Supporting Small Businesses: East Timor

This note describes how funding under the Small Grants Program (SGP) helped a group of international and Timorese MFIs to form a powerful alliance to address the country's urgent need of access to credit for the poor.

The note states that:

• The group focused on transparency and sustainability so its members could continue to provide vital microfinance services to their clients;
• The defining characteristics of the group were a shared approach and commitment to the highest standards.

The note provides information on:

• The poverty in East Timor;
• The country's dependence on simple framing and micro-enterprises;
• The demand for microfinance;
• The potential that microfinance offers to the population to move away from subsistence to greater participation in the cash economy.

The note details the:

• Formation of the joint Microfinance Working Group (MFWG) in order to:
  • Work together efficiently,
  • Share experience and 'best practices',
  • Inform the Government, the public, donors and stakeholders of the importance of microfinance to poverty alleviation and sustainable development.
• Lessons that the group learnt from Uganda about the necessity for a standard reporting format;
• The development of a shared 'Code of Conduct' (COC) and a 'Performance Monitoring System' (PMS);
• The principles of the COC;
• The seven indicators of the PMS.

The note concludes with the importance of COC and the PMS in enhancing transparency, promoting accountability and enabling practitioners to work together to build a strong microfinance industry.