In-Country Donor Coordination

This focus note examines specific cases of donor coordination in microfinance. 

Lack of coordination amongst donors can be confusing to government and the central bank. Different donors may push for different solutions, based on their experiences in different countries. They may even make continued funding conditional on certain measures being introduced and certain laws enacted. Local MFIs receive assistance from different donors and must meet different expectations. Provision of large capital sums to an MFI can potentially discourage discipline in financial management, weaken performance and reduce their ability and motivation to access commercial funds, including savings. 

The note identifies a number of different types of in-country donor coordination (ICDC) that are being adopted, each with significant benefits. They can be grouped as:

• Project-specific, where participating donors coordinate on specific microfinance programs or projects;
• Sectoral informal, where donors meet informally and occasionally;
• Sectoral substantive, where donors meet regularly, there is greater collaboration with government and formal financial sector, and establishment of MFI best practices;
• Sectoral strategic, where donors explicitly seek to develop a shared vision and coordinate efforts, working in collaboration with the government.

This is also available in French, Spanish and Arabic here.