A Multilateral Donor Triumphs over Disbursement Pressure: The Story of Microfinance at Banco do Nordeste in Brazil

This case study of the CrediAmigo microfinance program mounted by Brazil's Banco do Nordeste (BN), demonstrates how an international financial institution like the World Bank can be a useful catalyst in the development of microfinance retail capacity.

The paper states that the World Bank’s support to BN as it designed, launched, and nurtured CrediAmigo goes against the common perception that multilateral banks always focus on large near-term disbursements to the detriment of longer term capacity building. Progress so far suggests some lessons for multilateral donors in microfinance. They include:

• Outcomes may be better when large lending follows, rather than precedes development of proven retail capacity;
• Freedom from dogmatic presuppositions allows an opportunistic approach that is more likely to yield results;
• After pilot work, a bank with a large pre-existing branch network can roll out microfinance more rapidly than a new microfinance only institution;
• Generalist donor staff working on microfinance activities should get basic grounding in the elements of sustainable microfinance, through training or close work with specialists;
• Donors can be effective with a limited technical role, setting benchmarks consistent with international best practice, and putting the client institution in contact with microfinance practitioners.

Also availble in Spanish and Arabic here.