The Fourth Regional Workshop on Sustainable Banking with the Poor was held in Bangkok from 3-7 November 1997. This very successful workshop was organised jointly by the Banking with the Poor (BWTP) Network and the Sustainable Banking with the Poor (SBP) program of the World Bank. It was funded by the World Bank, the Foundation for Development Cooperation, the Ford Foundation, the Japan Foundation Asia Center, and AusAID. There were 98 participants in total, consisting of members of the BWTP Network, representatives from three Mekong countries, practitioners nominated by the World Bank, representatives from the World Bank and other donor agencies, and a number of self-funded participants. Four Japanese representatives also attended the workshop. The main objectives of the workshop were:
Overall, the workshop was extremely successful, with a number of interesting papers. Participants were given ample opportunity to contribute, providing for a productive exchange of views and valuable feedback to the presenters. A number of the papers will be published in the near future for dissemination throughout the microfinance sector. The workshop also enabled the BWTP Network to take a number of important decisions, and to consolidate its status as an autonomous body. This edition of the BWTP Newsletter includes a number of articles on important outcomes from the workshop. New microfinance research by the Foundation for Development Cooperation The Foundation for Development Cooperation presented two research reports at the Fourth Regional Workshop on behalf of the BWTP Network. Both will be revised in the light of comments at the workshop and published early this year. The first is a detailed study of the policy and regulatory environment for microfinance in Asia, prepared by Foundation staff Mr Paul B McGuire and Dr John D Conroy, and consultant Mr G B Thapa. It continues the series of major publications on best practice in microfinance, which includes Banking with the Poor (1992) and Best Practice of Banking with the Poor (1995). This study includes individual country studies of the policy and regulatory environment for microfinance in each of the nine countries represented in the BWTP Network. Fieldwork was conducted between March and June 1997, in close cooperation with members of the Network in each country. The country studies also involved interviews with senior officials from a wide variety of institutions, as well as a review of the literature. The main report draws heavily on these country studies, highlighting policy measures that have been successful and identifying the key elements of an appropriate policy and regulatory environment to encourage the growth of microfinance on a sustainable basis. In so doing, it takes a broad view of the policy and regulatory environment:
The report is possibly the first study to consider policy and regulatory issues for microfinance from such a broad perspective, and certainly the only such study with a specific focus on Asia. It finds that despite the existence of supportive policy and regulatory frameworks in some countries, much remains to be done to remove barriers to the creation of sustainable MFIs and to create a genuinely conducive environment for their operation. The second paper is concerned with key issues for profitable commercial bank engagement with microfinance, and was prepared and presented by consultant Ms Ruth Goodwin. This paper has a strongly practical focus, based on detailed field work in India and the Philippines. It is designed to provide commercial bankers with a simple methodology for assessing microfinance institutions (MFIs) to determine whether they would be good clients for the purpose of establishing linkages. The report breaks new ground in quantifying the operating margins available to commercial banks establishing linkages with NGOs. It is based on data collected from working bankers, and presents a compelling case for them to develop the capacity to cost loan products, such as loans to MFIs, in addition to the more usual costing of branch-level operations. It also provides a banker’s guide to assessing the bankability of MFIs. World Bank unveils new research at the workshop The Fourth Regional Workshop was an effort in collaboration between the BWTP Network and the Sustainable Banking with the Poor (SBP) program of the World Bank. World Bank staff members and consultants presented five papers at the workshop, while one paper was presented by a representative of the German agency for technical cooperation, GTZ. First, consultant Dr Tom Dichter presented a paper on non government organisations (NGOs) as financial intermediaries. Staff member Dr Lynn Bennett then presented a very interesting paper on a system framework for social and financial intermediation. Dr Bennett emphasised the importance to microfinance of social as well as financial intermediation and highlighted the need for a range of different institutions to be involved in the microfinance ‘system’. Consultants Ms Bharti Ramola and Mr Vijay Mahajan then gave a detailed presentation on microfinance in India: from commercial banks to NGOs, outlining the current system and presenting a vision for microfinance in India for the 21st century. Staff members Dr Jacob Yaron and Ms Leila Webster presented an informative paper on sustainability and outreach of the Bank for Agriculture and Agricultural Cooperatives (BAAC) in Thailand and Bank Rakyat Indonesia (BRI). They highlighted the factors which have enabled these State-owned banks not only to be successful in commercial terms, but also to touch on the microfinance sector. Ms Sylvia Wisniwski of GTZ made a presentation on savings in the context of microfinance - comparative analysis of Asian case studies, based on case studies conducted by GTZ of BAAC, BRI and the Rural Bank of Panabo in the Philippines. Finally, consultant Ms Joanna Ledgerwood gave an introduction to the SBP Microfinance Handbook, designed to provide a comprehensive source for those active in microfinance to better design, implement, evaluate, and manage microfinance activities. The meeting exposed the draft handbook to leading practitioners in the region, and provided important feedback to assist in finalising the handbook. Copies of these papers are available on request from the Network Secretariat. Update on the BWTP website Towards the end of 1997 there was a flurry of activity on the BWTP website. While there is still some work to be done, a great deal of new material has been added. The site now features the new BWTP logo. It also contains profiles of all those members who provided information to FDC before the middle of November 1997. For the small number of members who still do not have their profiles on the site, it is not too late. Just send us your profile, and we will make sure it is posted to the site. The site also contains executive summaries and/or abstracts of all of the Network’s publications. As new studies are added to the publications list, summaries will be added to the site. The text of back numbers of the BWTP Newsletter has also been posted to the site. FDC will do more work to improve the layout and design of the site in coming months. We will also add a section with information about important events and links to other microfinance sites. The current address of the site is:
However, it is intended to change the address in the near future, so as to better reflect the identity of the BWTP Network. BWTP Network moves forward A meeting of the BWTP Network was held on Friday, 7 December 1997 following the Fourth Regional Workshop. The Network took some important steps to further establish itself as an independent and self-sustaining entity. The Network consists of some 35 national policy institutions, commercial banks and NGOs from nine countries in Asia, namely Bangladesh, India, Indonesia, Malaysia, Nepal, Pakistan, Philippines, Sri Lanka and Thailand. All are committed to linking microfinance with the financial systems of their countries. In the morning, the meeting amended and approved the draft communique prepared by Foundation staff, as a statement of outcomes from the Fourth Regional Workshop. The statement focuses on the two studies prepared specifically for the Network, of the policy and regulatory environment for microfinance in Asia, and key issues for profitable commercial bank engagement in microfinance. In the afternoon, the inaugural Annual General Meeting of the BWTP Network was conducted. Members formally ratified the Constitution of the Network, and elected office-bearers for the Network (see separate articles on these topics). Finally, the Network agreed an annual membership fee for institutions, as a step in the direction of sustainability for the network. This fee is to be levied with effect from 1 January 1998, and invoices have been sent to all members. BWTP office bearers An important part of the annual general meeting of the BWTP Network was the election of office- bearers. Members of the Network elected an executive committee and membership committee as follows: Executive committee:
Membership Committee:
The Network also appointed the Foundation for Development Cooperation as secretariat and fiscal agent. The new office-bearers have a very important job in steering the Network through its formative period. We offer them our congratulations, and wish them all the best in their endeavours. INSTITUTIONS ASSOCIATED WITH THE BWTP NETWORK Bangladesh
Indonesia
Philippines
Australia
BWTP Network Constitution The constitution of the BWTP Network has now been formally ratified. It was first mooted at the Singapore meeting of the BWTP Network in July 1996, and a draft was discussed at the Kuala Lumpur meeting in December 1996. The new constitution provides an excellent framework to guide the future activities of the network. According to the constitution, the BWTP Network is "a not-for-profit, regional association of organisations committed to improving the quality of life of the poor". It does this through promoting and facilitating access for the poor to credit, savings instruments and other financial services, in particular through linkages between financial sector institutions (such as commercial banks), NGOs and self-help groups. The constitution also defines the mission of the network. Its mission is to:
The constitution also establishes arrangements for the executive committee, rules for membership, and arrangements for the administration of the network. Members are expected to work constantly towards achieving the network’s objectives. Copies of the constitution are available on request from FDC as the Network Secretariat. Microfinance goes to Niue The Pacific Microcredit Conference, sponsored by the New Zealand Official Development Assistance (NZODA) programme, was held from 13-16 October 1997. This was the first microfinance conference to be held specifically for the Pacific island countries. It was held in idyllic surroundings in the tiny Pacific country of Niue, with a total population of only 2,300. FDC was commissioned by NZODA to provide technical inputs to the conference. Program officer Paul McGuire prepared nine short background papers on key issues in microfinance and facilitated a number of the sessions. The Foundation also engaged Mr Lesley Tissera, a Sri Lankan national with experience as a microfinance practitioner in Papua New Guinea, as a facilitator and resource person. The BWTP Network was also represented by Dr Humaira Islam, Executive Director of the Shakti Foundation for Disadvantaged Women in Bangladesh. Dr Islam gave the keynote address and was a source of considerable inspiration to the participants. In all there were 49 participants, from twelve Pacific island countries and a number of regional organisations. The objectives of the conference included:
On the final day, the conference agreed to a statement reflecting the outcomes of the conference, embodying numerous strategies to improve the performance of microfinance programs in the Pacific. There is currently only a small number of microfinance programs in the Pacific, and most are very small by Asian standards. Nevertheless there is considerable interest in microfinance, and new programs are springing up in several countries. A very encouraging aspect of the conference was that some participants left with concrete ideas as to how they could improve their programs. The conference was hard work (with night sessions from 8-10pm most evenings), but also a lot of fun. There were even opportunities for bicycling, snorkelling and whale-watching, and some of the BWTP participants felt that such activities should be included on the agenda of future BWTP workshops! New executive secretary Many of you will have met FDC’s now not-so-new executive secretary, Ms Elaine Neill, at the fourth regional workshop in Bangkok. Elaine actually joined us in January 1997, so she has recently come up to her first anniversary with the Foundation. She replaces PJ Granville-Edge, who will be fondly remembered by many of you. PJ returned to Malaysia in 1997 to write a family history. Elaine was born and grew up in Fiji, before coming to Australia as a young adult. Prior to joining the Foundation, she worked as a rental properties consultant, personal assistant to the managing director of a construction company, administrative officer for an arts organisation, and most recently as office coordinator for the Ethnic Communities Council of Queensland. Since joining the Foundation, Elaine has spent much of her time organising the fourth regional workshop. Those of you who attended the workshop will appreciate the excellent job that she did. Despite the considerable pressure during the workshop itself, Elaine remained calm, cheerful and enthusiastic throughout, and even managed to develop a passion for Thai food. Outside work, Elaine enjoys clay sculpting, exhibitions, sewing, reading and swimming. New publications Two new publications on microfinance have made their way onto the Foundation’s publications list since the last newsletter. The first is a monograph by Paul McGuire and John Conroy entitled Bank-NGO Linkages and the Transaction Costs of Lending to the Poor through Groups: Evidence from India and the Philippines. This paper, based on studies of transaction costs commissioned by the Foundation, was presented at an OECD meeting in April 1996. An abridged version appears in the March 1997 edition of Small Enterprise Development, and it has also been published by the OECD. The second is called Microfinance in the Pacific Island Countries, referred to in newsletter no 9 of November 1996. This study was prepared by Paul McGuire on behalf of the Asian and Pacific Development Centre for BankPoor ’96. It includes an analysis of issues and constraints affecting microfinance in the Pacific, together with a review of programs and five case studies. BWTP research in the Philippines Professor Ronald Chua of the Asian Institute of Management is putting the finishing touches to two important research studies on microfinance in the Philippines, funded by AusAID. The studies will be published by the Foundation. The first is a rigorous baseline survey of new borrowers of BWTP Network member ASKI. The research design reflects international best practice, drawing heavily from recent conceptual work by USAID. The survey provides detailed baseline data on new borrowers, covering not just economic aspects but also social and behavioural aspects. This initial survey will be followed up by one or more surveys in future years to determine the impact of microfinance on clients’ lives. The second study looks at the performance and sustainability of two Philippine MFIs and BWTP members, ASKI and KMBI. It builds on the study of transaction costs published in June 1996, but looks at performance and sustainability from a much broader perspective. News briefs (continued) Women’s World Banking workshop Paul McGuire, program officer with the Foundation, attended the Women’s World Banking (WWB) Best Practice Workshop for Asian Microfinance Practitioners from 9-13 December 1997 in Yogyakarta, Indonesia, and gave a short presentation on the BWTP Network. A number of other BWTP members are also attended the workshop, including new network chairperson Mr Bambang Ismawan. This furthers the close cooperation between BWTP and WWB. Ms Nina Nayar from WWB was an active participant in the BWTP Fourth Regional Workshop. The Yogyakarta workshop was a very productive one, and included modules on the role of microfinance practitioner networks and building network strategies. Other modules covered building organisational effectiveness, improving operational effectiveness in credit delivery, savings mobilisation, business development services, the legal and organisational structure, and strategies for survival and growth. It was also noted that there is considerable scope for collaboration between the BWTP Network and WWB in areas of mutual interest. John Conroy visits Japan FDC Executive Director Dr John Conroy visited Japan from 14-21 December 1997, as a guest of the International Development Center of Japan (IDCJ). Dr Conroy gave lectures on microfinance to IFIC (the Institute for International Cooperation) and the Foundation for Advanced Studies in International Development (FASID). Dr Conroy also held discussions with key Ministries and donor agencies, including the Ministry of Foreign Affairs, the Ministry of International Trade and Industry (MITI), the Japan International Cooperation Agency (JICA) and the Overseas Economic Cooperation Fund (OECF). The Japanese Government has recently started to take a greater interest in microfinance, with OECF recently providing a soft loan of USD30 million to the Grameen Bank. As the world’s largest aid donor Japan has an important role to play in the development of microfinance, especially in the Asian region. Dr Conroy’s visit was an important step by the BWTP Network in helping to develop a constituency for microfinance in Japan. He also had preliminary discussions with colleagues at Citizens Bank as to how the Network may continue this process. |