Smartaid for Microfinance Index 2009: International Fund For Agricultural Development (IFAD)

This SmartAid for Microfinance Index measures and rates whether International Fund for Agricultural Development (IFAD) supports microfinance effectively. It analyzes IFADs system along five areas of effectiveness. The report includes a snapshot of its portfolio, strengths and weaknesses, a good practice highlight and a score. IFAD received 53 out of 100 points, indicating that overall, the agency has partially adequate systems in place to support microfinance. Performance was weak in use of performance-based contracts and use of appropriate instruments to develop local financial markets. The review suggests the following:

• Ensuring availability of sufficient technical expertise through the project cycle;
• Developing intensive plan for upgrading staff capacity on rural finance;
• Stepping up role of technical advisors and credit portfolio managers in project supervision;
• Enforcing mandatory reporting of core performance indicators;
• Verifying accuracy of flagging system;
• Beginning to use performance-based contracts;
• Promoting stand-alone projects;
• Providing incentives and resources for staff participation in learning events.

The review states that IFAD will have to invest in necessary resources, especially in terms of systems for accountability and staff capacity, if it wants to be a leader in rural finance.