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| Sunday, 6 November 2005 |
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Micro finance a means to support people by Don Asoka Wijewardena The key things that a government can do for microfinance are to maintain micro-economic stability, avoid interest-rate caps and refrain from distorting the market with unsustainable subsidised, and high delinquency loans programs,said Consultative Group to Assist the Poor (CGAP) Microfinance Specialist Eric Duflos at a media conference on Country Level Effectiveness and Accountability Reviews (CLEAR) at the JAIC Hilton. Duflos said that CGAP was involved in advising all funding agencies on proper distribution of resources adding that donors in Sri Lanka should use appropriate grant,loan and equity instruments on a temporary basis to build the institutional capacity for financial providers. Donor funding must seek to integrate financial services for the poor into local financial markets; apply specialist expertise to the design and implementation of projects, require that financial institutions and other partners meet minimum performance standards as a condition for continued support; and plan for exit from the outset. CGAP Lead Microfinance Specialist Ms Brigit Helms said that microfinance was meant to support the people who had no access to any government or commercial bank and it was dealing with the poorest of the poor. She also said that tackling aid effectiveness was one of the biggest challenges facing international development and microfinance was no exception. Referring to the importance of microfinance, Ms. Helms said that despite substantial investments by public and private donors, hundreds and millions of poor people had remained without access to financial services. Country-level constraints would play a part, but aid agencies would also share the blame. Their own procedures,practices and systems could make it difficult for them to apply good microfinance practices. She said that incentives were skewed more towards the ultimate impact on clients,while many donor agencies had accepted international donor guidelines on good practice in microfinance, and that these guidelines were often not reflected in operations on the ground. CGAP Microfinance Consultant MS Joanna Ledgerwood said that microfinance was a specialised field that combined banking with social goals,and capacity needs to be built at all levels, from financial institutions through the regulatory and supervising bodies and information systems to government entities and donor agencies. |
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