What Makes a Microfinance Apex Work?

This paper discusses the importance of microfinance apexes and illustrates success factors for an apex with a case study on the Pakistan Poverty Alleviation Fund (PPAF), which was established in 2000. Apexes channel public money to microfinance through non-government organizations.

There are approximately 76 apexes currently operating in 46 countries around the world. Some of the functions of an apex are wholesale financial intermediation, building the retail financial market, donor coordination, and MFI supervision. Factors that help apexes succeed include mission clarity and instruments adapted to fulfill this mission, independent board and capable management, focus on quality in terms of client MFIs, adapting to sector evolution, and playing a positive market development role.

PPAF plays a key role in Pakistan’s microfinance sector and provides 44% of the sector’s funding. Its experiences present lessons for the success of apexes. It highlights the importance of:

• Retaining relevance through constant evolution;
• Being multi-dimensional;
• Selecting organizations who share its vision and mission;
• Staying true to envisioned values, while remaining sustainable;
• Aiding market development;
• Complementing the role of regulators;
• Good governance;
• Working closely with sector stakeholders.