GTZ Microfinance Operations, An Update

This paper summarizes GTZ activities and experiences in over 40 countries in the areas of microfinance and financial sector reform.The paper begins by introducing the context in which GTZ's financial systems development has developed: the change in paradigm from supply-led "financing development" to demand-oriented "development financing". It shows how the orientation of initial activities in microfinance - concentrating on economic and social self-improvement through financial self-help has remained a fundamental tenet of GTZ microfinance policy to this day. It then explains the GTZ conceptual background to microfinance, focussing on its holistic approach promoting access to financial services through financial system development.It then goes into detail of the activities of the GTZ's project portfolio, including:

• Establishing and assisting MFIs through downscaling, upgrading, linkage and greenfield banking.
• Vocational training, associations and credit information
• Regulation and supervision of MFIs
• Refinancing of MFIs
• Linkage banking
• Savings mobilisation

The sections are complemented with a short review of GTZ's experience in each area and further illustrated with examples of specific GTZ projects.In the concluding chapter, GTZ's experience is briefly reviewed and future issues are discussed. These centre on the varying agendas of governments and donors and the role of the private sector. Finally, the relevance of microfinance for development policy as a motor for achieving the Milleinium Development Goals, for promoting regional development and the issue of maintaining a focus on the microfinance sector as a developmental catalyst are mentioned.