What makes a funding agency effective and relevant in the rapidly changing microfinance landscape? How can financial markets work for poor people? This course focuses on funding agency policies, systems, and operations that build MFIs and influence the financial sector where they operate.
Overview: The course explores the practical issues faced by funders as microfinance becomes commercial. The focus is inside the funding agency. Over the 5 days, cases are used to examine funder strategy, systems that support sound decisions, funding instruments and the evolving (and often challenging) role from start-up to more advanced stages of financial sector growth.
Objectives: By the end of the course participants will be able to:
Methodology: The course has a practical orientation and uses a case based approach with plenary and small group discussion. Participants are encouraged to share experiences.
The financial sector: Making markets work for poor people, explores strategic clarity and conditions for building healthy partnerships. Topics include the key differences in public sector and private sector market channels; the project, institutional and financial sector approaches to microfinance; market dynamics –who markets exclude and why. Participants analyze cases of common funder decisions and assess implications for widening access to finance.
The “core market”: Decision-making and funding instruments, introduces appraisals and common funding instruments –grants, loans, guarantees, and equity – and explores advantages/disadvantages for the MFI and the funder. Participants analyze MFIs at different stages of growth, identify performance targets and construct agreements that govern the funding relationship from the outset of funding to the completed exit. Attention is given to the funder role in weak markets, such as those emerging from conflict, to more advanced markets, where the funder role is often questioned. Participants discuss and develop exit strategies.
Policy and Coordination: Draws lessons for funder effectiveness in building institutions, and support structures for microfinance at the meso level, particularly those that enhance risk management, and promote transparency and financial inclusion. Managing collaborative funding relationships, and strategic approaches, such as APEX institutions and national strategies receive attention.
Systems and Tools: Practices and incentives within the organization are the focus of this interactive session. Topics include: CGAP’s Aid Effectiveness Index, learning from portfolio reviews, essential reporting and technical support for non-specialist staff.
Who should attend this course?
Grant making agency staff, social investors, development finance institutions, government officials and NGOs who are responsible for funding MFIs and the financial infrastructure at the meso level.
Pre-requisites: None. Familiarity with financial statements and indicators is desirable.
Course Structure: This is a 5 day course.
