Workshop: Capacity building for social inclusion

1. Workshop: Capacity building for social inclusion Annual EMN Conference “2010: A Changing Europe combating poverty, supporting enterprise” London, 24th of June Michael Unterberg

2. Capacity Building in European Microfinance • Building what? • What is it good for? • What kind of organisations are meant? • How is it connected to social inclusion? Let’s build the case for capacity building in European Microfinance Microfinance in Western Europe - a synopsis -

3. MF in Europe: A sector under construction Example Germany Example Romania • Strong policy interest in recent years • A new national guarantee fond was set up in 2010 • Aim: Building up a nation wide supply of micro-loan providers • Legal framework for microfinance changed markedly in the last 5 years • Dedicated microfinance organisations becoming banks • New providers with commercial orientation • It‘s about building... • Frameworks • Markets • Organisations Microfinance in Western Europe - a synopsis -

4. Organisations in Microfinance Banks (Semi-)public bodies • They don't cover the microcredit market as a main business proposition • They favor efficiency for more profitability • They have organisational structures built for providing many different financial services • They are doing microcredit as part of their mission e.g. employment offices • They have only weak incentives for efficiency in place • They have organisational structures built for administration tasks MFI • They are dedicated to microcredit provision • They favor efficiency as a pre-condition for outreach and growth • Their organizational structures are flexible Microfinance in Western Europe - a synopsis -

5. What are the organisational challenges for European MFI? European MFI have to deal with... European MFI are.. • In Western Europe: • Small and realtively young • Non-banking organisations • Socially oriented • In Central/Eastern Europe: • More matured organisations • Some „semi-banking“ organisations • More commercially oriented • target groups that are hard to reach • niche markets • limits of efficiency in inclusion lending • constant changes in funding conditions • unfavorable and/or changing legal frameworks Are European MFI capableofmeetingthesechallenges? Microfinance in Western Europe - a synopsis -

6. …a concept with strict definitions and goals …a concept confined to improving the profitability of MFI …a task that European MFI can fulfill on their own Capacity building in MF: What is it, and what not? Capacity building is... Capacity building is not... • …a broad concept for organisational and institutional development, closely connected to technical assistance (TA) • …a tool for social inclusion as it allows to reach excluded target groups more efficiently • …a long-term, continuing process, in which all stakeholders have to participate • Institutional capacity in MFI can be broken down in different dimensions: • Capacity of structures (e.g. policies, processes, infrastructure) • Capacity of people (e.g. staff, human resources, expertise) • Capacity to plan (e.g. vision for MF, strategies, funding models) • Capacity to perform (e.g. outreach, growth, impact) Microfinance in Western Europe - a synopsis -

7. Status Quo: MFI Capacity levels in Europe • 5 dimensions of capacity • self-assessment questionnaire • interviews and focus groups • visualization in spider diagrams Pilot Study in eight European countries • low overall capacity levels • underdeveloped systems for performance measurement and analysis • average capacities in human ressources • lack of sustainable funding models • need to further develop already existent performance and impact measurement systems. • Need to adapt these systems to changing regulations and monitoring requirements. • flexible MIS to cope with the demanding monitoring requirements of regulation Results for Western Europe Results for Central and Eastern Europe Microfinance in Western Europe - a synopsis -

8. How to make Capacity building work in Europe Important Questions from a MFI perspective on capacity building: • Who are the stakeholders? • How to work with an advisor? • What is the role of the networks? • Which standards & specialised solutions are available? • Is there any public support for my organisation? • What lessons are to learn from successful MFI? • What are the needs in my organisation? Microfinance in Western Europe - a synopsis -

9. Speaker: Cyril Gouiffés, EIF, Luxembourg EIF‘s Vision on MF in Europe Role of TA in fostering the European MF sector The JASMINE programm for TA Speaker: Piotr Korynski., MFC, Poland Role of networks in capacity building How to monitor capacity levels of the members? Role of MFC in the JASMINE programme Aim of the Workshop: Bring different perspectives together to „make it happen“ Donor‘s perspective Practitioner‘s perspective • Speaker: Georgi Breskovski, Mikrofond, Bulgaria • Past experiences of Mikrofond with capacity building • Recent capacity building needs of Mikofund • Experiences in working with external advisors • Participation in JASMINE programme Advisor‘s perspective Network‘s perspective • Speaker: Aldo Moauro, Microfinanza Rating, Italy • Status Quo of capacity for MF in Europe • What have advisors/TA-provider to offer? • Tools and strategies for capacity building in inclusion lending Microfinance in Western Europe - a synopsis -