Summary Matrix

These matrices present the analysis of donor agencies' strengths and challenges with respect to applying microfinance good practices, they also outline specific recommendations for change.

The matrices are the result of the “Peer Reviews” that the Consultative Group to Assist the Poor (CGAP) initiated to increase the effectiveness of donor aid in microfinance.They are organized around the following six main areas of inquiry that the reviews pursued:

• Strategic clarity and organizational culture;
• Technical expertise and resources;
• Organizational structure and flows;
• Instruments and incentives;
• Project cycle;
• Future microfinance operations.

Following are some of the points that the report makes:

• Strategic clarity refers to the extent to which an agency-wide vision of microfinance exists amongst staff;
• A good microfinance policy has little value until the operational staff internalize it;
• There is a strong correlation between donor agency investments in staff capacity and effectiveness;
• Donor agencies are increasingly hiring generalist staff, thereby creating an acute problem of in-house technical capacity;
• The increasing decentralization in agencies jeopardizes the flow of knowledge and information;
• A wide range of instruments, such as grants, loans, equity participation, etc. is necessary to support microfinance;
• An agencys instruments are effective if they can be used directly with the private sector;
• Effectiveness depends on ensuring that quality assurance and accountability are built into every phase of the project cycle.