Development of Microfinance Associations as Apex Institutions Abuja

Development of Microfinance Associations as Apex Institutions Abuja, Nigeria January 18 th, 2011 1

Importance of Microfinance Associations 70+ microfinance associations 2

Importance of Microfinance Associations 70+ microfinance associations 60 million microentrepreneurs affiliated 3

Importance of Microfinance Associations 70+ microfinance associations 60 million microentrepreneurs affiliated Almost all are connected through the SEEP Global Network of Networks 4

Mission Connecting practitioners in a Global Learning Community Vision A Sustainable Income in Every Household 5

Values Member-Driven Practitioner-Based Sustainable Transparent Innovative Inclusive 6

Importance of Microfinance Associations 70+ microfinance associations 60 million microentrepreneurs affiliated Almost all are connected through the SEEP Global Network of Networks. Associations can promote and guide entire microfinance industries. 7

Areas of Network Effectiveness Governance Operations Human Resources Financial Viability Service Delivery External Relations

External Relations Contacts-The association works with a diverse range of microfinance industry stakeholders to achieve its organizational objectives. 10

External Relations Contacts-The association works with a diverse range of microfinance industry stakeholders to achieve its organizational objectives. External Communications-The association has a clear communications strategy that effectively targets a diverse range of microfinance stakeholders. 11

External Relations Contacts-The association works with a diverse range of microfinance industry stakeholders to achieve its organizational objectives. External Communications-The association has a clear communications strategy that effectively targets a diverse range of microfinance stakeholders. Credibility-The association is recognized as an important and capable representative of the microfinance sector and effectively advocates on behalf of its members. 12

External Relations Contacts-The association works with a diverse range of microfinance industry stakeholders to achieve its organizational objectives. External Communications-The association has a clear communications strategy that effectively targets a diverse range of microfinance stakeholders. Credibility-The association is recognized as an important and capable representative of the microfinance sector and effectively advocates on behalf of its members. 13

Areas of Network Effectiveness Governance Operations Human Resources Financial Viability Service Delivery External Relations

Service Delivery Market Responsiveness-The association is market oriented and responsive to changing conditions. 15

Expanded Product Lines “$2 a day” Emphasis: incomes are low Findings: incomes are low incomes are irregular incomes are unpredictable 16

Expanded Product Lines NEED PRODUCT Helping poor households with day -to-day cash flow management Savings of any value at any time with ready access 17

Expanded Product Lines NEED PRODUCT Helping poor households with day -to-day cash flow management Savings of any value at any time with ready access Helping them borrow for all uses Tiny loans quickly, when needed and repaid in small, possibly irregular installments 18

Expanded Product Lines NEED PRODUCT Helping poor households with day -to-day cash flow management Savings of any value at any time with ready access Helping them borrow for all uses Tiny loans quickly, when needed and repaid in small, possibly irregular installments Helping them build savings over the long term Structured opportunities for long term savings 19

Expanded Product Lines NEED PRODUCT Helping poor households with day -to-day cash flow management Savings of any value at any time with ready access Helping them borrow for all uses Tiny loans quickly, when needed and repaid in small, possibly irregular installments Helping them build savings over the long term Structured opportunities for long term savings Helping them manage risks Insurance products 20

Expanded Product Lines NEED PRODUCT Helping poor households with day -to-day cash flow management Savings of any value at any time with ready access Helping them borrow for all uses Tiny loans quickly, when needed and repaid in small, possibly irregular installments Helping them build savings over the long term Structured opportunities for long term savings Helping them manage risks Insurance products 21

Expanded Product Lines US$ Millions Bank Rakyat Indonesia 18 million small savers Savings Average < US$200 Loans 22

Service Delivery Market Responsiveness-The association is market oriented and responsive to changing conditions. Member Focus-The association is driven by the needs and demands of its members. 23

Service Delivery Market Responsiveness-The association is market oriented and responsive to changing conditions. Member Focus-The association is driven by the needs and demands of its members. Service Mix-The association's core services are well designed and reflect its comparative advantage. 24

Financial Viability Financial Planning - Financial planning is an integral part of short- and long-term organizational plans, and appropriate financial performance measures are used to set goals and monitor performance. Financial Performance - Earned income, institutional reserves, operating efficiencies are strong and show positive trends Financial Administration - Financial administration processes are transparent and provide the necessary level of control to ensure that resources are used efficiently and for their intended purpose. 25

Governance Democratic Participation- The association has a participatory decision-making process governed by transparent and consensusoriented systems. 26

Governance Democratic Participation- The association has a participatory decision-making process governed by transparent and consensusoriented systems. Board of Directors-Each association has a board of directors that is accountable to its membership and provides effective leadership in fulfilling the association's mission. 27

Governance Democratic Participation- The association has a participatory decision-making process governed by transparent and consensusoriented systems. Board of Directors-Each association has a board of directors that is accountable to its membership and provides effective leadership in fulfilling the association's mission. Membership- Association membership is representative of the market and is defined and held accountable by common standards of performance and practice. 28

“Doing Bad by Doing Good? Theft and Abuse by Lenders in Inadequately Regulated Microfinance Markets” Catherine Duggan Harvard Business School Membership- Association membership is representative of the market and is defined and held accountable by common standards of performance and practice. 29

SMART Campaign 1. 2. 3. 4. 5. 6. Avoidance of Over-Indebtedness Transparent and Responsible Pricing Appropriate Collections Practices Ethical Staff Behavior Mechanisms for Redress of Grievances Privacy of Client Data Membership- Association membership is representative of the market and is defined and held accountable by common standards of performance and practice. 30

Defining and Measuring Ultimate Impact 31

Statement of Success A vibrant and inclusive financial sectors providing appropriate services to poor and low-income people • A strong, sustainable association that provides demand driven products to their member base; • A range of healthy, sustainable microfinance institutions that offer a wide range of quality services to clients at competitive prices; • A transparent business environment that ensures fair competition and protection for consumers. 32

Association Performance 33

Member Results 34

Industry Quality 35

Industry Quality 36

SEEP Documents for Nigeria Savings Groups Steps in Advocacy Planning: A workbook for Microfinance Associations Effective Governance: A toolkit for Microfinance Association Boards Performing a State of the Sector Analysis: A Guide for Microfinance Associations Investment Readiness and Microfinance Associations: Bridging the Financing Gap Measuring Financial Performance: Practitioners guide for Microfinance Associations Donor Strategies for Advancing Social Performance through Microfinance Associations Promoting Credit Bureaus: The Role of Microfinance Associations Product Costing and Performance Analysis: A toolkit for Analyzing Associations’ Service Offerings Managing Your Association’s Brand: The Strategic Importance of Integrated Marketing Communications Training Strategies: A Technical Note for Microfinance Associations How to Promote Industry Innovation: A Technical Note for Microfinance Associations 37

Thank You! 38