Inventory of Microfinance Activities Supported by Norway

This inventory presents an overview of microfinance activities supported by Norwegian Agency for Development Cooperation (Norad) and draws lessons from the ongoing support. The paper outlines lessons that highlight the importance of:

• Professional, specialized and sustainable implementing partners;
• Cost-effective operations;
• Accurate, standardized financial and social performance information;
• Continuous capacity building at all levels in the MFI;
• Integration of microfinance into the formal banking system.

The inventory draws from the information received on questionnaires, sent by the authors, to NGOs and Norwegian embassies, on Norad's support to microfinance. The authors suggest that the poor understanding of portfolio data demonstrated by some institutions should lead to changes in future project design, reporting and funding. Finally, the review recommends that Norad improve its strategic clarity in supporting microfinance, improve accountability for results and engage NGOs at a technical level. It also suggests two new microfinance instruments to assist the improvement process.