Source: CGAP (Consultative Group to Assist the Poor).
Original press release available here.
CGAP (Consultative Group to Assist the Poor) launched the “SmartAid for Microfinance Index” in 2007 to measure whether funding agencies are set up to support microfinance effectively. This ambitious project is the first of its kind with the twin objectives of promoting transparent external assessments of funders and influencing the aid effectiveness dialogue to place greater emphasis on strong management systems – the way funders work. Seven funders participated in the pilot round of SmartAid, and six have agreed to share the results of the Index publicly.
SmartAid builds on the aid effectiveness work undertaken by CGAP and its members starting in 2002 with the microfinance donor peer reviews. The SmartAid team, with academic advisors and microfinance experts, developed a set of indicators along a framework of five elements – strategy, staff, accountability, instruments, and knowledge management. SmartAid’s premise is that the proper management of these elements is a necessary though not sufficient condition for successful programs and investments.
The results of the pilot round show mixed performance, ranging from 53 to 86 out of 100 points. Staff capacity emerged as the area with the most challenges, while average scores were relatively high for appropriate instruments. All participants received a short report with an analysis of their strengths and weaknesses, and suggestions for how they can improve their effectiveness. The reports also highlight good practice examples – much in the spirit of peer learning.
As more and more funders enter microfinance, the fundamental question of whether they have the right instruments, strategies, staff, mechanisms for accountability and knowledge management to support microfinance effectively will become increasingly important. SmartAid hopes to impact the industry by highlighting the requirements for effective support to microfinance and benchmarking funders. Learn more about SmartAid here, including who were the top performers in the pilot round.
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