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Lessons Learned in Partnering with Microfinance Organizations

This paper is a summary of key lessons learnt by the author, in his years of working in the field of microfinance. They include: * Lessons for donors in choosing a suitable partner organization: o Local institutions like non-governmental organizations (NGOs), cooperatives, people�s organizations, banks, etc. make good partners; o International NGOs can help local microfinance institutions (MFIs) in capacity-building and in getting start-up finance; o Roles and responsibilities in partnering relationships should be clearly delineated. * Reasons why NGOs are not good microfinance partners: o NGOs that do different varieties of work lack focus; o They are social welfare-minded and lack business skills. * Reasons why cooperatives make better partners: o Their cost structure is lower; o They focus on profitability. * Lessons about micro-credit and micro-savings: o Micro-savings are more important than micro-credit; o Micro-credit is useful to households with income-generating activities; o The economically inactive need savings services. * Lessons on MFI performance: o Performance standards should be established at the beginning of a program and must be regularly measured and reported; o MFIs should adopt a specific microfinance methodology to achieve efficiency; o Technical training must be given to MFI staff; o MFIs should have good accounting and reporting systems; o It is important to have good governance, management, human resource management and financial performance; o A network of partner MFIs is a good tool to encourage inter-MFI coordination and practical learning.


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