STUDY VISIT ON THE ROLE OF WOMEN IN THE DEVELOPMENT OF MICROFINANCE IN AFRICA

Nairobi, Kenya 18 29th September 2006

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Background Information on Networks

Prepared by: Microfinance House Ltd

E-mail: mfhl@africaonline.co.ke ABBREVIATIONS ACCION Accion International AFRACA African Rural and Agricultural Credit Association AMFIN Africa Microfinance Network BWTP Banking with the Poor Network CASHPOR Credit and Savings for the Hardcore Poor CERISE CERISE CIDR Center for International Development and Research CRS Catholic Relieve Services ECLOF Ecumenical Church Loan Fund International FFH Freedom from Hunger FINCA FINCA International FWWB Friends of Women World Banking IMI International Micro Investment INAFI International Network of Alternative Finance Institutions IPC International Project Consult MEDA Mennonite Economic Development Associates MFN Microfinance Network NSO Network Support Organisations PROMUJER Pro Mujer SA DHAN Sa Dhan SAVE Save the Children SEEP Small Enterprise Education and Promotion Network

Background Information on Networks

Networks
What is a Network1? The term network is often used to refer to organizations that can be considered as both individual organizations and those that encompass a number of institutional partners. Such organizations are like AFRACA, INAFI, ACCION, CASHPOR, CIDR, etc. Throughout the development of the microfinance industry, Network Support Organizations (NSOs) have played a critical role in the following: i) ii) iii) iv) v) vi) Launching new institutions; Developing standards; Wholesaling funds; Providing technical services; Implementing knowledge management; and Leading policy and reforms.

Given the experience, Network Support Organizations (NSOs) can be an effective channel for donor microfinance; donors with limited staff or technical capacity can leverage their funds by investing in well-managed networks. Categories of Networks In an initiative by CGAP (Consultative Group to Assist the Poor) where network leaders of 33 NSOs were invited to a donors workshop in October 2002 to discuss roles and comparability of networks, they came up with the following categorization of NSOs: Microfinance Association NSOs These NSOs oversee peer group or membership organizations that join together for a common cause. Microfinance associations can be national, regional or international in scope and are sometimes referred to as lateral learning networks. Microfinance association NSOs provide no governance and have no ownership stake in their members. These are like AFMIN, AFRACA, BWTP, CERISE, INAFI, MFN, Sa Dahn, SEEP. Technical Service Focused NSOs These NSOs provide technical assistance to their partners. They are typically not represented on the partners boards of directors, or are limited to an ex-officio role with no ownership stake. These are like CASHPOR, CIDR, FFH, Grameen F, Grameen T, WOCCU, WWB, WSBI, and MFC. Ownership plus NSOs These NSOs own a minority, majority or 100% of some or all of their partners including fully owned partners that are launched by the NSO itself. Ownership plus NSOs also often provide other services, especially technical services. These are like ACCION, CRS, DID, ECLOF, FINCA, GRET, IMI/IPC, MEDA, Opportunity, Pro-Mujer, Save, World Vision. Funding NSOs
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Source : CGAP Focus Note July 2004

Background Information on Networks

These NSOs are primarily investor and apex funds that generally invest in their partners on a social or commercial basis through loans and equity investments. These are like FWWB, ProFund, Unitus, ShoreCap. Roles of Networks Microfinance is the primary activity of most NSOs. However, many of the NSOs offer related services e.g. business development or complementary services in health and education. Some networks identify themselves as multi-sector organizations. Catholic Relief Services (CRS) for example, works in microfinance, agriculture, community health, education, emergency response, HIV / AIDS, and other development sectors. Networks serve several crucial functions in expanding the delivery of financial services to the poor. These functions can be described in the following ways: i) ii) iii) iv) They are an important voice in policy and regulatory change, both within countries and across regions. They can be an effective means of intermediating both capital and technical services between donor agencies and service providers on the ground. They are a potent force for improving the performance of their members through peer learning, information exchange, and mutual accountability. They provide funding to members such as through investments funds, sometimes fulfill a governance function that is more effective and closer to true commercial governance than what donors provide.

NB: Please receive more information on challenges and performance of networks from the following sources: AFRACA: AFRACA Secretariat Address: P.O. Box 41378, Nairobi, Kenya Tel: 254-20-2717911 Email : afraca@africaonline.co.ke INAFI: Address: P.O. Box 4844-00200, Nairobi, Kenya Tel: 254-20-3870281 Email inafi@africaonline.co.ke AMFI

Background Information on Networks