Microfinance Institutions Growth Activity (MIGA) Activity Design for USAID/Peru

This paper traces the growth and development of microfinance in Peru and highlights the fact that the demand for credit overwhelmingly outstrips the supply. The paper states that the regulatory framework, institutional environment and strong donor support are creating a positive scenario for growth of microfinance in the country.

The technical assistance (TA) paper details the three areas of support that USAID would provide to the Government of Peru in order to create a strong microfinance sector:

• Technical assistance and training to microfinance institutions (MFIs);
• Financial sector support, specifically to improve the policy and regulatory environment;
• Capital support to MFIs.

The paper proposes the following as indicators for evaluating the TA:

• Number of clients served to be increased by 3 times;
• Number of poverty loans (less than US $400) to be increased by 3 times;
• Number of micro savers to be increased by 100,000.

The TA paper proposes that USAID will strongly encourage MFIs to apply best practices, and will emphasize strengthened operations and financial management. Institutions that can demonstrate improvements in lowering operating costs, increasing sustainability, diversifying services and in maintaining low delinquency rates will be the focus of the USAID support.

The paper concludes by defining success and other aspects of the TA which include:

• Five-year plan of action;
• Feasibility study detailing risks and assumptions;
• Financial plan and budget;
• Performance monitoring plan and key indicators of success.