Microfinance Associations (MFA): Their Role in Developing the Microfinance Sector

This paper synthesizes findings from case studies of microfinance associations (MFAs) in Uganda, Ghana, Niger, Mali, South Africa, Ethiopia, Namibia and Mozambique.

The studies identified MFA best practices and success criteria in order to assess their potential and limitations as well as to derive tentative recommendations for appropriate donor support. It examined MFAs according to membership, services and governance/management. Study findings include:

• Critical mass of MFIs oriented towards sustainability is a requirement for MFA formation;
• MFIs in the association must share at least one strong common concern, which is often lobbying/advocacy;
• MFIs in the MFA should not be too unequal with regard to size and power;
• Existence of an informally grown network before formalizing the MFA has proven helpful in keeping MFIs together, particularly in situations of stress and rivalry;
• Acceptance of MFAs by public authorities is a very important factor for their successful implementation;
• Seed money has been an indispensable condition for formalizing networks.

Finally, the case studies suggest that the promise of strategic partnerships with donors was a strong motive for the rapid constitution of an MFA.