cover their costs. Third, these two fea-tures–high repayment and cost-recovery interestrates–permitted some MFIs to achieve long-termsustainability and reach large numbers of clients. Infact, the promise of microfinance as a strategy thatcombines massive outreach, far-reaching impact,and financial sustainability makes microfinanceunique among development interventions.

By the dawn of the new millennium, however, themicrofinance community began to note a numberof limitations inherent in the microenterprisecredit model:

• Not all poor people run microenterprises.Supply-driven microenterprise creditmethodologies have reached a relativelynarrow band of clients, leaving behind arange of poor people for whom creditproducts are not particularly suited.

• Financial services needed by poor peopleextend far beyond working capital loansto encompass savings, credit, insurance,and money transfer services. Convenient,safe, and secure deposit services are a par-ticularly crucial need.

• NGOs, while crucial for conductingresearch and development of new models,face serious challenges in governance, legalframeworks, and cost structures. Moreimportantly, they have generally notreached massive scale, nor independencefrom donors (although there are majorexceptions to this rule).

• Institutions with large existing infrastruc-tures, such as commercial and state-ownedbanks, credit union networks, financialcooperatives, and even retail chains, mayoffer a significant, if challenging, “answer”to the problem of scaling up financialservices for the poor.

“Financial services needed by poor peopleextend far beyond working capital loans toencompass savings, credit, insurance, andmoney transfer services.Convenient, safe,and secure deposit services are a particularly crucial need.”

Man with water buffalo cart, Philippines. (© 1993, The World Bank Photo Library/Edwin G. Huffman.)

Evidence shows that when poor people have accessto financial services, these services enable them tofight poverty on their own terms. Whether theychoose to invest savings or loans in such “assets” assending more children to school, buying bettermedicines or more nutritious food, fixing a leakyroof, or increasing their incomes by investing intheir businesses, financial services underpin pover-ty reduction in multiple, concrete ways. ■

FINANCIAL SERVICES FOR THE POOR: THE BASICS


At the same time that microfinance is encounter-ing these challenges, the global developmentcommunity is beginning to recognize the multi-dimensional nature of poverty and the impor-tance of choice and empowerment in the lives ofthe poor. Since the early 1990s, the internationalcommunity has rallied in an unprecedented wayaround the Millennium Development Goals(MDGs), which aim to reduce different aspects ofpoverty in concrete ways (see Box 1). Financialservices provide the foundation for poor people topursue the MDGs as individuals, enabling themto make their own choices as to how best to over-come poverty.

Microfinance and the greater development commu-nity share the view that permanent poverty reduction requires addressing the multiple dimen-sions of poverty. For the international community,this means reaching specific MDG targets in educa-tion, women’s empowerment, and health, amongothers. For microfinance, this means a newapproach to providing financial services to the poor,as described in the previous section of this report.

“Whether they choose to invest savings or loans in such ‘assets’ as sending morechildren to school, buying better medicinesor more nutritious food, fixing a leaky roof, or increasing their incomes by investing in their businesses, financial services underpin poverty reduction in multiple, concrete ways.”

Financial services give the poor more power and choice to pursue their own strategies for escaping poverty.

Because microfinance services can be delivered sustainably within relatively short periods of time, these ben-

efits can be delivered on a permanent basis, well beyond the duration of donor or government programs that

rely on continuous subsidies.

A review of microfinance literature points to several specific conclusions about the impact of microfinance on

several of the MDGs:

Eradicate extreme poverty and hunger. Extensive evidence demonstrates that microfinance helps to reduce

poverty by increasing incomes, allowing the poor to build assets.

Achieve universal education. Households that have access to microfinance spend more on education than

non-client households. Improvements in school attendance and the provision of educational materials are wide-

ly reported in microfinance households. Participation in credit and savings programs has enabled many families

to send several children at a time to school and has reduced drop-out rates in higher primary grades.

Promote gender equality and women’s empowerment. Microfinance clients are overwhelmingly female.

Microfinance has been widely credited for empowering women by increasing their contributions to household

income, the value of their assets, and control over decisions that affect their lives.

Reduce child mortality, improve maternal health, and combat disease. Microfinance contributes to

improved nutrition, housing, and health, especially among women clients.

Box 1. Microfinance, Poverty Reduction, and the Millenium Development Goals (MDGs)

Women working, Kenya. (© The Word Bank Photo Library/Curt Carnemark.)


CGAP is an organization that bringstogether public and private sectordonors in support of a single goal: to

expand the access of the poor to financial serviceson a large scale. Since its creation in 1995, CGAPhas become a recognized center of excellence formicrofinance and its membership has expandedfrom 9 to 29 donors and foundations.

A service provider for the microfinance industry,CGAP functions as a standard setter, conveningplatform, incubator of innovations, knowledgecenter, and information clearinghouse.

CGAP serves three distinct groups of clients:microfinance institutions and networks, donors,and the microfinance industry as a whole (supervi-sors, information technology specialists, auditors,regulators, and private service providers). CGAPprovides services to each of these client groups, suchas technical assistance, strategic advice, training, thedevelopment of operational tools and consensusguidelines, action research, funding, and the dis-semination of publications and research publishedby CGAP and other microfinance organizations.

Originally established as a three-year program,CGAP was renewed in 1998 for an additionalfive years (1998-2003) and charged with institu-tion building, commercialization, policy andregulation, deepening the outreach of microfi-nance providers to reach poorer clients, andimproving donor microfinance operations.

In April 2002, CGAP’s board of directors, theConsultative Group (CG) of member donors, con-ducted a broad review of the CGAP system and thechanging needs of the microfinance industry.Based on an independent external review, the CGrenewed CGAP for a third phase (2003-2008) onan interim basis, pending final approval of a newstrategic document in September 2002. CGAPmember donors and management are currentlydesigning this phase, to commence July 2003,which will focus on broadening and diversifyingfinancial services for the poor.

ABOUT CGAPORGANIZATIONCGAP is housed at the World Bank, but oper-ates as an independent entity with its own gov-ernance structure.

Consultative Group of Member Donors (CG)The CG is the membership and governance body ofCGAP. Effectively the Board of Directors, the CGis comprised of 29 bilateral and multilateral devel-opment agencies and foundations. (See Table 1 forindividual members, Annex 1 for an institutionallisting.) The CG is chaired by Nemat Talaat Shafik,Vice President for Private Sector Development andInfrastructure of the World Bank.

Two new members joined the CG in fiscal year2002: the Argidius Foundation and the FordFoundation. Their membership is a reflection ofCGAP’s ongoing work to involve more privateinvestors and funders in microfinance.

Executive CommitteeThe Executive Committee (Excom) of CGAP is asubset of CG members that functions as the orga-nization’s executive governing body. It is comprisedof six members (see Table 1), each representing aconstituency of the CG, and is chaired by CamillaBengtsson, Microfinance Advisor, SwedishInternational Development Cooperation Agency.

The Executive Committee approves both the annu-al budget and workplans of CGAP. One of its keyroles is to facilitate communication between theCGAP operational team and the CG. In fiscal year2002, the Excom was particularly active, workingwith the external evaluators of CGAP, contributing

“A service provider for the microfinanceindustry, CGAP functions as a standardsetter, convening platform, incubator ofinnovations, knowledge center, and information clearinghouse. ”

ABOUT CGAP


BILATERAL MEMBERS

Country/Institution CG Representative(s)

Australia Kieran Donaghue

Belgium Jean-Louis de Gerlache

Canada Jean Claude Lorin*

Denmark Niels Richter, Jorn Olesen

Finland Jaako Kangasniemi, Tuukka Castren

France Alain Chetaille, Anne Clerc, Jacques Cossart, Jean Bruschi

Germany Roland Siller, Arlina Tarigan, Dirk Steinwand,

Italy Gianni Ghedini

Japan Teruhisa Oi, Kiyomi, Miyagawa, Toshimitsu Saiuchi

Luxembourg Georges Heinen, Arsène Jacoby, Thierry Lippert

The Netherlands Johan De Waard*

Norway Hege Gulli, Anne Kristin Hermansen

Sweden Camilla Bengtsson*

Switzerland Hansruedi Pfeiffer

United Kingdom David J.N. Stanton*

United States Kate McKee

MULTILATERAL MEMBERS

African Development Bank (AfDB) Mohamed Mah’moud, Abdirahman Beileh, Ross Croulet

Asian Development Bank (AsDB) Akira Seki, Nimal Fernando*

European Bank for Reconstruction Elizabeth Wallace

and Development (EBRD)

European Commission (EC) Odoardo Como

Inter-American Development Bank (IDB) Alvaro Ramirez

International Bank for Reconstruction and Nemat Talaat Shafik,+ Carlos Cuevas, William F. SteelDevelopment (World Bank)

International Fund for Agricultural Development (IFAD) Henri Dommel

International Labour Organization (ILO) Bernd Balkenhol

United Nations Development Program (UNDP)/ Heather Clark*

United Nations Capital Development Fund (UNCDF)

United Nations Conference on Trade and Massi Sahami-Malmberg, Frank Grozel

Development (UNCTAD)

FOUNDATIONS

Argidius Foundation Jim Shelter, Charles Shaw

Ford Foundation Frank DeGiovanni

+ Chair of the Consultative Group* Member, Executive Committee of Consultative Group (see Annex 1 for a list of constituencies)

Jean-François Rischard, Chair, Vice President for Europe, World BankAssaad Jabre, Alternate Chair, Vice President of Operations, International Finance CorporationElizabeth Adu, Chief Counsel, Africa Practice Group, Legal Division, World BankLynn Bennett, Advisor, Social Development Department, World BankCarlos Cuevas, Lead Financial Economist, Financial Sector Department, World BankClaudia Morgenstern, Senior Advisor, International Finance Corporation

Table 1. Member Donors of CGAP, June 2002

Table 2. Members of the CGAP Investment Committee, June 2002

ABOUT CGAP


extensively to the strategic plan and charter that willgovern the organization’s third phase, and providingvaluable input to CGAP initiatives.

Investment CommitteeThe Investment Committee (IC) of CGAP is thefiduciary oversight body that acts on behalf of theConsultative Group (see Table 2). The IC is com-posed of senior-level staff of the World Bank andthe International Finance Corporation (IFC),with Executive Committee members acting asobservers. Jean-François Rischard, Vice Presidentfor Europe, World Bank, chairs the InvestmentCommittee; Assaad Jabre, Vice President ofOperations, International Finance Corporation,is the alternate chair.

The Investment Committee ensures that theinvestments recommended by CGAP staff adhere

to the overall strategy endorsed by theConsultative Group. The committee evaluates allCGAP initiatives larger than $100,000.

In Spring 2002, the Investment Committee sawthe departure of two long-time members,Douglas Webb and Chris Scott. CGAP wouldlike to thank them both for their valuable contri-butions to the work of the committee. CGAP wasdelighted to welcome Elizabeth Adu, ChiefCounsel, Africa Practice Group, Legal Division ofthe World Bank, and Lynn Bennett, Advisor tothe Social Development Department of theWorld Bank, to the Investment Committee.

Policy Advisory GroupThe Policy Advisory Group (PAG) is comprisedof eight leading practitioner-experts (see Table 3).The primary role of the PAG is to support and

Current members:Pilar Ramirez, Chair, Centro de Fomento a Iniciativas Económicas (FIE), BoliviaFouad Abdelmoumni, Association Al Amana pour la Promotion des Microenterprises, MoroccoFazle Hassan Abed, Bangladesh Rural Advancement Committee (BRAC), BangladeshShafiqual Haque Choudhury, Association for Social Advancement (ASA), BangladeshDavid Gibbons, CASHPOR, Inc., MalaysiaCarlos C. Labarthe, Financiera Compartamos, MexicoAlex A. Silva, Profund Internacional, Costa RicaJohn de Wit, Small Enterprise Foundation, South Africa

Former members:Muhammad Yunus (former Chair), Grameen Bank, BangladeshKimanthi Mutua (former Chair), K-REP Bank, KenyaKamardy Arief, formerly of Bank Rakyat IndonesiaNancy Barry, Women’s World Banking, United StatesEla Bhatt, Self-Employment Women’s Association (SEWA), IndiaRenée Chao-Beroff, Centre International de Développement et de Recherche (CIDR), FranceMartin Connell, Calmeadow Foundation, CanadaRosalind Copisarow, formerly of Fundusz Mikro, now based in the United KingdomVijayalakshmi Das, Friends of Women’s World Banking, IndiaSukor Kasim, Center for Policy Research, Universiti Sains Malaysia, MalaysiaKlaas Kuiper, Agency for Business Development, Cape VerdéMaria Nowak, Association pour le Droit à l’Initiative Économique (ADIE), FranceMaria Otero, ACCION International, United StatesAlpha Ouedraogo, Centre d’Innovations Financières, Burkina FasoNabil El Shami, Alexandria Business Association, Egypt Sizwe Tati, Khula Finance Enterprise Limited, South AfricaLawrence Yanovitch, Foundation for International Community Assistance (FINCA), United StatesKerfalla Yansane, Banque Centrale de la République de Guinée, Republic of Guinea

Table 3. Members of the CGAP Policy Advisory Group (PAG), June 2002

ABOUT CGAP


In early 2002, a new Donor Services Team was formed to redouble CGAP’s efforts to assist member donors in improving their effectiveness. The team focuses on improvingdonor practices in microfinance, building donorstaff skills, and providing tailored services to different types of donors. (See “DonorEffectiveness” section on page 23.)

Staff changes were minimal in the past fiscal year.Two new members joined CGAP in Spring 2002:Alexia Latortue joined the Donor Team and Peggy McInerny became Communications andPublications Officer. Patricia Mwangi went on leavein May 2002 and will return to the MicrofinanceIndustry Team in October of this year.

CGAP EVALUATIONSCGAP underwent three major evaluations in fiscal year 2002. The first examined the performance of CGAP in its second phase todetermine whether its funding should be renewedafter 2003. The evaluation was conducted by ateam of independent external evaluators engaged by the Consultative Group and overseenby the Excom.

The independent evaluation formed the basis ofthe CG decision in April 2002 to renew itsmandate for an additional five years. The CGconcurred with the evaluation’s conclusion thatthe global microfinance industry continues toneed donor support and that CGAP has aunique and major role to play in assisting itsdevelopment, especially in those areas wherecollective action is critical.

The second evaluation was an audit conducted bythe Internal Audit Department of the World Bankto verify that CGAP’s procedures, internal con-trols, and monitoring systems complied with theadministrative guidelines of the Bank’sDevelopment Grant Facility (DGF). Establishedin 1997, the DGF manages the World Bank’s

advise the Consultative Group and CGAP staffon the policies and strategic direction of CGAP.Members of the PAG contribute valuable practi-tioner viewpoints to CGAP activities and policiesand support CGAP in championing good prac-tice in microfinance. Pilar Ramirez of Centro deFomento a Iniciativas Económicas (FIE) current-ly chairs the PAG.

Over the past year, PAG members actively con-tributed to a CGAP-led effort to develop broadlyapplicable poverty indicators for MFI clients.PAG members also reviewed finalists for the Pro-Poor Innovation Challenge awards and candidatesfor the Appraisal and Monitoring Service. Theycontributed papers to the Microfinance VisionaryShowcase on the future of microfinance and pro-vided advice on CGAP market research in CentralAmerica and Mexico. PAG members also encour-aged MFIs in their respective countries to utilizethe IDB-CGAP Rating Fund (see page 28) and totest CGAP technical tools.

CGAP Staff

CGAP staff constitute the operational arm ofCGAP. A small group of experienced microfinancespecialists, the staff implements the strategyendorsed by the CG (see Figure 1). The team isheaded by Director and CEO Elizabeth Littlefield.(See Annex 2 for staff biographies.)

The Microfinance Industry Team promotes trans-parency of financial information on microfinanceproviders and the exchange of knowledge withinthe microfinance industry. The MicrofinanceInstitutions Team supports MFIs through training,appraisals, and technical assistance. The Micro-finance End-Client Team advances innovativemethodologies that allow MFIs to deepen povertyoutreach and offer diverse financial services. It alsodevelops tools to increase transparency about pover-ty levels of microfinance clients.

“Over the past year, PAG members activelycontributed to a CGAP-led effort to developbroadly applicable poverty indicators forMFI clients.”

“Effectively the Board of Directors, theConsultative Group is comprised of 29bilateral and multilateral developmentagencies and foundations.”

ABOUT CGAP


Figure 1. CGAP Organizational Chart, June 2002

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in the past fiscal year, a considerable increasefrom the 35 percent funding level in FY2001 (seeTable 4).

Over the past two years, CGAP member donorshave increased their contributions to the coreCGAP budget, with several members makingcash contributions for the first time. The AsianDevelopment Bank made its first budget contri-bution of US$ 250,000 in FY2002. Similarly, theUnited Kingdom made an initial contribution ofUS$ 400,000 in FY2002. Also in FY2002,

ABOUT CGAP


grant-making activities. The CGAP audit receivedthe highest possible rating.

The third and ongoing evaluation is part of a larg-er, comparative review undertaken by the WorldBank’s Operations Evaluation Department(OED). The purpose of the OED review is toevaluate the effectiveness of the Bank’s involve-ment in 70 global programs and to derive strategicand operational lessons for continued Bank sup-port. As part of this review, the OED is conduct-ing in-depth case studies of 28 of these programs,of which CGAP is one.

DONOR COMMITMENTS TO CGAPOver the past several years, CGAP has sought todiversify its funding as contributions from theWorld Bank are reduced over time. Additionalfunding from non-Bank members will, in fact, becrucial to future World Bank funding throughthe DGF. Total non-World Bank donor fundingaccounted for 43 percent of total CGAP funding

FY2001 FY2002 FY2003

World Bank 7,500,000 7,125,000 6,725,000Australia 323,576 668,689Argidius Foundation 100,000 100,000Asian Development Bank 250,000 250,000Belgium 262,430 222,575Canada 341,724 323,576 318,188Denmark 250,000 360,317 360,317Ford Foundation 200,000 200,000Finland 235,689 239,365France1 133,980 149,670Germany 174,538 354,880 180,189IFAD 300,000Italy 278,747 462,332Japan 300,000 300,000Luxembourg 270,177The Netherlands 399,690 406,224 401,277Norway 341,746 334,934 330,677Sweden 293,542 281,653 293,542Switzerland 300,000 399,975 400,000United Kingdom2 400,000 400,000United States 300,000 400,000 815,000Total 11,571,859 13,024,135 11,163,225

1 France funded the cost of one CGAP staff member in FY01 (approximately US$ 153,280).2 The United Kingdom funded 50% of the poverty team (US$ 150,000) for both FY2000 and FY2001.Shaded - pledged but not received.

Table 4: CGAP Member Donor Budget Commitments, FY2001-2003 (in US Dollars)

“The CG concurred with the conclusion ofan independent evaluation that the globalmicrofinance industry continues to needdonor support and that CGAP has a uniqueand major role to play in assisting itsdevelopment, especially in those areaswhere collective action is critical.”

ABOUT CGAP


AusAID more than doubled its contribution toUS$ 668,689, Switzerland raised its contributionby US$ 100,000 to US$ 399,975, Denmarkraised its contribution by US$ 110,000 to US$ 360,317, Italy raised its contribution byalmost US$ 200,000 to US$ 462,332, and Francemade a cash contribution of US$ 133,980.

A full history of member donor fiscal support toCGAP can be found in Annex 3.

OPERATIONAL BUDGETThe operational budget of CGAP in fiscal year2002 (July 1, 2001-June 30, 2002) was US$ 9,172,800 (see Table 5). This budget, whichdoes not reflect disbursement commitmentsmade for future fiscal years, breaks down amongCGAP’s three major client groupings as follows:US$ 4.6 million for microfinance institutions (ofwhich US$ 3.9 million represented grants andcapacity-building services), US$ 980,700 formember donors, and US$ 2.3 million for themicrofinance industry. Staff time was evenlyspread across the three client groups.Approximately US$ 1.1 million was allocated to

management, administration, CG and Excommeetings, and overhead.

The budget includes all costs associated with implementing CGAP’s work, including disbursements to grantees; staff costs for techni-cal assistance, training, technical tool develop-ment and testing; investment appraisal andmonitoring; operational travel; meetings withthe CG, Executive Committee, and PAG;fundraising costs; administrative support; andoffice costs. Staff costs are allocated to CGAPactivities using a time recording system. ForFY2002, costs for management, administration,CG and Excom meetings, and overhead com-prised 12.2 percent of the total budget. Thesecosts include staff costs not allocated to projects,office rent, and office expenses. ■

Total FY02 BudgetMicrofinance Industry 2,254.9 Technical advice and exchange 579.6Training and capacity building 274.3Tools and services 1,401.0

Financial Institutions 4,568.5Technical advice and exchange 625.1Training and capacity building 1,812.9Tools and services 51.1Grants to MFIs 2,079.3

Member Donors 980.7Technical advice and exchange 711.3Training and capacity building 103.2Tools and services 166.2

Publications 247.6

Management, Administration, CG/Excom Mtgs, Overhead 1,121.1

Grand Total 9,172.8

Table 5. CGAP Operational Budget, Fiscal Year 2002(in 000s of US Dollars)


As a service provider for the microfinanceindustry, CGAP supports the work ofmicrofinance providers, government poli-

cymakers, regulators, supervisors, donors, andother service providers by:

• building standards together with other actors • developing technical tools• delivering customized training (see Box 2)• providing strategic advice and advanced

technical services• undertaking action research• cofunding MFIs and networks with CGAP

member donors • disseminating information on innovations,

good practice, and recent research

This section provides an overview of CGAP activi-ties in fiscal year 2002. Subsequent sections arethen devoted to the themes that characterizedCGAP’s work over the past year: donor effective-ness, financial transparency, enabling policy frame-works, poverty outreach, and institution building.

ACTIVITY HIGHLIGHTS 2001-2002Fiscal year 2002 saw CGAP concentrate its effortsin three major areas. First, CGAP redoubled itsfocus on donor effectiveness in microfinance, asdemonstrated by the creation of a new DonorTeam, an ambitious aid effectiveness initiative,and the decision to open an office in Paris. Theprimary objective of the new office, authorized bythe CG in April 2002, will be to improve CGAPservices to member donors headquartered inEurope (17 of 29 members).

Second, CGAP continued to devote majorresources to encouraging greater transparency onboth the financial performance and poverty out-reach of MFIs. One major accomplishment inthis area was the incorporation in June 2002 of anew non-profit organization, the MicrofinanceInformation eXchange (MIX, see page 27), tofacilitate greater commercial investment in micro-finance and to promote meaningful performancebenchmarks for MFIs.

CGAP SERVICES & ACTIVITIES

Another major accomplishment in this area wasthe launching of the Client Targeting Centre inNovember 2001, an online resource that providesinformation on targeting tools and a platform forMFIs to share their experiences with using thesetools. Further work on poverty outreach includeda CGAP initiative to develop industry consensuson simplified indicators for measuring MFI clientpoverty levels.

Third, CGAP devoted concerted attention in thepast year to opening up the boundaries of microfi-nance by working with new actors, promoting thedevelopment of innovative products, and encourag-ing the application of new technologies. CGAPprojects and support in this area encompassed part-nerships between MFIs and insurance companies(SEWA, India), and funding of MFIs offering newproducts such as transfer payment services(Jamaican Cooperative Credit Union League,Jamaica; Organización de Desarrollo EmpresarialFemenino, Honduras), share purchase funds (LiftAbove Poverty Organization, Nigeria), and primaryhealth care services (PACT Institute, Mynamar).

CGAP also took concrete steps in the past year tospin off initiatives that have been incubated atCGAP and are ready for greater industry owner-ship and participation. Two CGAP initiatives werethus transferred to the MIX; the Pro-PoorInnovation Challenge grant program will soon behanded over to the International Fund forAgricultural Development; and CGAP’s capacity-building program began to develop new types ofpartnerships to expand availability of quality train-ing for MFI staffs worldwide.

“In the past year, CGAP redoubled its focuson donor effectiveness in microfinance, asdemonstrated by the creation of a newDonor Team, an ambitious aid effectiveness initiative, and the decision to open anoffice in Paris. ”

CGAP SERVICES AND ACTIVITIES


From transparency initiatives to poverty outreachto donor training, CGAP works in partnershipwith other organizations engaged in microfinance.These partnerships—with donors, scores of differ-ent service providers, microfinance networks, andpractitioners—are crucial for supporting the effortsof others; leveraging CGAP’s own resources; anddeveloping more effective consensus guidelines,new product initiatives, and action research.

In a continued effort to strengthen these partner-ships and communications, CGAP organizedregular informal sessions over the past year withinternational NGOs, service providers, and net-works. Sessions were held with representatives ofM-CRIL, CARE, ACCION, Freedom fromHunger, MEDA, Opportunity International,Results, Save the Children, SEEP, Shorebank, andmany others. CGAP extends an open invitation toany interested organizations traveling throughWashington to arrange similar sessions. These meet-ings are an essential complement to regular CGAPconsultations with the industry, which range fromactive informal email and other feedback to formalinput sought through such exercises as theMicrofinance Visionary Showcase (see Annex 4).

CGAP delivers a variety of technical training, both directly and in conjunction with partner institu-tions. The goal of all CGAP training is to enhance the knowledge and operational efficiency of dif-ferent institutional actors in microfinance.

• The CGAP Capacity Building Program seeks to build local institutional capacity to provide oper-ational training and technical assistance to MFIs worldwide.

• The Microfinance MBA Program is a joint venture with the Soros Foundation that intends to buildmicrofinance specialties in graduate business programs of universities in the developing world.

• CGAP Donor Training aims to enhance the skills and knowledge base of donor staff to encour-age the implementation of good practice in microfinance programming.

• Regulatory and Service Provider Training provides targeted training to government regulatorsand accounting professionals on microfinance practice.

Box 2. CGAP Training Initiatives

INFORMATION DISSEMINATIONCGAP is dedicated to disseminating knowledgeand information about contemporary microfi-nance to the broadest possible public via the Weband printed publications.

Microfinance GatewayThe Microfinance Gateway (www.microfinance-gateway.org) is a public forum for the microfinanceindustry at large. Designed to serve the changingneeds of the industry, the Gateway allows practi-tioners to contribute thought pieces, post publica-tions, publicize conferences and training work-shops, debate current issues, and look for employ-ment or consultants. Two years after its launch, theGateway has become the most comprehensivesource of information on microfinance on the Web,with over 11,000 individual users and approximate-ly 400,000 hits a month.

Weekly Gateway Highlights this year offered shortpieces on Islamic banking, responses to a WallStreet Journal article on the Grameen Bank, thestate of regulation and supervision in LatinAmerica, and the history of microfinance inIndonesia. Viewpoints—short thought piecesintended to generate debate among microfinanceexperts—published this year included a capital vs.capacity debate (“Water, Water, Everywhere, ButNot a Drop to Drink”) and an essay on the dis-tinction between microcredit and microfinance.

Several new features were added to the Gateway infiscal year 2002. First, a text-only option and

“CGAP also took concrete steps in thepast year to spin off initiatives that havebeen incubated at CGAP and are ready for greater industry ownership and participation.”



streamlined navigation were introduced to improveaccess in countries with slower internet connec-tions. Second, new features such as an archive ofpostings from the Devfinance discussion groupwere added. Third, the consultant database wasredesigned, making it easier to input, update, andaccess the resumés of microfinance experts.

Finally, two new Resource Centres were launchedon Client Targeting and Microinsurance, and newfeatures were added to the Information SystemsCentre (see Annex 4 for details).

CGAP PUBLICATIONSCGAP produces a variety of publications intend-ed to disseminate new research, best practices,and innovative ideas in microfinance. New publi-cations released in fiscal year 2002 were

• Apex Institutions in Microfinance(Occasional Paper No 6)

• Developing Deposit Services for the Poor: Preliminary Guidance for Donors (ConsensusGuideline, draft version, April 2002)

• Financial Transparency: A Glossary of Terms

• Focus on Financial Transparency (CGAPUpdate Brochure)

• Microcredit: One of Many InterventionStrategies (Donor Brief No 2)

• Microfinance Donor Projects: 12 Questionsabout Sound Practice (Donor Brief No 1)

• Microfinance Glossary: English-Spanish(draft version, August 2001)

• A Multilateral Donor Triumphs overDisbursement Pressure: The Story ofMicrofinance at Banco do Nordeste in Brazil(Focus Note No 23)

• Product Costing Tool (Technical Tool No 6,draft version, March 2002)

• Resource Guide for Microfinance Assessments(Focus Note No 22 )

• Savings Are as Important as Credit: DepositServices for the Poor (Donor Brief No 4)

• Sistemas de información gerencial para insti-tuciónes de microfinanzas: Guía práctica(Spanish translation of Handbook forManagement Information Systems)

• Using Microfin 3.0: A Handbook forOperational Planning and FinancialModeling (CGAP Technical Tool No 2)

• Water, Water Everywhere, But Not a Drop toDrink (Donor Brief No 3)

See Annex 4 for descriptions of the above publi-cations, as well as a comprehensive list of CGAPpublications to date. ■

“Two years after its launch, theMicrofinance Gateway has become themost comprehensive source of informationon microfinance on the Web.”

Focus Notes provide short overviews of current topics and trends in microfinance. Many summarize longerresearch by microfinance experts or describe lessons learned from CGAP projects.

CGAP Update Brochures detail activities undertaken by CGAP in such areas as poverty outreach, povertyassessment, and transparency in microfinance.

Consensus Guidelines and Glossaries are documents developed in cooperation with other organizationsworking in microfinance and are intended to establish standards in microfinance. Guidelines and glossaries arepublished in final form only after consensus is reached among industry players.

Donor Briefs are two-page publications that summarize major issues relevant to microfinance donors with alist of recommended references.

Occasional Papers are in-depth, analytical treatments of microfinance topics intended for specialists.

Technical Tools, some of which feature software, are handbooks intended to provide practitioners and donorswith specific technical skills in microfinance. Tools cover such functional areas as business planning, MISselection, audits, and evaluation. CGAP first publishes tools in draft form, after which they are pilot tested forone to two years before being finalized.

Box 4. An Overview of CGAP Publications

Box 3. Collaboration with Other Microfinance Organizations in 2001-2002

Over the past year, CGAP worked with a range of organizations and consultants worldwide, from MFI grant recipients to internation-

al and regional MFI networks, central bankers, rating agencies, and banks. The institutions below comprise a partial listing of the

organizations with which CGAP collaborated in 2001-2002 on such activities as joint research, MFI ratings and evaluations, training,

consensus guidelines, and technical assistance.

2CS, SénégalACCION, USAACEP, SénégalAcclaim Africa, Ltd., UgandaACME, HaitiACNABIN, BangladeshADOPEM, Dominican RepublicAFCAP, Eastern/Southern AfricaAFMIN, Côte d'IvoireAfricap, SénégalAga Khan Foundation, USAAgricultural and Rural Development for Catanduanes (ARDC),

PhilippinesAgrocapital, BoliviaAhantaman Rural Bank, Ltd., GhanaAISFD-CI, Côte d'IvoireAl Amana, MoroccoALAFIA, BéninAlternativa Solidaria Chiapas, MéxicoANIP/MF, NigerAPIDEC, Burkina FasoAPIFM, MadagascarAPIM, MaliAPIMFT, TogoAppui au Développement Autonome, LuxembourgAQUADEV, Burkina FasoAREGAK, ArmeniaArgidius Foundation, The NetherlandsAssociation for Social Advancement, BangladeshAsociación de Consultores para el Desarrollo de la Pequeña,

Mediana y Microempresa, NicaraguaAsociación Méxicana de Uniones de Crédito del Sector Social,

MéxicoASSIST, IndiaBanco do Nordeste, BrazilBancoSol, BoliviaBank Dagang Bali, IndonesiaBASIX, IndiaBCEAO (West African Central Bank), West AfricaBesa Foundation, Albania Blue Orchard, LuxembourgBolivian Superintendency of Banks, BoliviaBRAC, BangladeshBRI-International Visitors Program, IndonesiaBTFF, KyrgyztanCabinet Remix, SénégalCaja Los Andes, BoliviaCAPAF, SénégalCARD Bank, Inc., PhillipinesCARE, USACASHPOR, Inc., MalaysiaCatholic Relief Services, USACBDIBA-ONG, BéninCredit Development Forum, BangladeshCentenary Rural Development Bank, Uganda

Center for Microfinance, NepalCentral Bank of the Philippines, Philippines(Central) Bank of Tanzania, Tanzania(Central) Bank of Uganda, Uganda(Central) Bank of Zambia, ZambiaCentre for Self-Help Development, NepalCERISE Network, FranceCFTS (Cashpor), IndiaCooperative Housing Foundation, RomaniaChina Microfinance Training Center, ChinaCIDR, FranceCities Alliance, USACitigroup Foundation, USACMM Bogotá, ColombiaCMM Medellín, ColombiaCompartamos, MéxicoConstanta Foundation, GeorgiaCRECER, BoliviaCrediFundes, PanamaCRISIL, IndiaCSBF, MadagascarCYSD, IndiaDevelopment Alternatives International, USADAI FINNET, HaitiDay, Berry, and Howard Foundation, USADeloitte & Touche - ILA Africa, South AfricaDeutsche Bank, GermanyDéveloppement International Desjardins, CanadaD-FRIF (Fundación Diaconia), BoliviaDIS, MoroccoDoen Foundation, The NetherlandsDoveriye, RussiaEbony Consulting International, South AfricaEDA Rural Systems, South AsiaEDPYME Confianza, PeruEDPYME Crear Tacna, PeruEDPYME Edyficar, PeruFacet B.V., NetherlandsFAO Microbanker, ItalyFaulu Uganda Limited, UgandaFENECOAC (Guatemalan Credit Union Federation)FECECAM, BéninFern Computer, IrelandFIE S.A., BoliviaFin Rural, BoliviaFINCA, USAFinComun, MéxicoFineline Systems & Management, Ltd., KenyaFitch Bolivia, BoliviaFMM Bucaramanga, ColombiaFMM Popayan, ColombiaFNMF, FranceFONDEP, MoroccoFondesa, Dominican RepublicFoundation for Development Cooperation, Australia



Box 3. Collaboration with Other Microfinance Organizations in 2001-2002



Freedom from Hunger, USAFundación WWB-Colombia, ColombiaFUNDAPRO, BoliviaGRET, France, CambodiaGTZ, GermanyHorus, FranceHorizonti, MacedoniaIASC, IndiaICMIF, UKInternational Monetary Fund, USAINDNET, IndiaIndonesia Central Bank, IndonesiaInstitute for Motivating Self-Employment, IndiaInstitute of Development Studies, UKInternational Capital Corporation, South AfricaInternational Training Solutions, South AfricaIRIS, University of Maryland, USAJamaican Cooperative Credit Union League, JamaicaKadale Consultants, Ltd., MalawiKAFO-JIGINEW, MaliKashf Foundation, PakistanKatalysis Partnership, USAKCLF, KazakhstanK-Rep Advisory Services, Ltd., KenyaLift Above Poverty Organization, NigeriaLocal Enterprise Assistance Program, LiberiaLoan Performer, UgandaM & N Associates, Ltd., ZambiaMADE, HaitiMasawe Ernst & Young, TanzaniaM-CRIL, IndiaMibanco, PanamaMicroBanking Bulletin, USAMicrofin, USAMicrofinance Academy, CameroonMicrofinance Centre, PolandMicroFinance Group, PakistanMicroFinance Network, USAMicrofinanza, ItalyMicroFund for Women, JordanMicroRate, USAMicroSave-Africa, KenyaMillennium Consulting Group, MalawiMision Alianza, PeruNaropa University, USANational Rural Support Program, PakistanNirdhan Utthan Bank, Ltd., NepalNsoatreman Rural Bank, GhanaOikocredit, The NetherlandsOpen Society Insitute, USAOpportunity International, UK, USAOrganización de Desarrollo Empresarial

Femenino, HondurasPACEF, CameroonPacific Credit Rating, PeruPact, Myanmar, NepalPadakhep Manabik Unnayan Kendra, BangladeshPakistan Poverty Alleviation Fund, PakistanPanamanian Superintendency of Banks, PanamaPartner, Bosnia and HerzegovinaPartneri Shqiptar ne Mikrokredit, Albania

People's Reconstruction Movement, IndiaPerbarindo, IndonesiaPhilippine Network for Helping the Hardcore Poor, Inc., PhillipinesPlaNet Finance, FrancePraden, IndiaPriceWaterhouseCoopers, Inc., South AfricaPRIDE Formation, GuineaPrism Research, Bosnia and HerzegovinaPrisma, NicaraguaPRIZMA, Bosnia and HerzegovinaPRO MUJER, BoliviaProdem, BoliviaProject Dungganon (NWTF), PhillipinesPROMUC, IndiaPunla sa Tao Foundation, PhilippinesRaboBank, The NetherlandsRashtrya Seva Samithi, IndiaRed Cross, SwitzerlandReserve Bank of India, IndiaResults, USARFF, AlbaniaRockdale Foundation, USARural Finance Corporation, MoldovaRural Finance Facility, South AfricaSafeSave Coop, BangladeshSave the Children International, USASEEDS, Sri LankaSelf-Employed Women’s Association, IndiaSHARE, IndiaSIEM Corporación, Costa RicaSinapi Aba Trust, GhanaSKDRDP, IndiaSKS, IndiaSmall Enterprise Education and Promotion Network, USASmall Enterprise Foundation, South AfricaSmall Industries Development Bank of India, IndiaSNEHA, IndiaSoft Corporación, GuatemalaSoftware Strategies, KenyaSouth Asia Research Society (SARS), IndiaSwayamkrushi Women's Development, IndiaTaytay Sa Kauswagan, Inc., PhilippinesTemir Bank, KazakhstanTenemos, UKTriodos, The NetherlandsUganda Microfinance Union, UgandaUganda Public Accountant Association, UgandaUMUCS, MéxicoUniversity of Natal, South AfricaVulindlela, South AfricaWAGES, TogoWashington University in Saint Louis, USAWeidemann and Associates, USAWomen Economic Empowerment Consort, KenyaWomen's World Banking International, USAWorld Council of Credit Unions (WOCCU), USAWorld Relief International, USAWorld Vision International, USAXacBank, MongoliaYouth Self Employment Foundation, TanzaniaZakoura Foundation, MoroccoZambuko Trust (Pvt), Ltd., Zimbabwe


DONORS remain the single mostimportant source of external fundingfor microfinance today, although sav-

ings and other domestic funds are gaining promi-nence. Over the past six years, CGAP has placedstrong emphasis on promoting messages relatedto sound donor practices among its memberdonors, achieving consensus on core issues andstrengthening relationships between memberdonors and CGAP staff. Yet many donors contin-ue to face challenges to good practice, includingdisbursement pressures, staff rotations, and fund-ing mechanisms ill-suited for promoting sustain-able financial services to the poor.

CGAP’s works with member donors to improvetheir effectiveness, efficiency, and accountability by

(i) building on and catalyzing a sense ofurgency and commitment to bettermicrofinance programming;

(ii) supporting donor staff to promote orga-nizational changes within their agenciesnecessary to apply good practices inmicrofinance; and

(iii) encouraging mutual support and cross-learning among donor agencies withresponsive, appropriate, and high-qualityinformation, training, and technical assis-tance services.

DONOR PEER REVIEWSIn early 2002, DFID and CGAP combined effortsto tackle aid effectiveness using microfinance as atest case. The initiative entails coordinating donor-led peer reviews of 21 multi- and bilateral donoragencies through mid-2003. The reviews concen-trate on the institutional policies, practices, andprocesses of each donor institution and include on-site visits to field and headquarters operations.

Peer reviews help donor agencies identify the suc-cess factors and constraints to effectiveness thatinfluence their microfinance operations. Althoughmicrofinance is the technical focus of the reviews,

DONOR EFFECTIVENESS

analysis of the modus operandi of the various agen-cies is expected to be applicable to other areas ofdevelopment assistance.

Outputs of the peer reviews are specific, practicalproposals to the top management of each agencyon how to improve its aid effectiveness in micro-finance. In addition to recommendations to indi-vidual agencies, CGAP prepares synthesis docu-ments comparing the results of three to fourreviews at time. These documents are then circu-lated among participating agencies.

TECHNICAL SUPPORTAt the request of its member donors, CGAPregularly provides technical input on the design ofdonor microfinance projects, contributes to techni-cal documents, and reviews proposed country-levelregulations affecting microfinance.

WORLD BANKDue to the size and significance of World BankGroup microfinance funding, CGAP’s location inthe Bank, and the opportunity for learninglessons applicable to other donors, CGAP contin-ues to work closely with the Bank and the IFC onmicrofinance.

In fiscal year 2002, CGAP staff contributed to theWorld Bank Poverty Reduction Strategy Paper(PRSP) Sourcebook, numerous specific countryPRSPs, several project appraisals and CountryAssistance Strategies (CAS), and an operationalnote on rural development and rural microfinance.

“Peer reviews help donor agencies identifythe success factors and constraints to effectiveness that influence their microfinance operations. Although microfinance is the technical focus of thereviews, analysis of the modus operandi of the various agencies is expected to be applicable to other areas of development assistance.”

DONOR EFFECTIVENESS


member donors and the IMF, a CGAP staff mem-ber and consultant traveled to Afghanistan inApril 2002 to meet with donors and the Afghangovernment, as well as to participate in a WorldBank financial sector mission. CGAP’s advice wasto establish a multidonor facility that would coor-dinate donor funding for microfinance. The rec-ommendation is circulating among interestedmember donors and CGAP will remain involvedin the project throughout the design phase.

Cambodia: At the request of several memberdonors, including AFD, AusAID, GTZ, and theWorld Bank, CGAP undertook an analysis of themicrofinance sector in Cambodia in June 2002.Intended to assist donor microfinance program-ming in the country, the report recommends thatdonors greatly enhance their coordination inorder to strengthen MFI institutional capacity,promote financial transparency, and support thestructuring of the sector as a whole through, forexample, creation of an MFI association, a creditbureau, or market evaluation studies.

Indonesia: In early 2002, CGAP held a series ofmeetings with local representatives of the WorldBank, GTZ, USAID, and AusAID to shareinformation and coordinate approaches on sup-porting the microfinance sector in Indonesia,particularly with respect to MFI training. CGAPis currently working with USAID and GTZ tocoordinate a Training of Trainers workshop forCGAP courses.

Other technical advice included a review of micro-finance and rural finance projects in Afghanistan,Bulgaria, El Salvador, Eritrea, East Timor, Ghana,Kazakhstan, Mali, Malawi, Mexico, Nicaragua,Pakistan, the Philippines, Sri Lanka, and Tajikistan.

CGAP staff also gave several formal and informalbriefings on microfinance to Bank staff and man-agement, including a detailed presentation to theBoard of Executive Directors.

OTHER MEMBER DONORCONSULTATIONSAt their request, CGAP assists donors in designingbetter microfinance policies and programs. In addi-tion to the peer reviews, CGAP over the past fiscalyear provided advisory inputs to GTZ (Indonesia,India, and headquarters), AfDB, CIDA, AsDB,ILO (STEP program and headquarters), DFID,Finnida, USAID (headquarters and field offices),SIDA, AFD, EBRD, SDC, the EC, and nationaland regional donors in West Africa and India.

IN-COUNTRY DONORCOORDINATIONOver the past fiscal year, CGAP has worked withdonor coordination groups in West Africa, Asia,Central Asia, and Latin America. Four examplesare described below.

Afghanistan: In late 2001, the World Bankapproached CGAP for advice on microfinance inAfghanistan. Based on additional interest by other

Six peer reviews are scheduled for completion by September 2002. UK Secretary of State for InternationalDevelopment Clare Short will host a meeting then with CGAP and several high-level officials of its memberdonors to discuss the results, emerging lessons, and follow-up actions flowing from these reviews. Agenciesreviewed by that date will include:

• African Development Bank• Asian Development Bank• UK Department for International Development • International Fund for Agricultural Development• Norwegian Agency for Development Cooperation • Swedish International Development Cooperation Agency

Another four agencies (KfW, AFD, UNDP/UNCDF, World Bank) are scheduled for reviews by year-end 2002,and an additional eleven agencies have expressed interest in participating in reviews expected to conclude bymid-year 2003: AusAID, CIDA, DANIDA, DGDS (Italy), EBRD, EC, ILO, JBIC, the Ministry of Foreign Affairsof the Netherlands, SDC, and USAID. (See inside back cover of this report for a glossary of acronyms.)

Box 5. Peer Reviews – Progress to Date

DONOR EFFECTIVENESS


Tajikistan: CGAP led a short microfinance semi-nar in Dushanbe in February 2002 with supportfrom USAID. Locally-based donors then formeda Donor Working Group for Tajikistan, includingAsDB, Aga Khan Development Network(AKDN), Eurasia Foundation, GTZ, IFC, OSI,USAID, World Bank, and the UNDP. With sup-port from USAID and the Open Society Institute(OSI)/Soros Foundation, CGAP also conductedan assessment of the microfinance sector inTajikistan that has since been used by severaldonors as a reference for programming design.

APPRAISAL AND MONITORING SERVICECGAP member donors provide hundreds of mil-lions of dollars for microfinance each year. Givenlimited technical staff and mechanisms for identi-fying promising opportunities, however, manydonors encounter difficulties in identifying insti-tutions to support. At the same time, many micro-finance organizations manage multiple relationshipswith donors who often require different reportingperiods, information, and conditions.

In response to the needs of both groups–donors andmicrofinance organizations–CGAP launched itsAppraisal and Monitoring Service in 2001. Thisservice coordinates joint appraisals of microfinanceorganizations by interested donors, then facilitates aconsortium approach to funding by consolidatingreporting and monitoring requirements. (See page42 for consortium investments made in fiscal year 2002.)

TRAININGCGAP provides training to donor staff involved inmicrofinance to build their skills and impact donorpolicies and practices. Its week-long “Appraising aMicrofinance Institution” course was offered thisyear at the African Development Bank in Abidjanand at DANIDA in Copenhagen.

Other CGAP donor training in fiscal year 2002included participation in a “Microfinance andPoverty Reduction Workshop” at CIDA; a spe-cialized course for NORAD staff and NGOs inOslo; and a seminar on the CGAP PovertyAssessment Tool for IFAD staff.

UNCDF/SUM Courses: UNCDF/SUM deliveredthe five-day workshop “From Donations toInvestments: Donors and Sustainable Micro-finance” in Cambodia in November 2001 and inUganda in March 2002. CGAP supported thesecourses with funding and CGAP faculty.

DONOR INFORMATION RESOURCE CENTREIn Spring 2002, CGAP began to lay the foundations for an online Donor InformationResource Centre. The centre will contain concise,relevant, and up-to-date information in the form ofdownloadable Donor Briefs (see Annex 4), trainingmodules, ready-to-use Powerpoint presentationson topics in microfinance, donor good-practicecase studies, and other microfinance publications.

WORKING GROUPSCGAP provides administrative and technicalsupport to three Working Groups of its memberdonors.

Savings Mobilization: The savings mobilizationworking group, chaired by MicroSave Africa,plans to define next steps for implementing therecently updated draft Developing Deposit Servicesfor the Poor: Preliminary Guidance for Donors.

Microinsurance: The ILO chairs this CGAPworking group, which documents good practicesin microinsurance. A meeting of the workinggroup was held in Geneva in March 2002 atwhich representatives of several CGAP donorsand microinsurance experts outlined an initialwork plan.

Public Banks: The former working group on agri-cultural development bank reform has switchedits focus to examining how microfinance can beprovided through state-owned banks via theirexisting branch systems and infrastructure. GTZchairs the working group on public banks. ■

“Based on the interest of its member donors andthe IMF, CGAP staff met with donors and theAfghan government in April 2002. CGAP’s advicewas to establish a multidonor facility that wouldcoordinate donor funding for microfinance. ”


PUBLICLY available and comparable infor-mation on the financial performance ofmicrofinance institutions is a core building

block for the microfinance industry. MFI man-agers, donors, and potential investors need suchinformation to assess and compare the perform-ance of institutions and to attract the commercialfunds necessary to scale up microfinance. Today,however, most financial information published byMFIs is unreliable, auditors are not well-versed inmicrofinance operations, and MFIs apply variedand incomplete reporting standards.

Promoting transparency in microfinance is a cor-nerstone of CGAP’s work. In the past year, CGAPprovided technical tools and services for financialtransparency all along the information chain, fromMFI management information systems throughaudits, supervision, performance benchmarking,and, finally, to ratings and evaluations. These effortsincluded forming a new non-profit organization tohouse some of these initiatives, completing the con-sensus guidelines on minimum financial disclosure,and developing tools and funds to build the marketfor independent ratings and evaluations of MFIs.

THE MICROFINANCE INFORMATIONEXCHANGE (MIX) In June 2002, CGAP joined with the RockdaleFoundation, the Open Society Institute (OSI),Citibank, Deutsche Bank, and other organizationsto incorporate a non-profit organization, theMicrofinance Information eXchange (MIX). TheMIX will integrate two CGAP transparency initia-tives: the MIX Market, developed over the past

FINANCIAL TRANSPARENCY

Information System

Service

Financial Disclosure

Guidelines

External Audit Support

Program

Loan Portfolio Managem

ent

Tool

Benchmarking service,

MBB

Rating and Evaluation

Fund

year and a half on the basis of UNCTAD’s VirtualMiocrofinance Market and the MicroBankingBulletin (MBB), which was created by Robert P.Christen and has been funded by CGAP since itsinception.

The MIX seeks to improve MFI performance bybuilding a credible market infrastructure thatlinks microfinance institutions worldwide withinvestors and donors.

Building the MIX system, collecting and verifyingdata, and integrating the MIX with the MBB hasbeen a major undertaking for CGAP in fiscal 2002,involving three full-time staff and consultants.Shifting these projects to a jointly funded privatecompany is consistent with CGAP’s strategy ofincubating initiatives and then bringing in otherplayers to take them forward. This leverages CGAPfunds and technical resources invested to date, pro-motes broader industry ownership of the services,and fosters new partnerships with important actorsin microfinance. The choice of private sector part-ners also sends a positive signal about the future roleof private capital in microfinance. CGAP will man-age the MIX for the next three years, after which itis hoped that its transformation to a fee-based, inde-pendent organization will be complete.

Figure 2. CGAP Initiatives in Financial Transparency

“Promoting transparency in microfinance isa cornerstone of CGAP’s work. In the pastyear, CGAP provided technical tools andservices for financial transparency all alongthe information chain.”



The MIX Market: The MIX Market (MM) is aWeb-based service designed to bridge the infor-mation gap in microfinance by providing detailedinformation on both supply (donors/investors)and demand (MFIs) for funding. The service willfeature financial statements, ratings, and assess-ments of MFIs; terms and conditions of fundingfrom investors and donors; and country-levelinformation regarding investment and microfi-nance regulations.

The MicroBanking Bulletin: The MicroBankingBulletin (MBB) provides a benchmarking service(the MicroBanking Standards Project) that col-lects and maintains financial and performancedata on MFIs worldwide in a broad-based, confi-dential database. This data is collected and ana-lyzed in partnership with international and localnetworks, who cooperate to disseminate the useof common formats, leverage project resources,and increase the number and variety of MFIs rep-resented in the benchmarks.

The MBB provides MFI managers with confiden-tial financial reports, including peer-group bench-marking, and publishes anonymous peer group datasemi-annually. More than 150 MFIs currently par-ticipate in the project, making the MBB the pri-mary reference for high-quality financial analysisand information on MFI financial performance.

IDB-CGAP RATING FUNDIn 2001, CGAP and the Inter-AmericanDevelopment Bank (IDB) launched a jointRating Fund to finance ratings and assessments ofmicrofinance institutions by pre-qualified agen-cies. The objectives of the Rating Fund are to

• encourage demand from MFIs that want toknow how they are performing financially,

• build a supply of competent rating and eval-uation service providers at local and interna-tional levels; and

• facilitate private-sector funding by improv-ing the quality and quantity of informationon the performance of MFIs.

By fiscal year-end 2002, the Rating Fund hadapproved 45 MFIs from 23 countries in Asia,Central Asia, Eastern Europe, Latin America, andthe Middle East for rating/assessments. Of theMFIs approved for funding, 97 percent will havetheir ratings publicly disclosed for the first time.The percentage of funding covered by the funddecreases with each subsequent rating update.MFIs can choose among eight microfinance rat-ing/assessment agencies which have been pre-qualified to conduct ratings: ACCION (for non-ACCION affiliates), CRISIL, Horus, M-CRIL,Microfinanza, MicroRate, PlaNet Rating, andPCR. Rating reports are published on the RatingFund section of the CGAP website.

Although CGAP approves organizations thatconduct ratings under the auspices of the RatingFund, it does not certify the ratings and evalua-tions themselves. Rather, it seeks to help build amarket capable of determining the quality of rat-ings based on their utility to donors, investors,and MFIs.

To meet continued strong demand for ratings onthe part of MFIs, the CGAP InvestmentCommittee approved an additional US$ 500,000for the Rating Fund in May 2002. The IDB hasapproved US$ 800,000 for ratings of MFIs inLatin America and other donors have alsoexpressed interest in contributing to the RatingFund. Activities of the Fund are expected to even-tually taper off as MFIs and investors becomeincreasingly aware of the benefits of extensive eval-uations and assume a greater share of the costs.

African MFI Evaluations: CGAP provided financialand advisory support to an African MFI evaluationproject funded by several European member donorsof CGAP. Organized by ADA, a Luxembourg-basedNGO, the project evaluated nine African MFIs in2001. CGAP participated in the project steeringcommittee and in a final workshop held inDecember 2001. The ADA experience and work-shop recommendations have been incorporated intothe work of the IDB-CGAP Rating Fund.

“By fiscal year-end 2002, the CGAP-IDBFund had approved 45 MFIs from 23 coun-tries in Asia, Central Asia, Eastern Europe,Latin America, and the Middle East forrating/assessments. ”



CONSENSUS GUIDELINESStandard Definitions of Financial Ratios: Exper-ience has shown that a great deal of confusion hasresulted when donors, MFIs, supervisors, andanalysts use the same names for ratios that arecomputed very differently. An industry workinggroup that included IDB, MBB, M-CRIL,MicroRate, PlaNet Finance, SEEP, USAID, andCGAP produced a final version of a standard def-initions document in June 2002. Member donorsof the CGAP Consultative Group will be asked toendorse the final document at their annual meet-ing in September 2002.

Financial Statement Disclosure Guidelines: MostMFI financial statements do not include suffi-cient information to allow a reader to judge thecondition or prospects of the institution.Elaborated in consultation with practitioners anddonors, the Financial Statement DisclosureGuidelines are intended to promote better finan-cial reporting on the part of MFIs.

The preliminary guidelines were approved by theCG in 2000 and were pilot tested through June2002. The consensus document will be publishedin final form in fiscal year 2003.

OTHER TRANSPARENCY ACTIVITIESManagement Information Systems (MIS) Support:Most MFIs have poor information systems and lackguidance on how to select an MIS package that fitstheir organizational needs. In early 2001, CGAPdeveloped the Information Service ResourceCentre, a website that provides guidance on ISissues and offers consumer reports on commerciallyavailable IS packages.

The IS Resource Centre was enhanced in severalways during the past fiscal year. Three additionaldetailed reviews of information systems softwarefor microfinance providers were added(Microbanking System EXTE, Bank 2000/Micromanager, and Cubis 2000); a discussiongroup moderated by an IS expert was launchedwith over 100 active users; and a new database ofvendor-provided information on commerciallyavailable software packages was created.

MFI EXTERNAL AUDIT SUPPORT PROGRAMOver the past two years, CGAP has invested con-siderable effort in improving the quality of pro-fessional external audits of microfinance institu-tions. This has included developing an opera-tional tool (External Audit of MicrofinanceInstitutions: A Handbook), an online resource cen-tre (the Audit Information Centre on the CGAPwebsite), and specialized training materials forauditors. In fiscal year 2002, these existingresources were further developed and several sem-inars were also held.

Seminar on Audits of Microfinance Institutions: Inconjunction with the Austrian RegionalDevelopment Bureau and the Institute ofCertified Public Accountants of Uganda (ICPAU),CGAP offered a seminar on external audits ofMFIs in November 2001. Held in Kampala,Uganda, the seminar was intended for a smallgroup of senior auditors, but drew an overwhelm-ing response and sold out to 120 participants. Oneof the key findings of the seminar was that mostauditors are not yet aware that a professional auditof an MFI should focus more on field operationsthan on head office operations.

Audits and Internal Monitoring Seminar: Togetherwith CARE, CGAP co-sponsored a workshop forsenior-level internal auditors and finance staff ofinternational NGOs in April 2002. Held inWashington, D.C., the workshop focused onstrategies for internal controls and reporting risksfor large, multisectoral programs with a microfi-nance component. ■

“Experience has shown that a great deal ofconfusion has resulted when donors, MFIs,supervisors, and analysts use the samenames for ratios that are computed verydifferently.”

Farmer on carriage, Egypt. (Hisham F. Ibrahim/Getty Images.)


AS new solutions are found for the deliv-ery of financial products and services tothe poor, and as these systems become

more integrated into the overall financial systemsof individual countries, policy and legal frame-works will need to adapt so that governments canplay their appropriate role as facilitators, ratherthan direct providers of financial services for thepoor. CGAP’s goals in this area are to

• support a legal and regulatory frameworkthat allows microfinance to develop adiverse range of institutions, promotes integration of microfinance into the national financial system, and safeguardspoor people’s money; and

• help to develop the technical expertise ofgovernment supervisory and regulatoryauthorities.

CGAP engages influential policymakers in indi-vidual countries, regional organizations, multilat-eral banks, and organizations such as the IMF andthe US Treasury Department to sensitize them toissues in microfinance regulation and supervision.To date, CGAP’s work in this area has been large-ly in response to demand rather than proactive,with many consultations occurring at the requestof member donors.

Over the next several years and in response tomember donor urging, CGAP will devote greaterattention to promoting an enabling policy and reg-ulatory framework through advisory services, train-ing for central bankers and regulators, the develop-ment of operational tools, and participation inhigh-level consultation and policy roundtablesregarding governmental policy and regulation.

ADVISORY WORKNational-Level Consultations: During the pastyear, CGAP staff had substantial engagementswith senior officials of a dozen countries in con-nection with proposed microfinance legislation.In November 2001, for example, CGAP respond-ed to a request for comments on Panama’s draft

POLICY FRAMEWORK

microfinance bank law, met with theSuperintendent of Banks to discuss it, provided atraining session for superintendency staff, andmade a public presentation about the law (whichhas since been approved). In response to officialrequests, CGAP also provided detailed commentson draft legislation in Afghanistan, Kyrgyzstan,Laos, Pakistan, and Zambia.

Consultations with Multilateral Organizations:During the past year, CGAP increased itsengagement with World Bank colleagues as theyand client governments formulated microfi-nance policy in Country Assistance Strategydocuments and Poverty Reduction StrategyPapers, providing comments on over a dozencountry documents.

In Sierra Leone, CGAP supported the efforts of theWorld Bank and the AfDB to introduce a favorablepolicy environment for microfinance. In additionto coordinating an assessment of the microfinancesector in the country, CGAP provided recommen-dations to the government for reforming itsapproach to supporting microfinance. Building onthis work, in the coming year CGAP will helpfacilitate a policy workshop on microfinance withthe Sierra Leone government.

CGAP also developed a more active relationshipwith the International Monetary Fund (IMF),including several workshops for IMF staff andcentral bankers from developing countries, as wellas consultations on the development of a bankinglaw for Afghanistan.

Regional Engagements: CGAP held sessions onmicrofinance law and policy at several regional

“CGAP engages influential policymakers inindividual countries, regional organizations,multilateral banks, and organizations such as the IMF and the US TreasuryDepartment to sensitize them to issues inmicrofinance regulation and supervision.”

POLICY FRAMEWORK


PUBLICATIONS AND TRAININGConsensus Guidelines: In the past year, CGAP con-tinued work and consultations regarding consensusguidelines on microfinance regulation and supervi-sion, which will be presented for adoption at theConsultative Group’s September 2002 meeting.

Loan Portfoloio Management Tool: The biggestchallenge of supervising microfinance is to deter-mine the soundness of a microcredit portfolio.While 90 percent of MFI business risk lies in itsloan portfolio, the tools used by auditors andsupervisors to test commercial bank loan portfoliosare almost completely ineffective in determiningthe repayment performance of microloans. Theindustry does not yet have a published guide tomicrocredit portfolio testing.

With input from ACCION and MicroRate,CGAP has produced such a guide, which providesa detailed set of procedures for assessing microcre-dit portfolio quality at three different levels of thor-oughness. The tool will be published after field

conferences last year. Its most substantial region-al engagement was with the West African CentralBank (BCEAO). In March 2002, CGAP andCIDA organized a seminar in Washington, D.C.,for the BCEAO and representatives of key donorsworking in West Africa to discuss the state ofmicrofinance and supervision in West Africa.Following the seminar, CGAP organized a visit toLa Paz for the BCEAO to examine Bolivia’s expe-rience with regulation and supervision of MFIsand credit unions.

“The biggest challenge of supervising microfinance is to determine the soundnessof a microcredit portfolio. While 90 percentof MFI business risk lies in its loan portfolio, the tools used by auditors andsupervisors to test commercial bank loanportfolios are almost completely ineffectivein determining the repayment performanceof microloans.”

Woman leading water buffalo, China. (Corbis.)

POLICY FRAMEWORK


testing in fiscal year 2003 and is expected to formthe basis of training for banking inspectors.

Training: CGAP staff delivered seminars on thestate of microfinance and regulatory and superviso-ry issues at the IMF during 2001-2002. For exam-ple, a module on microfinance has been intro-duced into an eight-week IMF policy training pro-gram for central bank representatives from French-speaking nations, attended this year by representa-tives from over 25 developing countries.

CGAP also continued to provide training onmicrofinance regulation for central bankers at theannual MicroFinance Training program inBoulder, Colorado (see page 41). The August2001 program was attended by 15 centralbankers; a two-week regulation course is plannedfor the program’s July 2002 session. ■

Man painting, Bhutan. (© The World Bank PhotoLibrary/Curt Carnemark.)

Outdoor meeting, Ghana. (© The World Bank Photo Library.)


OVER the past year, CGAP has contin-ued its commitment to deepening thepoverty focus of microfinance and has

undertaken several initiatives to help expand thedelivery of financial services to very poor and vul-nerable people. Vastly expanded outreach toimpoverished clients can only be achieved byunderstanding their diversity and varied financialneeds and by developing new products thataddress those needs.

CGAP’s work in the last year promoted greatertransparency on the poverty levels of clients,encouraged innovations to improve MFI per-formance and expand the range of financial prod-ucts offered by them, and included the broad dis-semination of information on financial servicesfor the very poor.

CONSENSUS GUIDELINES ANDOPERATIONAL TOOLSPoverty Indicators: There has been an ongoingdebate within the microfinance communityregarding indicators used to identify poverty lev-els of clients. Dissatisfaction with the commonlyused indicator of average loan size recently led toa renewed round of discussions on developingmore appropriate indicators.

At the request of USAID and several MFI networks,CGAP in late 2001 initiated a dialogue on povertyindicators with other microfinance professionals. InFebruary 2002, it organized a seminar to discussexisting tools for client targeting that showcasedUSAID’s AIMS tools, the CASHPOR HousingIndex, and SEF’s Participatory Wealth Ranking.This was followed by a meeting to discuss potentialindicators with a small group of practitioners,donors, and advocacy organizations. A set of simple,low-cost, generic indicators was subsequently devel-oped by CGAP and has been circulated to theseorganizations for review. When consensus has beenreached, the indicators will be published for broaderdissemination within the industry.

CGAP intends to introduce these poverty indica-tors through industry information providers such

POVERTY OUTREACH

as the MicroBanking Bulletin and theMicrofinance Information eXchange, andthrough donor agencies via reporting require-ments for MFIs. While use of these indicators willbe voluntary, it is expected that market pressurewill encourage their widespread adoption.

CGAP Poverty Assessment Tool: The CGAPPoverty Assessment Tool (PAT) uses statisticallyrigorous analysis to measure the poverty levels ofmicrofinance clients. Developed in 2000 as a toolfor donors to use in making investment decisions,it was tested the following year in seven countries.In 2002, at the request of the MicrocreditSummit and the Institute for DevelopmentStudies in Sussex, it was used to determine clientpoverty levels of CRECER in Bolivia andNyesigiso in Mali. Among donors, CIDA is plan-ning to use the PAT for programs in thePhilippines and Bangladesh, and IFAD is consid-ering its use for programs in several countries.

ENCOURAGING INNOVATION

Pro-Poor Innovation ChallengeLaunched in May 2000, the Pro-Poor InnovationChallenge (PPIC) is a CGAP awards program tar-geted at less well-known MFIs that are stronglycommitted to reaching the very poor. To date, theprogram has completed four rounds of funding,with 24 MFIs in Africa, Asia, Eastern Europe, andLatin America collectively receiving a total of US$ 1.1 million in funding (see Annex 5, Table 2,for a list of all PPIC awardees to date).

As part of its strategy to incubate programs thatcan later graduate to other organizations, CGAPwill transfer the administration of the Pro-PoorInnovation Challenge program to IFAD in

“At the request of USAID and several MFInetworks, CGAP in late 2001 initiated adialogue on poverty indicators with othermicrofinance professionals.”

POVERTY OUTREACH


• National Rural Support Program,Hyderabad, Pakistan: program for bondedlaborers

• Organización de Desarrollo EmpresarialFemenino, Honduras: development of sys-tem to channel transfer payments

• PACT Institute, Myanmar: extension ofprimary health care services

• Rural Finance Corporation, Moldova:development of banking links and intro-duction of non-cash operations to reducerisk and insecurity

• Sinapi Aba Trust, Ghana: development ofimpact monitoring system to improvepoverty outreach and impact

Case Studies of Pro-Poor Innovation ChallengeAwardees: Case studies of eight selected PPICgrant recipients were researched in FY 2001 toincrease industry learning on poverty-focused pro-grams. Programs being documented include thosethat have developed innovative products, as well asthose that use specific methodologies for reachingvulnerable groups. CGAP anticipates that the stud-ies, to be published by year-end 2002, will bothdemonstrate the possibility of providing financialservices to very poor people and spark creativedevelopment of such programs.

RESOURCE CENTRESClient Targeting Centre: Many MFIs have longargued that proactive targeting is essential to reachvery poor and vulnerable groups. MFIs committedto serving this clientele often use explicit targetingtechniques, including the housing index, participa-tory wealth ranking, means testing, and geograph-ic targeting. CGAP launched the Client TargetingCentre on the Microfinance Gateway in November2001 to provide information on these tools,encourage their use, and generate ideas on reachingthe very poor. In addition to providing links to arange of targeting tools, the Centre also providesstatistical information on the depth of outreach ofdifferent MFIs.

Impact Assessment Centre: CGAP has worked withthe ImpAct Project based at the Institute of

Summer 2002. The next phase of the program willhave a rural focus, in keeping with IFAD strategyand the expressed request of CGAP memberdonors to support innovations in rural finance.

PPIC Grantees in 2002: Winners of the FourthRound of the Pro-Poor Innovation Challengewere announced in late March 2002. The follow-ing 10 MFI programs were selected for theirdepth of outreach, innovation, and commitmentto sustainability:

• Asociación Méxicana de Uniones deCrédito del Sector Social, Mexico: trans-fer payment services

• Center for Microfinance, Nepal: microin-surance service

• Horizonti, Macedonia: outreach withinthe Roma population

• Jamaican Cooperative Credit UnionLeague, Jamaica: transfer payment services

• Lift Above Poverty Organization, Nigeria:development of a credit fund that willenable clients to purchase shares in prof-itable privatized companies

“Launched in May 2000, the Pro-PoorInnovation Challenge (PPIC) is a CGAPawards program targeted at less well-known MFIs that are strongly committed to reaching the very poor.”

Man selling foods at market, Pakistan. (© 1994, TheWorld Bank Photo Library/Jan Pakluski.)

POVERTY OUTREACH


Development Studies in Sussex, UK, and fundedby the Ford Foundation, to create an ImpactAssessment Centre on the Microfinance Gateway.The purpose of the Centre, to be launched in Fall2002, is to promote understanding of how micro-finance services improve the welfare of the poorand to assist MFIs to design impact assessmenttools to improve their operations and services.

The Centre will provide technical support topractitioners on building impact assessment sys-tems, link experts and academics to developmentson the ground, and inform donors and policy-makers of the ways in which MFIs are improvingthe livelihood of their clients.

Microinsurance Focus: Poor people are extremelyvulnerable to external shocks. Even when success-ful microfinance clients increase their incomesand household economic welfare, an illness ordeath in the family, a flood, drought, or theft canpush them back into extreme poverty. Goodmicroinsurance is increasingly seen as effective inmitigating such risks, yet experience withmicroinsurance is limited.

MFIs have a structured network of poor clientsand well-established mechanisms to regularly col-lect small amounts of money. This comparativeadvantage, partnered with insurance expertise andprofessional service providers, can provide thefoundation for extending insurance services to awider market of the poor. To promote learning ongood microinsurance practice, CGAP and theCGAP Working Group on Microinsurance inAugust 2001 launched Microinsurance Focus, anew online resource centre on the MicrofinanceGateway. The centre offers such resources as a listof service providers that currently offer microin-surance, FAQs, an electronic document database,and links to related websites.

ACTION RESEARCH: DIVERSECLIENTS, DIVERSE PRODUCTSClient Poverty Levels in West Africa: Microfinance isthriving in West Africa, with more than 2.5 millionpeople currently served by MFIs providing savings,credit, and other financial services. While somelarge institutions serve as many as 350,000 mem-bers, many institutions are very small, village-based

banks. In terms of the number of clients and/ormembers, credit unions are the dominant institu-tional model in the region, but many NGOs andassociations also offer microfinance services.

In 2002, the West African Central Bank(BCEAO) and CGAP launched a joint study toanalyze the clientele of these diverse institutionsto better understand who is being reached, whatservices are being provided, and to what extentthe mismatch between client financial needs andprevailing services excludes specific groups of thepoor. In the past year, the methodology for thestudy was finalized, the first country and pro-grams were selected, and a coordinator for thestudy was hired. Field research is slated to beginin September 2002.

Housing Microfinance: CGAP is actively engagedin the housing microfinance research initiative ledby Cities Alliance, a global coalition of develop-ment agencies and international associations oflocal authorities that includes ACCION, IPC,and the Creative Housing Foundation. CGAPstaff act in an advisory role to the peer group,which is documenting innovations and con-straints on housing finance services for the poor.This information will then be disseminated topromote adaptation and refinement of housingmicrofinance methodologies.

As a first step in the initiative, CGAP last year con-tracted an associate of AFCAP, the East Africancapacity-building hub of CGAP and DFID, toconduct a study of the housing microfinance sectorin Kenya that focuses on the policy environmentand key institutional players in the market. ■

“CGAP launched the Client TargetingCentre on the Microfinance Gateway inNovember 2001 to provide information ontargeting tools, encourage their use, andgenerate ideas on reaching the very poor.”

Women at fish market, Sénégal. (© The World Bank Photo Library/Curt Carnemark.)


THE limited capacity of financial institu-tions serving the poor is one of the pri-mary constraints to reaching scale.

CGAP addresses this constraint directly throughtechnical assistance and performance-based grantsto individual organizations, and at an industrylevel through the broad dissemination of consen-sus guidelines, technical tools, and training.

OPERATIONAL TOOLS FORMICROFINANCE INSTITUTIONSCGAP focuses on developing technical tools thatanswer the operational and strategic needs of MFIs.It has published four such tools to date: Handbookfor Management of Information Systems forMicrofinance Institutions, Business Planning andFinancial Modeling, External Audit of MicrofinanceInstitutions, and the CGAP Product Costing Tool.

Draft Product Costing Tool: Over the past year,CGAP developed an activity-based costing tool toenable MFIs to better understand their cost struc-ture. The tool is intended to improve efficiencyand determine product viability by gaining infor-mation on the true structure of product costs.Once product costs are determined, the tool pro-vides methods for understanding how and whycosts are incurred for a specific product andwhether or not the product contributes to theoverall financial viability of an MFI. CGAPtrained 18 MFI experts and consultants in thetool at a workshop held in Washington, D.C., inJanuary 2002. Field testing is now underway,with CGAP providing partial funding to 10 MFIswilling to share their results.

New Microfin Software and Handbook: In late2001, CGAP published a new comprehensiveuser’s guide to Microfin software, an Excel-basedseries of spreadsheets that constitute a strategic andoperational planning tool for MFIs. Using Microfin3.0 replaces the CGAP Business Planning andFinancial Modeling for Microfinance InstitutionsHandbook (1998). Developed for CGAP byCharles Waterfield and Tony Sheldon, the newestversion of the software was posted on the CGAP

INSTITUTION BUILDING

website in late summer 2001. Microfin 3.0 featuresimproved navigation, automatic help functions,better screen displays, and easier transfer facilities.An updated user’s manual was published by PactPublications in Fall 2001; Spanish and Frenchtranslations of the new handbook and Microfinmodel are expected in late 2002.

TRAINING FOR MICROFINANCEINSTITUTIONSCGAP’s capacity-building program deliversfinancial and operational management trainingto MFI staff through local and regional serviceproviders. The program seeks to build localmarkets for microfinance support services byproviding course materials, training of trainerworkshops, and initial marketing support to localpartner organizations who deliver the courses ona commercial basis.

CGAP conducted a comprehensive review of itscapacity-building program in 2001 and developeda new strategy for the program. Having invested indeveloping local partners by providing exclusiveaccess to its training materials, CGAP last yearbegan to expand access to this content by postingcourse materials on its website. Over the next year,the program will focus on exploring new partner-ships and delivery channels for its courses inIndonesia, the Middle East/North Africa, India,and Bangladesh–large markets where economies ofscale offer CGAP the opportunity to generate ahigh rate of return on its investment in coursedesign and development.

CAPACITY BUILDING PARTNER UPDATESAFCAP: AFCAP is the Eastern/Southern Africanhub for CGAP. Located in Nairobi, Kenya,

“In late 2001, CGAP published a new comprehensive user’s guide to Microfin software, an Excel-based series of spreadsheets that constitute a strategic andoperational planning tool for MFIs.”



French Ministry of Foreign Affairs (MAE). Thirty-four courses were offered by CAPAF partners overthe past fiscal year in Bénin, Burkina Faso, Côted’Ivoire, Cameroon, Guinea, Haiti, Mali, Morocco,Madagascar, Niger, Sénégal, and Togo.

CAPAF also underwent a mid-term evaluation ofits CGAP funding from April-July 2002. Theevaluation report and recommendations areexpected in August 2002.

Asia Capacity Building Partners: CGAP has twotraining partnerships in Asia: one with EDARural Systems in India and another with thePunla sa Tao Foundation in the Philippines.During fiscal year 2002, these partners hosted anInformation Systems training of trainers work-shop in the Philippines and delivered 22 coursesin India, Cambodia, Myanmar, and thePhilippines.

China Microfinance Training Center: CMTC isthe CGAP capacity-building partner in China. Itwas established in late 1999 with the RuralDevelopment Institute, the leading Chineseresearch center on poverty studies. CMTCoffered one course on Delinquency Measurementand Control in fiscal year 2002.

AFCAP is jointly funded by the UK Departmentfor International Development (DFID). In thepast year, AFCAP hosted an Operational RiskManagement training of trainers workshop. Inaddition, its associates offered four courses inTanzania, two courses in Zambia, one in Kenya,two in South Africa, and one in Uganda.

AFCAP also develops the technical assistancecapacity of organizations in the region, trainingand mentoring local consultants in assignmentsranging from business planning to NGO trans-formation. An evaluation of AFCAP, completedin January 2002, recommended a second projectphase. CGAP and DFID are currently consider-ing various options for the hub.

CAPAF: CAPAF is the Francophone Africa hub forthe CGAP capacity-building program. Located inDakar, Sénégal, CAPAF is jointly financed by the

Since the launch of a pilot initiative in Africa in 1997, the CGAP capacity-building program has built two region-

al training hubs and partnerships with local organizations that cover more than 40 countries. Together, these

partners now deliver six week-long CGAP courses in six languages, with a seventh course to be launched in late

2002. The Skills for Microfinance Managers series now comprises the following courses:

• Delinquency Management and Interest Rate Setting*

• Financial Analysis*

• Fundamentals of Accounting*

• Business Planning with Microfin*

• Information Systems

• Operational Risk Management

• Product Development (forthcoming, late 2002)

CGAP has begun preparations to translate the Skills for Microfinance Managers series into more local lan-

guages, with priority given to languages used in large, underserved markets. Upcoming translations will like-

ly include Bahasa, Arabic, and Bengali.

* Participant course materials available on the CGAP website.

Box 6. CGAP MFI Training Program

“Since the launch of a pilot initiative inAfrica in 1997, the CGAP capacity-buildingprogram has built two regional traininghubs and partnerships with local organiza-tions that cover more than 40 countries.”



Microfinance Centre: The Microfinance Centre(MFC) for Central and Eastern Europe and theNewly Independent States is the CGAP capacity-building partner in this region. Based in Warsaw,Poland, MFC functions as both a training centerand as a network that promotes microfinance in theregion. During fiscal year 2002, MFC offered tenCGAP courses in Bosnia and Herzegovina, Georgia,Croatia, Kazakhstan, Poland, and Yugoslavia.

MBA PROGRAM IN MICROFINANCEBuilding financial systems for the poor in develop-ing countries will require a large number of moti-vated and talented young people with hard skillswho intend to make a career in the business. Toattract and retain these people, microfinance needsto offer them an attractive career path in their owncountries. In 2001, CGAP and the SorosFoundation formed a joint venture, theMicrofinance MBA, to develop a pool of suchhighly skilled, future microfinance leaders.

The Microfinance MBA program seeks to devel-op microfinance expertise in a number of gradu-ate schools in key regions of the developing worldby establishing academic chairs and, possibly,

microfinance centers. These centers would betasked with developing microfinance curriculaand course materials, becoming integrated in aunified network through academic exchanges.

To date, the CGAP/Soros Foundation team hasidentified 13 target countries and nearly 30 candidate universities in Asia, Africa, LatinAmerica, the Middle East, and Central and EasternEurope. Over the next year, CGAP expects to for-malize partnerships with three to five universities,form regional advisory boards, and begin to devel-op core curriculum materials for the program.

MICROFINANCE TRAININGPROGRAM IN BOULDERThe Microfinance Training Program at NaropaUniversity in Boulder, Colorado, is targeted at stafffrom microfinance institutions, donors, govern-

“The Microfinance MBA program seeks todevelop microfinance expertise in a numberof graduate schools in key regions of thedeveloping world by establishing academicchairs and, possibly, microfinance centers.”

Product Development Course: This upcoming course provides product development guidelines for microfi-

nance managers. The curriculum begins with an examination of market research and interpretation of market

data, then proceeds to the design of product prototypes, pilot testing, and costing issues. The final component

of the Skills for Microfinance Managers series, the Product Development course will be piloted with CGAP

partners in Fall 2002.

Information Systems Course: This course raises management awareness about the development and imple-

mentation of information systems. Course materials were reviewed and improved based on a training of trainers

workshop held in late 2001. New materials were delivered to CGAP partners and hubs for rollout in early 2002.

CGAP sponsored two Information Systems Course training of trainers in fiscal year 2002, resulting in the certi-

fication of 13 trainers qualified to teach the updated course in four regions. The new course was delivered in

Kenya, Uganda, Poland, and the Philippines in 2002.

Operational Risk Management Course: This new course focuses on internal controls, fraud, and external

audits. The objectives of the course are to help microfinance managers improve the quality of risk manage-

ment in their institutions by assessing and measuring risk, and designing and implementing internal control

processes for their prevention.

The course was piloted in Cape Town, South Africa, with AFCAP trainers in October 2001, where five trainers

from four African institutions were certified to deliver the course. A second training of trainers workshop was held

in Dakar, Sénégal, in April 2002. A third session is planned for Asian partners in August 2002. The new course

was first delivered in June 2002 by MFC in Yugoslavia.

Box 7. Skills for Microfinance Managers – Course Development Updates


MFI NetworksDéveloppement International Desjardins (US$ 180,000): DID has been active for 30 yearsin microfinance, particularly in Africa, where itprovides long-term technical assistance to some ofthe largest credit unions. Over the next threeyears, DID intends to strengthen the internalcontrols and external audit tools of its partnersNyesigiso in Mali, Otiv in Madagascar, Pamecasin Sénégal, and FUCEC in Togo.

MicroFinance Network – Global (US$ 250,000):The MicroFinance Network (MFN) is a globalassociation of leading microfinance practitionerscommitted to improving the lives of poor and low-income people through the provision of credit, sav-ings, and other financial services. CGAP fundingsupports the work of MFN in promoting commu-nication among managers of top-performing MFIsand in compiling MFI performance data and les-sons for worldwide dissemination.

SEEP National Network Strengthening (US$580,000): SEEP, the Small Enterprise Educationand Promotion Network, has established itself asa trade association of North American microfi-nance practitioners. SEEP activities include thedevelopment of practitioner tools, standards, andMFIs, as well as a practitioner learning program.CGAP funding will be dedicated to its work withnational MFI networks.

Retail MFIsFondation Zakoura, Morocco (US$ 220,000):Zakoura is the second largest MFI in Moroccowith 34,327 loans outstanding in December 2000and a portfolio of US$ 3.2 million. Until 2001,Zakoura achieved remarkable performance interms of both poverty outreach and financial via-bility with very little donor funding. In the pastyear, the government of Morocco, the EuropeanUnion, and USAID have given Zakoura restrictedgrants of US$ 5.4 million for loan capital or toopen new branches. CGAP funding complementsthese restricted grants by supporting the imple-mentation of a new management information sys-tem, together with improvements in financial man-agement and internal controls and audits.

Kashf Foundation in Pakistan (US$ 300,000):From its start in 1996 until late 2000, Kashf


ment agencies, and private organizations that dealwith microfinance on a regular basis. CGAP playsan important role in managing the program, lead-ing the faculty, and contributing to the curriculum.Several CGAP staff teach various courses,including Introduction to Financial Analysis,Microfinance Accounting, Commercial Banks inMicrofinance, Regulation and Supervision, andTargeting Services to the Very Poor. CGAP alsoprovides scholarships to the program to membersof the PAG, its capacity-building partners, andpaying members of the CG.

CGAP INVESTMENTS IN MFIS AND MFI NETWORKSSince its inception, CGAP has made direct invest-ments in MFIs to help strengthen their capacityto deliver financial services to poor clients. CGAPcomplements its investments with technical assis-tance in the form of appraisals, business planningsupport, and strategic advice. The objectives ofCGAP investments are

• to increase the number of profitable institu-tions reaching large numbers of the poor;

• to demonstrate to donors the importance ofperformance-based partnerships;

• to assist in the development and testing oftechnical tools and materials; and

• to keep CGAP staff in touch with microfi-nance issues on the ground throughappraisals, monitoring, and exchanges withmicrofinance partners.

CGAP aims to provide grants to MFIs and net-works in joint funding arrangements with mem-ber donors, thus providing a service both todonors and to microfinance institutions. CGAPconsolidates the appraisal, reporting, and moni-toring functions, creating efficiencies at the donorand institution levels (see page 25). The CGAPAppraisal and Monitoring Service began to attracta number of donor agencies over the past year.The pipeline for next year consists almost entire-ly of jointly funded transactions.

The Investment Committee of CGAP approvedthe following investments during fiscal year 2002:



restricted its microfinance operations to a singlepilot branch, postponing significant growth untilits operations were in a condition to support a fullrollout. Kashf is now in a position to expand mas-sively with far less risk of debilitating managementand systems problems. In addition to its owninvestment, CGAP will manage a UNCDF grantof US$ 300,000. Other cofunding commitmentsinclude US$ 285,000 funding from AusAID anda US$ 2.3-2.8 million loan from the PakistanPoverty Alleviation Fund on terms consistent withthose of CGAP.

Pro-Mujer in Bolivia (US$ 170,000): Pro-Mujeris the only significant urban program in Boliviathat focuses systematically on a market niche ofclients well below the poverty line. Modest CGAPfunding will support testing of CGAP tools andexperimentation with credit scoring, a new tech-nique in microfinance.

VimoSEWA (US$ 775,000): VimoSEWA is anaffiliate of the Self-Employed Women’sAssociation (SEWA), a union of over 300,000Indian women engaged in the informal economy.CGAP is coordinating a joint funding package forVimoSEWA to support a massive expansion of itsproperty, health, and life insurance business overa ten-year period. Participating donors haveformed a VimoSEWA Working Group that meetsonce a year to monitor the project and provideguidance to SEWA. The Ford Foundation isparticipating in the package (US$ 600,000), as is GTZ.

WOCCU/FFH in Ecuador (US$ 1,065,370):CGAP is supporting a joint initiative betweenFreedom from Hunger (FFH) and the WorldCouncil of Credit Unions (WOCCU) to transferFFH’s Savings and Credit with Education (SCWE)product to four credit unions in Ecuador and toWOCCU/Ecuador. Combining the delivery offinancial and educational services using villagebanking methodology enables both services to beprovided profitably, demonstrating the ability ofcredit unions to reach poorer clientele.

APPRAISAL PIPELINEThe following programs have either beenappraised and/or preliminary research is under-

way to recommend them to member donorsthrough the Appraisal and Monitoring Service.

Appraisals CompletedEnnatien Moulethan Tchonnebat (EMT),Cambodia: Established in 1991, EMT is an MFIoperating as a private company with a licensefrom the National Bank of Cambodia. EMT hasover 75,000 clients with an outstanding loanportfolio of $3.3 million. (Funding decisions arepending with CGAP and GTZ.)

Hattha Kakesar Ltd. (HK), Cambodia: Establishedin 1994, Hattha Kaksekar is a private MFI workingin isolated rural areas in North-West Cambodia.HK has close to 8,000 clients with an outstandingloan portfolio of $1.45 million. (Funding decisionsare pending with CGAP and GTZ.)

Centre International de Développement et deRecherche (CIDR), Eastern Africa: CIDR’sexperience with the village-banking approach inWest Africa has made it a leader in microfinance inrural and remote areas. CIDR is now launching aprogram for the development of participativemicrofinance systems in Ethiopia, Tanzania, andKenya, focusing on underserved rural areas.(Donors who have expressed interest in theappraisal document and/or cofunding includeDFID and the EU.)

Appraisals Planned for Late 2002CGAP is currently in discussions with memberdonors who have expressed an interest in appraisalsof the following MFIs and MFI networks: Friendsof Women’s World Banking, India (SDC andSIDBI); Kazakhstan Community Loan Fund; andOpportunity International Network (IFC, SIDBI,Oikocredit, Cordaid, Blue Orchard, DFID,USAID, Triodos). Appraisals of these institutionsare expected to occur by year-end 2002. ■

“CGAP aims to provide grants to MFIs andnetworks in joint funding arrangementswith member donors, thus providing a service both to donors and to microfinance institutions. ”


MULTILATERAL MEMBER DONORSAfrican Development Bank (AfDB)Rue Joseph Anoma01 BP 1387 Abidjan 01 Côte d’Ivoire

AMINARue Joseph Anoma01 BP 1387 Abidjan 01Côte d’Ivoire

Asian Development Bank (AsDB)6 ADB AvenueP.O. Box 789Mandaluyong CityPhilippines

European Commission (EC)EuropeAidEconomic Cooperation AIDCO/C/2Loi 41-8/74Rue de la Loi 2001049 BrusselsBelgium

European Bank for Reconstructionand Development (EBRD) One Exchange SquareLondon, EC2A 2JNUnited Kingdom

Inter-American Development Bank (IDB)1300 New York Avenue, N.W. Washington, D.C. 20577 United States

International Fund for AgriculturalDevelopment (IFAD)Via del Serafico, 10700142 RomeItaly

International Labour Office (ILO)4, route des MorillonsCH 1211 Geneva 22Switzerland

United Nations Conference onTrade and Development (UNCTAD)Palais des NationsCH-1211 Geneva 10Switzerland

United Nations Capital Development FundSpecial Unit for Microfinance (UNCDF/SUM)Two UN Plaza, 26th FloorNew York, NY 10017United States

United Nations Development Programme (UNDP)MicroStartOne United Nations PlazaRoom UH-8th FloorNew York, NY 10017United States

The World Bank1818 H Street, N.W.Room F 11-K 188Washington, D.C. 20433United States

BILATERAL MEMBER DONORSAustraliaAustralian Agency for International Development (AusAID)GPO Box 887Canberra ACT 2601Australia

BelgiumBelgian Administration for DevelopmentCooperationRue de Bréderode 61000 BrusselsBelgium

CanadaCanadian International DevelopmentAgency (CIDA)200 Promenade du PortageHull, Québec K1A OG4Canada

Annex 1CGAP Consultative Group of Member Donors

MEMBER DONORS


DenmarkRoyal Danish Ministry of Foreign Affairs2 Asiatisk PladsDK-1448 Copenhagen KDenmark

FinlandMinistry of Foreign AffairsP.O. Box 176 (Katajanokanlaituri 3)00161 HelsinkiFinland

FranceAgence Française de Développement (AFD)5, rue Roland Barthes75598 Paris Cedex 12France

Ministère des Affaires ÉtrangèresDepartment of International Cooperation

and Development20, rue Monsieur75700 PARIS 07 SPFrance

GermanyKreditanstalt für Wiederaufbau (KfW)Financial Sector DepartmentPalmengartenstr. 5-960325 Frankfurt am MainGermany

Federal Ministry for Economic Cooperation and Development (BMZ)Dept. 410Friedrich-Ebert-Allee 4053113 BonnGermany

Die Deutsche Gesellschaft für TechnischeZusammenarbeit (GTZ)Banking Services and Financial SystemsDevelopmentPostfach 5180Dag Hammersjold Weg 1-565726 EschbornGermany

ItalyMinistry of Foreign AffairsDirectorate General for DevelopmentCooperation - DGCSPizza della Farnesina - 100194 RomeItaly

JapanJapan Bank for International Cooperation (JBIC)c/o Office of the Executive Director for JapanThe World BankMC 12-3151818 H Street, N.W.Washington, D.C. 20433United States

Ministry of Foreign Affairsc/o Office of the Executive Director for JapanThe World BankMC 12-3151818 H Street, N.W.Washington, D.C. 20433United States

Member ConstituencyCamilla Bengtsson, Chair (Sweden) Denmark, Finland, Norway, Sweden

Heather Clark (UNDP/SUM) International Fund for Agricultural Development, International Labour Organization, United Nations Development Programme, United Nations Capital Development Fund, United Nations Conference on Trade and Development

Nimal Fernando (AsDB) African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, Inter-American Development Bank, World Bank, Argidius Foundation, Ford Foundation

Jean Claude Lorin (Canada) Australia, Canada, United States, Japan

David J.N. Stanton (UK) Germany, Italy, Switzerland, United Kingdom

Johan De Waard (The Netherlands) Belgium, European Commission, France, Luxembourg, The Netherlands

Table 1. Executive Committee Members and Constituencies, June 2002

MEMBER DONORS


Ministry of FinanceInternational BureauDevelopment Institution Divisionc/o Office of the Executive Director for JapanThe World Bank1818 H Street, NWMC 12-315Washington, DC 20433United States

LuxembourgMinistère des Finances3, rue de la Congrégation2931 LuxembourgLuxembourg

Ministère des Affaires ÉtrangèresDirection de la Coopération au Développement6, rue de la Congrégation2931 LuxembourgLuxembourg

The NetherlandsMinistry of Foreign AffairsBezuidenboutseweg 67P.O. Box 20061The Hague 2500 EBThe Netherlands

NorwayNorwegian Agency for DevelopmentCooperation (NORAD)Ruselokkveien 26P.B. 8034 DEP0030 OsloNorway

Norwegian Ministry of Foreign Affairs7, juni plassen/Victoria TerrasseP.O. Box 8114 DEP0032 OsloNorway

SwedenSwedish International DevelopmentCooperation Agency (SIDA)INEC DepartmentSveavagen 20S-105 25 Stockholm Sweden

SwitzerlandSwiss Agency for Development and CooperationFreiburgstrasse 130CH-3003 BerneSwitzerland

United KingdomDepartment for International Development(DFID)94 Victoria StreetLondon SW1E 5JLUnited Kingdom

United StatesUS Agency for International Development(USAID)1300 Pennsylvania Avenue, N.W.Mail Stop: 20523-211Washington, D.C. 20523United States

FOUNDATION MEMBER DONORSThe Ford Foundation320 East 43rd StreetNew York, NY 10017United States

Argidius FoundationMatorca, Inc.Suite 200586 Argus RoadOakville, Ontario L6J3J3Canada ■

Region Staff Coordinator

Anglophone East Africa Ousa Sananikone (through September 2002)*Southern Africa Elizabeth Littlefield (through September 2002)* Francophone Africa, Middle East Jennifer IsernEast Asia Xavier ReilleSouth Asia Syed HashemiLatin America and the Caribbean Richard Rosenberg, Brigit HelmsEastern Europe and NIS Doug Pearce

* Patricia Mwangi will resume regional responsibility for these regions when she returns from leave in October 2002.

Table 2. Regional Responsibilities of CGAP Staff, June 2002


Elizabeth Littlefield, Director. Ms. Littlefieldjoined CGAP in late 1999 from the investmentbank JP Morgan, where she was the ManagingDirector in charge of financing in Central,Eastern, and Southern Europe, Central Asia, theMiddle East, and Africa. Her responsibilitiesinvolved oversight of financing (public, private,structured, and derivative) to governments, cor-porations, and banks, and related advisory worksuch as debt management and credit ratingadvisory. Prior to this position, Ms. Littlefieldheld positions at JP Morgan as a Vice Presidentand head debt trader for external and local debt inAfrica, Eastern Europe, and Asia; and as aDirecteur in JP Morgan’s Paris office in CorporateFinance, among others. Parallel to her career ininvestment banking, Ms. Littlefield spent a yearand a half in 1989–90 on secondment to microfi-nance institutions in West and Central Africa.During this period, she also provided consultancyservices to the microenterprise sector in Pakistan.Ms. Littlefield served on the Board of Trustees ofWomen’s World Banking from 1992–94, and onthe Executive Committee of the Board asTreasurer from 1994–99. Ms Littlefield is agraduate of Brown University and the FondationNationale des Sciences Politiques in Paris. Shealso completed a year-long finance training program at JP Morgan. Ms. Littlefield speaksfluent French.

Leslie Barcus, CGAP/Soros MBA. Ms. Barcusjoined CGAP in May 2001 to provide support toCGAP capacity-building initiatives. Ms. Barcusoriginally served as the Capacity Building ProductManager for the MFI Training Program. Recently,she transitioned to the Microfinance MBA, a jointventure of CGAP and the Soros Foundation to cre-ate a microfinance specialization for MBA andother graduate management programs. Prior tojoining CGAP, Ms. Barcus was the Director ofLending at ACCION New York, an associatemicrofinance institution of ACCION USA andACCION International. Ms. Barcus speaks fluentFrench and has worked in training, corporate bank-ing, and economic development consulting. She

holds a master’s degree in international develop-ment from The American University inWashington, D.C.

Robert P. Christen, Senior Adviser. Mr.Christen joined CGAP in 1998. He works onissues related to commercialization, regulation,and supervision. He is also the Director of theMicrofinance Training Program at NaropaUniversity in Boulder, Colorado, and is the Chairof the Editorial Board of The MicroBankingBulletin, an industry publication devoted tofinancial sustainability and benchmarking. Beforejoining CGAP, Mr. Christen advised commercialbanks interested in microfinance, central banksand bank superintendencies interested in the reg-ulatory framework for microfinance, and donorsinterested in performance standards. Mr.Christen also worked for ACCION International.Mr. Christen is the author of several publicationsrelated to sustainable microfinance. He received amaster’s degree from Ohio State University. Mr.Christen speaks fluent Spanish.

Carmencita B. Clay, Budget Officer. Ms. Clayjoined CGAP in 1995. She handles all budgetissues, administers CGAP’s trust funds, and workswith member donors on commitments to CGAP.Before joining CGAP, Ms. Clay worked atUSAID/Philippines, the Asian DevelopmentBank, and various departments in the WorldBank. Ms. Clay received a bachelor’s degree incommerce (accounting major) from thePhilippines College of Commerce and speaks flu-ent Tagalog and English.

Tamara Cook, Microfinance Analyst. Ms. Cookjoined CGAP in 1996. As a member of theMicrofinance Institutions Team, she monitorsCGAP investments, manages funding applications,conducts institutional appraisals, prepares andreviews grant proposals, and coordinates the CGAPAppraisal and Monitoring Service. In addition, shecontributes to research for CGAP publications andprograms, and is responsible for reporting to CGAPstakeholders on CGAP’s evaluation and renewal for

Annex 2

CGAP Staff Biographies

CGAP STAFF BIOGRAPHIES


Phase III. Ms. Cook graduated from GeorgeWashington University, where she studied interna-tional development and business administration.She has attended numerous training programs inmicrofinance and is proficient in French.

Tiphaine Crenn, Microfinance Analyst. Ms.Crenn joined CGAP in 1998. She works on theFinancial Institutions Team as a coordinator for theCGAP capacity-building program. She also workson the CGAP website and the MicrofinanceGateway. Before joining CGAP, Ms. Crenn workedas a translator and bilingual lexicographer. She has amaster’s degree in translation from the University ofOttawa, Canada. Ms. Crenn speaks fluent Frenchand English and is proficient in Spanish.

Evelyne Fraigneau, Director’s Assistant. Ms.Fraigneau joined CGAP in 1999. She providesassistance to the Director, handles informationrequests, and plans meetings for CGAP and itsstakeholders. Before joining CGAP, Ms.Fraigneau worked in the World Bank’s AfricaRegion and at the French mission to the UnitedNations office in Geneva, Switzerland. She stud-ied translation at St. Bénigne Institute in Dijon,France, and Georgetown University, and speaksfluent French and English.

Natasa Goronja, Microfinance Analyst. Ms.Goronja joined CGAP in 2001. Originally amember of the Microfinance Industry Team, shetransferred to the Donor Services Team in early2002. Before joining CGAP, Ms. Goronja workedin the microfinance sector in Bosnia as a loan offi-cer, microfinance trainer, consultant, and policyadviser. She manages information dissemination,primarily through the Web, for the CGAP DonorTeam, and is actively engaged in the delivery ofdonor training. She is completing a master’sdegree in European studies in a joint programmanaged by University of Bologna, University ofSarajevo, and the London School of Economics.A native of Bosnia and Herzegovina, Ms. Goronjaspeaks fluent Serbo-Croatian, Italian, and French,as well as some Russian.

Syed M. Hashemi, Microfinance Specialist. Dr.Hashemi joined CGAP in 1999. He concentrateson identifying pro-poor innovations and dissemi-

nating best practice lessons related to poverty out-reach. He is the leader of the End-Client Team.Before joining CGAP, Dr. Hashemi had directedthe Program for Research on Poverty Alleviation atthe Grameen Trust since 1994. The program strivesto make research relevant to the lives of the poorand the powerless. Before that, Dr. Hashemi taughtdevelopment studies at Jahangirnagar University inBangladesh for 12 years. He has conductedresearch on microcredit, NGOs, and gender subor-dination in rural Bangladesh. Dr. Hashemi holds aPh.D. in economics from the University ofCalifornia at Riverside.

Brigit Helms, Senior Microfinance Specialist.Dr. Helms joined CGAP in 1996. She is teamleader of the newly created Donor Team, whichassists CGAP member donors to improve aideffectiveness in microfinance. Dr. Helms has alsoworked in microfinance capacity building atCGAP and continues to be an instructor at theMicrofinance Training Program in Boulder,Colorado. In addition to helping define andimplement CGAP initiatives on depth of out-reach, Dr. Helms led the development of the draftCGAP Poverty Assessment Tool. She has conduct-ed several institutional appraisals of MFIs world-wide. Dr. Helms is the author of the draft CGAPProduct Costing Tool, co-author of the CGAPAppraisal Format, and a regular contributor to theFocus Notes series. Prior to joining CGAP, Dr.Helms worked in the Latin America and theCaribbean Division of IFAD, where she super-vised projects with significant microenterprise andmicrofinance components. She has also worked asa desk officer for Central America at the U.S.Department of Commerce. Dr. Helms has exten-sive private and public-sector consulting experi-ence and has worked in more than 35 countries inLatin America, the Caribbean, Africa, and Asia.She holds a P.h.D. from Stanford University indevelopment and agricultural economics, speaksfluent Spanish, and is proficient in both Frenchand Italian.

Jennifer Isern, Senior Microfinance Specialist.Ms. Isern joined CGAP in 1996. She leads theMicrofinance Institutions Team, which coordi-nates the appraisal and monitoring service, con-ducts appraisals on a global basis, and coordinates

ˇ



training, technical assistance, and funding tofinancial institutions. In addition, Ms. Isernfocuses on regulation and supervision, donorservices, and the development of several CGAPtools and publications. Within CGAP, she isresponsible for Francophone Africa and theMiddle East/North Africa regions. Before joiningCGAP, Ms. Isern was the Regional TechnicalAdviser for economic development in West andCentral Africa with CARE International, themicrofinance coordinator for CARE Togo, andproject manager for CARE Niger. In these capac-ities, she supported the design, training, imple-mentation, and evaluation of CARE’s microfi-nance programs in Africa. In addition, she hasworked for USAID (in Sénégal and CentralAmerica), the United Nations DevelopmentProgramme, AT&T, and other public and privatefirms. Ms. Isern received her master’s degree fromthe Woodrow Wilson School at PrincetonUniversity. She speaks fluent French and is profi-cient in Spanish.

Alexia Latortue, Microfinance Specialist. MsLatortue joined CGAP in 2002. She is workingon the donor team and managing the Donor PeerReview project. Prior to joining CGAP, Ms.Latortue worked as a Development Specialistwith Development Alternatives, Inc. In Haiti,she served as Manager of Technical Services ontwo USAID-funded microfinance projects work-ing with NGOs, credit unions, and commercialbanks from 1998 to late 2001. She launched ini-tiatives on standards, external audits, microinsur-ance, and knowledge management, and oversawtraining activities. She has also worked with theSmall Business Development Center in BocaRaton, Florida, and as a research analyst forSterling International Group, among other pri-vate sector posts. She received a master's degree indevelopment economics from the Fletcher Schoolof Law and Diplomacy at Tufts University. She isfluent in French, Haitian Creole, and German,and has rudimentary Spanish.

Sarah Manapol-Brown, Budget Assistant. Ms.Manapol-Brown joined CGAP in May 2000. Sheworks closely with Carmencita Clay on budgetissues, consultant contracts, and payment transac-tions. Prior to joining CGAP, she worked for the

World Bank’s Private Sector DevelopmentDepartment in its Corporate Restructuring andGovernance Unit. Ms. Manapol-Brown speaks flu-ent Tagalog and English.

Peggy McInerny. Ms. McInerny joined CGAPin early 2002 as Communications andPublications Officer. Her responsibilities includemarketing communications; overseeing the edit-ing, publication, and distribution of CGAP pub-lications; and editing of content for the CGAPwebsite. Ms. McInerny has previously worked asEditor at the Kennan Institute for AdvancedRussian Studies in Washington, D.C., and for thetelecommunications firms ORBCOMM Globaland CAIS. Her work as a freelance writer and edi-tor has included structural edits of full-lengthbooks, research papers, and articles, as well aswriting grant proposals and newsletters. She holdsa bachelor’s degree from New York University anda master’s degree from the Johns HopkinsUniversity School of Advanced InternationalStudies, and speaks fluent French and Russian.

Patricia Mwangi, Microfinance Specialist. Ms.Mwangi joined CGAP in 1999. She is working onthe capacity-building initiative, monitoring invest-ments, the financial statements disclosure guide-lines, and the audit program. She is on theMicrofinance Industry Team and is responsible forthe Eastern and Southern Africa regions. Prior tojoining CGAP, Ms. Mwangi worked as an externalauditor and management consultant with PriceWaterhouse, Kenya. She performed statutoryaudits for two years for commercial entities andnon-profit organizations. In her six years of man-agement consulting, she managed projects, con-ducted institutional performance assessments, anddid financial management training and trainingdesign. She worked mostly in East Africa withmicrofinance institutions and public and privatesector organizations, as well as in Zimbabwe, India,and the Philippines. She received her master'sdegree in Administration from the AustralianCatholic University and is a Certified PublicAccountant. Ms. Mwangi is proficient in French.

Doug Pearce, Microfinance Specialist. Mr.Pearce joined CGAP in 2001. He is on the End-Client Team and is responsible for Central and



Eastern Europe and the Newly Independent States.Prior to joining CGAP, he was a PrincipalEconomist in the Markets, Finance, and EnterpriseGroup of the Natural Resources Institute in theUK. In Bosnia and Herzegovina, as SectorCoordinator for CARE, he set up and managed amicrofinance institution, and in Bolivia he man-aged an IDB credit union program for MEDA. Hehas also worked as a consultant with DFID, theEBRD, and the World Bank. He brings experiencein MFI and project management, rural finance,capacity building, policy advisory work, andmicrofinance through the banking sector. Mr.Pearce received a master’s degree in agriculturaleconomics from Wye College at the University ofLondon. He is fluent in Spanish.

Xavier Reille, Senior Microfinance Specialist.Mr. Reille joined CGAP in 1999. He is the leaderof the Microfinance Industry Team and is respon-sible for the East Asia region. Mr. Reille is also themanager of the Microfinance Gateway andManaging Director of the MicrofinanceInformation eXchange. Before joining CGAP, heworked with Catholic Relief Services (CRS), wherehe was the Regional Microfinance Adviser forSoutheast Asia. During his three-year assignmentwith CRS, he set up a major investment companyfor rural banks in Indonesia and developed a ratingmethodology for those banks. Prior to CRS, he was Operations Director at Sociétéd’Investissement et de DéveloppementInternational (SIDI), where he played a role in thecreation of Profund (an equity fund for microfi-nance institutions in South America) and thedevelopment of Centenary Bank (a commercialbank in Uganda). Mr. Reille has a master’s degreein international finance from the University ofParis. He is fluent in French, Spanish, and English,and speaks Bahasa Indonesia.

Richard Rosenberg, Senior Adviser. Mr.Rosenberg joined CGAP in 1995. He has con-tributed to CGAP’s tools and publications,including the External Audit Handbook;Appraisal Format; Occasional Papers on interestrates, delinquency measurement, and regulation;CGAP’s financial statement disclosure guidelines;and policy guidelines on microfinance regulation.He is a core faculty member of the Microfinance

Training Program in Boulder, Colorado, and alsoassists with other donor training. Before joiningCGAP, Mr. Rosenberg was Deputy Director ofUSAID’s Center for Economic Growth, whichprovided most of USAID’s Washington, D.C.-based expertise in private sector and agriculturaldevelopment. He also spent nine years in LatinAmerica, managing portfolios totaling US$ 600million in export and investment promotion, pri-vatization, pension reform, and developmentfinance (especially microfinance). Prior toUSAID, Mr. Rosenberg practiced antitrust andcontract law with Boodell Sears in Chicago,Illinois, and private investment management withthe principal owner of the Parker Pen Companyin Washington D.C. He holds a law degree fromHarvard University and is fluent in Spanish.

Ousa Sananikone, Senior Private SectorDevelopment Specialist. Ms. Sananikone joinedCGAP in 2000. She is a member of the CGAPManagement Team and assists the Director in theoverall management and administration of CGAP.Ms. Sananikone also manages the Rating Fundand has conducted several appraisals of microfi-nance institutions since joining CGAP. Prior toCGAP, Ms. Sananikone was with the Small andMedium Enterprise (SME) DevelopmentDepartment of the World Bank, where she taskmanaged a number of SME and microfinancelending projects and conducted economic and sec-tor work in Africa and Asia. She holds a master’sdegree in international affairs from the School ofForeign Service at Georgetown University. She isfluent in Lao, Thai, French, and English.

Alfonso Vega Acosta, Microfinance Analyst. Mr.Vega A. joined CGAP in 2000. A member of theMicrofinance Industry Team, he works on theMicrofinance Gateway and the CGAP website. Healso conducts institutional appraisals and researchfor CGAP publications and programs. Mr. Vega A.is the manager of the Information Systems Serviceinitiative and works on several poverty-related proj-ects, including the Pro-Poor Innovation Challengeand the Poverty Assessment Tool. A Mexicannational, his native tongue is Spanish and he is pro-ficient in French. Mr. Vega A. is a graduate ofBrown University, where he studied developmentstudies and economics. ■


Annex 3

Historic Budget Commitments of CGAP Member Donors

FY1995 FY1996 FY1997 FY1998 FY1999 FY2000 FY2001 FY2002 FY2003

World Bank 5,250,000 10,250,000 15,250,000 6,249,000 6,994,000 7,500,000 7,125,000 6,725,000

Australia 302,750 232,645 323,576 668,689

Argidius Foundation 100,000 100,000

Asian Development Bank 250,000 250,000

Belgium 201,748 383,035 262,430 222,575

Canada 336,066 341,723 341,724 323,576 318,188

Denmark 250,000 250,000 250,000 360,317 360,317

Ford Foundation 200,000 200,000

Finland 200,052 268,110 235,689 239,365

France1 133,980 149,670

Germany 174,538 174,538 354,880 180,189

IDB 50,000

IFAD2 300,000

Italy 283,217 278,747 462,332

Japan 300,000 300,000

Luxembourg 500,000 312,390 279,348 270,177

Netherlands3 3,022,609 534,773 488,640 399,690 406,224 401,277

Norway 1,633,384 385,902 377,643 341,746 334,934 330,677

Sweden 327,751 318,846 293,542 281,653 293,542

Switzerland 156,000 300,000 300,000 300,000 399,975 400,000

United Kingdom4 400,000 400,000

United States5 400,000 400,000 300,000 400,000 815,000

Total 5,250,000 15,455,993 15,250,000 357,748 9,598,684 11,091,745 11,571,859 13,024,135 11,163,225

1France funded the cost of one CGAP staff member from FY97-FY01 (approximately US$ 766,400).2IFAD funded the cost of one CGAP staff member from FY96-FY98 (US$ 600,000).3The Netherlands funded the cost of one CGAP staff member from FY96-FY98 (US$ 484,504)4The United Kingdom funded 50% of the Poverty Team (US$ 150,000) for both FY00 and FY01.5In the years 1995-98, USAID made a non-cash contribution for CGAP staff (through secondment) valued at US$ 450,000.

Shaded – pledged but not received.

Total Donor Contributions to Core CGAP Budget in US Dollars as of June 30, 2002


MICROFINANCE GATEWAY NEW IN FY02Client Targeting Centre. Launched in November2001, this centre provides a guide to existing tar-geting tools, ranging from geographical targetingto participatory wealth ranking. The centre isdesigned to encourage suggestions on the applica-bility of different tools in different regions andcontexts and solicits postings from MFIs concern-ing their experience with these tools. http:// www.microfinancegateway.org/poverty/index.htm

Information Systems Centre. This centre wasenhanced in several ways during the past fiscalyear. Three additional detailed reviews of infor-mation systems software for microfinanceproviders were added (Microbanking SystemEXTE, Bank 2000/Micromanager, and Cubis2000); a discussion group moderated by an ISexpert was launched with over 100 registeredusers; and a new database of vendor-providedinformation on commercially available softwarepackages was created.http://www.cgap.org/iss_site/index.html

Microinsurance Focus. Launched in August 2001under the auspices of the CGAP Working Groupon Microinsurance, this online centre promotessound practices in insurance provision to poor peo-ple by providing a platform for the exchange ofknowledge and experience. http://www.microfinancegateway.org/microinsurance/index.htm

CGAP WEBSITE NEW IN FY02Microfinance Visionary Showcase. In February2002, CGAP asked microfinance leaders to sharetheir views on what the industry will look like in2008 and the actions required to reach that vision.The showcase was one of the activities undertakenby CGAP in preparation for a strategic review meeting of its Consultative Group of donormembers. The submissions were reviewed by theCG and have been posted on the CGAP site:www.cgap.org/html/microfinance_industry.html

NEW PUBLICATIONS FY2002

Focus NotesResource Guide for Microfinance Assessments,CGAP Focus Note No 22 (November 2001) byCGAP Staff. This note compares five of the better-known rating methodologies for MFIs: CAMEL ofACCION International, PEARLS of the WorldCouncil of Credit Unions, GIRAFE of PlaNetRating (a branch of PlaNet Finance), and the rat-ing methodologies of MicroRate of Washington,D.C., and Micro-Credit Ratings and GuaranteesIndia, Ltd.

The note is part of a trio of CGAP publicationson financial transparency, which also includesFinancial Transparency: A Glossary of Terms andFocus on Financial Transparency: Building theInfrastructure for a Microfinance Industry.

A Multilateral Donor Triumphs overDisbursement Pressure: The Story ofMicrofinance at Banco do Nordeste in Brazil,CGAP Focus Note No 23 (December 2001) bySteven N. Schonberger and Robert Peck Christen.This note documents the World Bank’s patient,phased support to Brazil’s Banco do Nordeste as itdesigned, launched, and nurtured its CrediAmigomicrofinance program.

Occasional PapersApex Institutions in Microfinance, CGAPOccasional Paper No 6 (January 2002) by FredLevy. This paper reviews the experience of nationalmicrofinance apexes—wholesale mechanisms thatchannel funds, with or without supporting techni-cal services, to retail microfinance institutions in asingle country or integrated market.

Technical ToolsProduct Costing Tool, CGAP Technical Tool No 6(draft version 1.3, March 2002) by Brigit Helms.The objective of this activity-based costing tool isto enable MFIs to better understand their coststructure. The tool is intended to improve effi-ciency and determine product viability by gaininginformation on the true structure of product costs.

Annex 4

Websites & Publications

WEBSITES AND PUBLICATIONS


Once product costs are determined, the tool pro-vides methods for understanding how and whycosts are incurred for a specific product, andwhether or not a specific product, contributes tothe overall financial viability of the MFI.

Sistemas de información gerencial para institu-ciónes de microfinanzas: Guía práctica. TheSpanish translation of Handbook for ManagementInformation Systems became available in late 2001.It can be downloaded in electronic form from theCGAP website and is sold in hard copy by PactPublications. First published in English in 1998,the MIS Handbook addresses the issues and deci-sion making involved in developing a manage-ment information system.

Using Microfin 3.0: A Handbook forOperational Planning and Financial Modeling(2001). This is a comprehensive user’s guide toMicrofin software, an Excel-based series ofspreadsheets that constitutes a strategic and oper-ational planning tool for MFIs. Using Microfin3.0 replaces the CGAP Business Planning andFinancial Modeling for Microfinance InstitutionsHandbook (1998). Spanish and French transla-tions of the new handbook and Microfin modelare expected to be published in late 2002.

Donor BriefsMicrofinance Donor Projects: 12 Questionsabout Sound Practice, Donor Brief No 1 (April2002). This brief outlines the major questionsthat should guide the design of a donor microfi-nance program.

Microcredit: One of Many InterventionStrategies, Donor Brief No 2 (April 2002). Thisbrief examines microcredit against other, alterna-tive intervention strategies designed to alleviatepoverty, generate income, and promote employ-ment. The publication is a summary of CGAPFocus Note No 20 (May 2001).

Water, Water Everywhere, But Not a Drop toDrink, Donor Brief No 3 (May 2002). This pub-lication summarizes key lessons that emergedfrom a discussion of a CGAP “Viewpoint” pub-lished on the Microfinance Gateway(www.microfinancegateway.org) in January 2002.

Savings Are as Important as Credit: DepositServices for the Poor, Donor Brief No 4 (June2002). This brief outlines key recommendationsfor how donors can support deposit services inmicrofinance. It is based on Developing DepositServices for the Poor: Preliminary Guidance forDonors (see below).

Consensus Guidelines and GlossariesDeveloping Deposit Services for the Poor:Preliminary Guidance for Donors (draft version,April 2002). by Madeline Hirschland, on behalf ofthe CGAP Working Group on SavingsMobilization. These draft guidelines embody theworking consensus of CGAP member donors,industry experts, and practitioners on how donorscan support deposit services in microfinance.

Financial Transparency: A Glossary of Terms(November 2001). This glossary defines and dis-cusses some of the elements involved in the col-lection, analysis, and disclosure of MFI financialinformation. The glossary is part of a trio ofCGAP publications on financial transparencythat includes Resource Guide for MicrofinanceAssessments (CGAP Focus Note No 22) and theCGAP Update Series brochure, Focus onTransparency.

Microfinance Glossary: English-Spanish (draftversion, August 2001). This glossary provides alist of commonly used microfinance terms inEnglish and Spanish.

CGAP Update BrochureFocus on Financial Transparency (2001). Thisbrochure outlines the activities of CGAP and otherindustry players in the area of financial transparen-cy. It is part of a trio of CGAP publications onfinancial transparency that also includes ResourceGuide for Microfinance Assessments (CGAP FocusNote No 22) and Financial Transparency: A Glossaryof Terms.

Working PaperMicrofinance in Central America and Mexico- Profile and Challenges. This document,published on the CGAP website in early 2002,discusses extensive market research conductedby CGAP at the end of 2001 in El Salvador,



Guatemala, Honduras, Nicaragua, and Mexico.The paper offers profiles of microfinance inCentral America and Mexico with a focus onthe various players in the sector, then outlinesthe principal challenges faced by microfinancein the region.

COMPREHENSIVE LISTINGOF CGAP PUBLICATIONS

Focus Notes

No1: The Consultative Group to Assist thePoorest: A Microfinance Program (1988,revised version)

No2: Maximizing the Outreach ofMicroenterprise Finance: The EmergingLessons of Successful Programs (1995)

No3: Missing Links: Financial Systems ThatWork for the Majority (1995)

No4: Regulation and Supervision ofMicrofinance Institutions: Stabilizing aNew Financial Market (1996). Out ofprint. This publication has been replaced byOccasional Paper No4 (2000).

No5: Financial Sustainability, Targeting thePoorest, and Income Impact: Are ThereTrade-Offs for Microfinance Institutions?(1996)

No6: The Challenge of Growth forMicrofinance Institutions: The BancoSolExperience (1997)

No7: Effective Governance for MicrofinanceInstitutions (1997)

No8: Introducing Savings in MicrocreditInstitutions: When and How? (1997)

No9: Anatomy of a Microfinance Deal: TheNew Approach to Investing inMicrofinance Institutions (1997)

No10: State-Owned Development Banks inMicrofinance (1997)

No11: How CGAP Member Donors FundMicrofinance Institutions (1998)

No12: Commercial Banks in Microfinance: NewActors in the Microfinance World (1998)

No13: Savings Mobilization Strategies: Lessonsfrom Four Experiences (1998)

No14: Pilot Initiative in Africa: What Have WeLearned? (1999)

No15: Raising the Curtain on the“Microfinancial Services Era” (2000)

No16: Those Who Leave and Those Who Don’tJoin: Insights from East AfricanMicrofinance Institutions (2000)

No17: Microfinance and Risk Management: AClient Perspective (2000)

No18: Exploring Client Preferences inMicrofinance: Some Observations fromSafeSave (2000)

No19: In-Country Donor Coordination (2001)

No20: Microfinance, Grants, and Non-FinancialResponses to Poverty Reduction: WhereDoes Microcredit Fit? (2001)

No21: Linking Microfinance and Safety NetPrograms to Include the Poorest: TheCase of IGVGD in Bangladesh (2001)

No22: Resource Guide to MicrofinanceAssessments (2001)

No23: A Multilateral Donor Triumphs overDisbursement Pressure: The Story ofMicrofinance at Banco do Nordeste inBrazil (2001)

Occasional Papers

No1: Microcredit Interest Rates (1996)

No2: Cost Allocation for Multi-ServiceMicrofinance Institutions (1998)

No3: Measuring Microcredit Delinquency:Ratios Can Be Harmful to Your Health(1999)

No4: The Rush to Regulate: LegalFrameworks for Microfinance (2000)

No5: Commercialization and Mission Drift:The Transformation of Microfinance inLatin America (2001)

No6: Apex Institutions in Microfinance (2002)

No7: Scoring: The Next Breakthrough inMicrocredit? (forthcoming, Summer 2002)



Technical ToolsAvailable free of charge in electronic form atwww.cgap.org. Printed copies of Technical Tools Nos. 1-4 are available for sale from PactPublications (www.pactpub.com) and GRET-Librairie ([email protected]).

No1: Handbook for Management InformationSystems for Microfinance Institutions(1998). Available from Pact Publications.

No2: Using Microfin 3.0: A Handbook forOperational Planning and FinancialModeling (2001). Available from PactPublications.

No3: External Audit of MicrofinanceInstitutions: A Handbook (1998).Available from PACT Publications.

No4: The CGAP Appraisal Format forMicrofinance Institutions (1999).Available online or from CGAP.

No4/Companion Publication: CGAP Poverty Audit (2001, draft version). Availableonline or from CGAP.

No5: CGAP Poverty Assessment Tool (2000,draft version). Available online or fromCGAP.

No6: CGAP Product Costing Tool (2002, draftversion 1.3). Available online or fromCGAP.

Donor BriefsNo1: Microfinance Donor Projects: 12

Questions about Sound Practice (2002)

No2: Microcredit: One of Many InterventionStrategies (2002)

No3: Water, Water, Everywhere, But Not aDrop to Drink (2002)

No4: Savings Are as Important as Credit:Deposit Services for the Poor (2002)

Consensus Guidelines and GlossariesDisclosure Guidelines for Financial Reporting(2001, provisional version).

Financial Transparency: A Glossary of Terms (2001)

Microfinance Glossary: English-French (2000,draft version). Available only online at:http://microfinancement.cirad.fr/fr/ frame6.html

Microfinance Glossary: English-Spanish (2001, draft version). Available only online atwww.cgap.org.

Developing Deposit Services for the Poor: Preliminary Guidance for Donors, CGAPWorking Group on Savings Mobilization (2002,draft version). Available only online at www.cgap.org.

CGAP Update BrochuresFocus on Poverty: CGAP 2000

Helping to Build a Microfinance Industry (2001)

Assessing the Relative Poverty of MicrofinanceClients: A CGAP Operational Tool (2001)

Focus on Financial Transparency: Building theInfrastructure of a Microfinance Industry (2001)

CGAP Microfinance Publications (forthcoming,July 2002)

Other BrochuresSkills for Microfinance Managers-English

Skills for Microfinance Managers-French

The Microfinance Gateway: A Home Page forMicrofinance (forthcoming, Summer 2002)


Annex 5

CGAP Investments & Pro-Poor Innovation Challenge Awards

Investment Country Committed

TOTAL SUPPORT FOR MICROFINANCE

INSTITUTIONS 38,172,609

Technical Tools 408,509

Business Planning and Financial Modeling Global 291,819

Tools Dissemination Global 84,600

Microfinance Ratings Paper Global 32,090

Training and Capacity Building 9,576,890

CAPAF West Africa 2,400,000

MicroSave-Africa Africa 1,400,000

AFCAP East Africa 1,475,000

BRI International Visitors Program Global 1,200,000

Pilot Capacity-Building Initiative in Africa Africa 847,000

Pilot Capacity-Building Initiative in Asia Asia 696,500

China Capacity-Building Initiative Asia 440,000

Microfinance Centre Poland 438,000

New Course Development Global 300,000

Product Manager Global 354,440

Capacity Building in Sri Lanka Asia 25,950

Technical Advice and Exchange 926,960

Appraisals and Technical Assistance Global 657,560

Vietnam Bank for the Poor Vietnam 189,400

Banco do Nordeste do Brazil Brazil 50,000

Funding for the Poor Cooperative (Operations Manual) China 30,000

Funding for Microfinance Institutions 15,646,080

ACODEP Nicaragua 2,000,000

Compartamos Mexico 2,000,000

SHARE India 2,000,000

Project Dungganon (NWTF) Philippines 1,600,000

CARD Philippines 1,200,000

Nirdhan Nepal 1,100,000

Pro-Poor Innovation Challenge Global 1,100,000

K-Rep Bank and Kwa Multipurpose Society Kenya 900,000

SEWA Insurance India 775,000

Kashf Foundation Pakistan 600,000

ACEP Senegal 500,000

Save the Children, Middle East Region Jordan, West Bank, Lebanon 250,000

Ahantaman Rural Bank Ghana 225,000

Nsoatreman Rural Bank Ghana 225,000

continued on page 57

Table 1. CGAP Investments, 1995-2002

CGAP INVESTMENTS, 1995-2002



Centenary Rural Bank Uganda 220,000

Zakoura Morocco 220,000

Promujer Bolivia 180,160

XacBank Mongolia 95,000

SafeSave Bangladesh 70,000

Prizma Bosnia and Herzegovina 65,000

Aga Khan Rural Support Foundation Pakistan 50,000

Doveriye Russia 50,000

Kafo Jiginew Mali 50,000

Rural Finance Facility South Africa 50,000

Zambuko Trust Zimbabwe 50,000

FECECAM Bénin 40,000

Government Savings Bank Thailand 17,920

Centre for Self-Help Development Nepal 13,000

Funding Microfinance Institution

through Networks 6,250,000

ACCION International Gateway Fund Latin America 2,500,000

Women's World Banking Facility for Affiliate

Capitalization, Phase 1 Latin America 2,500,000

Women's World Banking Facility for Affiliate

Capitalization, Phase 2 Global 750,000

Développement International Desjardins Africa 500,000

Funding Networks 5,364,170

FINCA International Africa, Latin America 1,260,000

Joint WOCCU/FFH Credit Union Downscaling (SCWE) Ecuador 1,065,370

SEEP Network, Phase 1 and 2 Global 906,100

Microfinance Network, Phase 1, 2 and 3 Global 700,000

ACCION International, Phase 2 Global 500,000

CASHPOR, Inc. Asia and Pacific 323,000

Développement International Desjardins, Phase 2 Africa 180,000

Katalysis Latin America 98,700

PRIDE Africa Evaluation East Africa 56,000

Credit and Development Forum Bangladesh 50,000

Foundation for Development Cooperation Asia 50,000

Freedom from Hunger West Africa 50,000

INDNET India 50,000

PHILNET Philippines 50,000

DEVCAP Global 25,000


Table 1. CGAP Investments, 1995-2002 Continued



TOTAL SUPPORT TO DONORS 1,910,530


Technical Tools 538,960

Poverty Assessment Tool with IFFRI Global 286,000

Donor Peer Reviews Global 100,000

Donor Briefs Global 100,000

Global Donor Portfolio Database Global 52,960

Training and Capacity Building 977,200

Donor Staff Training UNCDF/UNDP Global 800,000

CGAP Donor Training Global 177,200

Technical Advice and Exchange 394,370

Donor Mainstreaming Global 242,970

Third Consultative Forum Global 70,900

Microfinance Framework for Afghanistan Global 50,000

Microsave Africa Evaluation Global 30,500

TOTAL SUPPORT TO INDUSTRY 11,593,000

Technical Tools 8,936,810

Microfinance Information Exchange (MIX) Global 2,000,000

Guatemalan Credit Union Rating Agency (WOCCU) Guatemala 1,775,000

Rating Fund, Phase 1 and 2 Global 1,225,000

Microbanking Bulletin, Phase 1 and 2 Global 957,500

Publications and Translations Global 859,740

Microfinance Gateway Global 649,000

MIS Handbook and Audit Standards Global 293,900

Audit Handbook Global 293,900

Apex Study Global 156,700

Information Systems Consumer Report Global 123,930

West Africa Study of PARMEC Law West Africa 112,200

CE/NIS Mapping Central Europe and NIS 100,000

Virtual Microfinance Market Global 100,000

Evaluation of African MFIs by ADA Global 70,000

Product Costing Tool Testing Global 60,000

Microfinance Revolution Publication Global 44,600

Loan Portfolio Management Tool Development Global 37,340

Microfinance Video Global 35,000

Business Process Mapping Global 20,000

Credit Scoring Paper Global 13,000

Impact Assessment Methodologies Virtual Meeting Global 10,000

Training and Capacity Building 198,000

Soros/CGAP Microfinance MBA Start-Up Global 100,000

Microcredit Summit, Meeting of Councils

Scholarship Global 63,000






Microfinance Training, Boulder, Colo. Global 30,000

INAISE Workshop Global 5,000

Technical Advice and Exchange 2,458,190

External Audit Capacity Building Global 550,000

Latin America Poverty Survey Latin America 325,000

Poverty Outreach Global 306,180

China Microfinance Forum and Policy Work China 267,840

West Africa High-Level Policy West Africa 256,300

World Development Report Impact Study Global 113,800

Poverty Tools/Indicators Global 100,000

Poverty Case Studies Global 100,000

CE/NIS Projects Central Europe and NIS 100,000

Microinsurance Focus Global 65,000

Guidelines on Regulation and Supervision Global 52,030

Poverty Assessment, West Africa West Africa 50,000

City of London Seminar Global 30,600

Housing Microfinance Global 30,000

Grameen Bank Securitization Bangladesh 25,700

Field Presence Research Global 21,140

FORD-IDS Impact Study Global 20,000

Mexico Microfinance Conference Mexico 20,000

Bank for the Poor, Peru Peru 7,600

Conference on Regulation and Supervision Latin America 7,100

Village Banking Workshop and Study Tour Tunisia 5,100

Argentina Microfinance Forum Argentina 4,800

TOTAL COMMITMENTS 51,676,139


PRO-POOR INNOVATION CHALLENGE RECIPIENTS


Table 2. Pro-Poor Innovation Challenge Recipients (in US$), 2000-2002

Recipient Region/Country Amount

ROUND 1: JUNE 2000Groupe de recherche et d'échanges technologiques, Cambodia Cambodia 50,000Swayam Krishi Sangam India 50,000Freedom from Hunger Ghana 50,000Centre Béninois pour le Développement des Initiatives à la Base Bénin 50,000

200,000ROUND 2: JANUARY 2001Association Mennonite de Développement Economique Haiti 50,000CASHPOR Financial and Technical Services India 50,000Padakhep Manabik Unnayan Kendra Bangladesh 50,000Uganda Microfinance Union Uganda 50,000Women’s Association for Gain Both Economic and Social Togo 50,000

250,000ROUND 3: MAY 2001Alternertivas Solidaria Chiapas México 50,000Local Enterprise Assistance Program Liberia 50,000Constanta Foundation Geogia 50,000Women Economic Empowerment Consort Kenya 50,000Youth Self Employment Program Tanzania 50,000

250,000ROUND 4: MARCH 2002Asociación Méxicana de Uniones de Crédito del Sector Social Mexico 40,000Center for Microfinance Nepal, 45,000Horizonti Macedonia 35,000Jamaican Cooperative Credit Union League Jamaica 45,000Lift Above Poverty Organization Nigeria 35,000National Rural Support Program Pakistan 40,000Organización de Desarrollo Empresarial Femenino Honduras 35,000PACT Institute Myanmar 40,000Rural Finance Corporation Moldova 40,000Sinapi Aba Trust Ghana 45,000

400,000

ADA Appui au DéveloppementAutonome, Luxembourg

AFCAP Microfinance CapacityBuilding Programme inAfrica, Nairobi, Kenya;funded jointly by CGAPand DFID

AFD Agence Française deDéveloppement, Paris,France

AfDB African DevelopmentBank, Abidjan, Côted’Ivoire

ADIE Association pour le Droità l’InitiativeEconomique, France

AKDN Aga Khan DevelopmentNetwork

AMINA Microfinance InitiativeFor Africa of the AfricanDevelopment Bank

ASA Association for SocialAdvancement,Bangladesh

AsDB Asian DevelopmentBank, Manila,Philippines

AusAID Australian Agency forInternationalDevelopment

BCEAO West African CentralBank

BMZ Federal Ministry forEconomic Cooperationand Development,Germany

BN Banco do Nordeste,Brazil

BRAC Bangladesh RuralAdvancement Committee

CAPAF Capacity Building hubfor Francophone Africa,Dakar, Sénégal; fundedjointly by CGAP andMAE

CAS Country AssistanceStrategy of the WorldBank

CHF Cooperative HousingFoundation, Maryland,USA

CIDA Canadian InternationalDevelopment Agency,Toronto, Canada

CIDR Centre International deDéveloppement et deRecherches, France

CGAP Consultative Group toAssist the Poorest

CG Consultative Group ofCGAP Member Donors

CMTC China MicrofinanceTraining Center, Beijing;CGAP capacity-buildingpartner in China

DANIDA Danish InternationalDevelopment AssistanceAgency, Copenhagen,Denmark

DID DéveloppementInternational Desjardins

DFID Department forInternational Develop-ment, London, UK

DGF Development GrantFacility of the WorldBank

DGDS Directorate General forDevelopmentCooperation, Italy

EBRD European Bank forReconstruction and De-velopment, London, UK

EMT Ennatien MoulethanTchonnebat, aCambodian MFI

EU European Union,Belgium

EC European Commission,Belgium

Excom Executive Committee ofCGAP

FAQ Frequently asked ques-tion

FFH Freedom from Hunger,Washington, D.C.

FFP Private Foundation Fund;a legal entity in Bolivia

FIE Centro de Fomento aInitiativas Económicas,Bolivia

FINCA Foundation for InternationalCommunity Assistance,Washington, D.C.

FPC Funding the PoorCooperative, China

FWWB Friends of Women’sWorld Banking, India

GTZ Die DeutscheGesellschaft fürTechnischeZusammenarbeit (Societyfor TechnicalCooperation), Germany

HK Hattha Kakesar, Ltd.; aCambodian MFI

IAS International AccountingStandards

IC Investment Committeeof CGAP

ICPAU Institute of CertifiedPublic Accountants ofUganda

IDB Inter-AmericanDevelopment Bank,Washington, D.C.

IFAD International Fund forAgriculturalDevelopment, Rome,Italy

IFC International FinanceCorporation of theWorld Bank Group

ILO International LabourOrganization, Geneva,Switzerland

IMF International MonetaryFund, Washington, D.C.

IPC Internationale ProjektConsult GmbH,Frankfurt, Germany

IS Information Systems

JBIC Japan Bank forInternationalCooperation

KCLF Kazakhstan CommunityLoan Fund

KfW Kreditanstalt fürWiederaufbau, Germany

MAE Ministère des AffairesÉtrangères, France

MBA Masters in BusinessAdministration

MBB MicroBanking Bulletin

MBSP MicroBanking StandardsProject

M-CRIL Micro-Credit Ratingsand Guarantees India,Ltd.

MDG Millenium DevelopmentGoal

MDRM Mission for Regulationand Development ofMicrofinance of theBCEAO

MEDA Mennonite EconomicDevelopment Associates,Winnipeg, Canada

MFC Microfinance Center forCentral and EasternEurope and the NewlyIndependent States,Warsaw, Poland; an MFInetwork and training center

MFI Microfinance institution

MFN MicroFinance Network

MIX MicrofinanceInformation eXchange(MIX)

MM Microfinance Market

NGO Non-governmentalorganization

NIS Newly IndependentStates of the formerSoviet Union

NORAD Norwegian Agency forDevelopmentCooperation, Oslo,Norway

OED Operations EvaluationDepartment of the WorldBank

OI Opportunity Inter-national, an MFI net-work

OSI Open Society Institute,an affiliate of the SorosFoundation

PAG Policy Advisory Group ofCGAP

PAT Poverty Assessment Tool,a CGAP technical tool

PRSP Poverty ReductionStrategy Paper

PPIC Pro-Poor InnovationChallenge, a CGAPawards program

SCWE Savings and Credit withEducation, a product ofFFH

SDC Swiss Agency forDevelopment andCooperation

SEF Small EnterpriseFoundation, South Africa

SEEP Small EnterpriseEducation andPromotion Network,Washington, D.C.

SEWA Self-Employed Women’sAssociation

SIDA Swedish InternationalDevelopmentCooperation Agency

SIDBI Small IndustriesDevelopment Bank ofIndia

UNDP/UNCDF United NationsDevelopmentProgram/United NationsCapital DevelopmentFund, Switzerland

UNCTAD United NationsConference on Trade andDevelopment,Switzerland

USAID US Agency forInternationalDevelopment,Washington, D.C.

WOCCU World Council of CreditUnions

ACRONYMS USED IN THIS REPORT

CONSULTATIVE GROUP TO ASSIST THE POORESTc/o The World Bank1818 H Street, N.W.Room Q4-400Washington, D.C. 20433

annual report 2002 - world bank...integrating microfinance into the established financial sector and...

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