Strategic Alliance Issues in Microfinance Management

This paper argues that lack of strategic alliance management skills amongst MFIs is a contributing factor for the failure of microfinance in Papua New Guinea.

The paper examines two examples of strategic alliances in PNG and derives lessons from their experiences that might contribute to maximizing MFI outreach, sustainability and self-sufficiency in the region.

The paper discusses:

• Importance of strategic alliances;
• Reasons for the high failure rate of strategic alliances;
• Role of the alliance manager;
• Importance of human resource management in strategic alliances;
• Important traits in alliance management: flexibility, self-confidence, sensitivity to others and a multi-cultural experience.

The paper describes the cases of two of PNG’s MFIs - the “Liklik Dianu Arbitore Trust” (LLDAT) and the “Bogainville Microfinance Scheme” (BMS) - in order to highlight the importance of inculcating strategic alliance management skills.

It concludes by listing lessons learnt from the experiences of these two MFIs about the importance of:

• Clear knowledge of the alliance manager’s tasks and responsibilities;
• Early demonstration of positive results to keep partners interested;
• Alignment of the alliance’s strategic intent and governance structure, planning and control mechanisms, culture and environment;
• Alliance interfaces that consist of exchanges of information, meetings, joint task forces, common teams and sharing of progress reports;
• Shorter alliance duration in agreements with clear measurable goals.