Paper
Towards Good Practice Principles for Microfinance in War-affected Contexts
Performance standards for MFIs in war-affected environments - A compilation of guidelines
This discussion document aims to contribute to debate among donors, non-government organizations (NGOs), microfinance institutions (MFIs) and microfinance clients on a common standard for microfinance in war-affected contexts.
The paper states that:
- In war-affected contexts, microfinance providers need to conform to international donor guidelines;
- Following best practice principles can contribute to outreach and viability;
- The conditions peculiar to war-affected contexts necessitate additional good practice standards.
The document sets out standards for MFIs, relating to:
- Institutional strengths, such as:
- Strong security systems;
- Sustainable service delivery;
- Investment in staff and client capacities;
- A philosophy of independence;
- Accurate management information systems (MIS);
- Transparent financial reporting.
- Quality of services, such as:
- A strong repayment discipline;
- An effective client targeting strategy;
- Smaller loans with flexible repayments.
- Outreach and financial performance, which include:
- An appropriate pricing policy;
- Sound portfolio quality;
- Planned profitability;
- Strong internal control systems.
The document also sets out standards for donors, relating to:
- Appropriate uses of grants;
- Appropriate uses of loans;
- Commercial sourcing of funds;
- Coherence of donor policies.
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