Social Fund Support of Microfinance: A Review of Implementation Experience
This series of case studies review social fund projects with microfinance components.
World Bank task managers and project planners have become increasingly eager to include microfinance components in social funds and other multi-sectoral projects, as a result of growing recognition of microfinance's role in poverty alleviation. This has resulted in demand for information on successful approaches to project design and implementation. The Social Fund Thematic Group has initiated several activities to support task managers in their work, in response to this demand.
The case studies of Panama, Yemen, Albania, Bosnia and Herzegovina, and Eritrea explore a wide range of implementation experiences. They identify lessons, best practices, and potential pitfalls. Findings include:
- Combining social funds and microfinance is a complex undertaking;
- Social funds have constraints that can make adhering to microfinance best practices difficult;
- Common constraints include organizational structures that emphasize grants, budget systems that do not permit rigorous MFI monitoring and staff incentives that do not focus on MFI sustainability;
- Social funds with microfinance components can respond to a community's demand for financial services if they are designed well and supported with technical assistance.
