Elements of Donor Effectiveness in Microfinance: Policy Implications

This paper presents the peer review on the subject of elements of donor effectiveness in microfinance. According to the paper, the peer reviews examined the methods of 17 bilateral and multilateral agencies and elaborated upon five core elements of donor effectiveness:

• Strategic clarity;
• Strong staff capacity;
• Accountability for results;
• Relevant knowledge management;
• Appropriate instruments.

The paper states that donors can use the five core element of effectiveness to identify their comparative advantage in promoting financial services for the poor. It also highlights various actions that agencies can take after incorporating these:

• Expanding horizontal as well as vertical size of the agency;
• Consolidating agencies' specialization in geographical or technical markets;
• Delegating tasks to other agencies in case of limited comparative advantages;
• In case of phasing out, reassigning previously used resources in other development works.