Scaling Up and Stretching Out: Microfinance Activities in the LAC Region Finance Forum Presentation Mike Goldberg (LCSFP) Sept. 24, 2004

Nicaragua Broad Based Access to Financial Services: The Rare Stand-Alone Project: No credit line (Effron study) Access indicators Financial systems (4 levels) Credit information systems Donor coordination (PRSC) $7 million could leverage up to $125 million

Stretching Microfinance: Honduras Land Fund Commercial banks, NGOs, landless farmer groups No Government role Land purchase and working capital Commercial approach, savings incentive

Stretching Microfinance: Nicaragua Rural Electrification Demonstration effect Bank study - hookups MFIs get access to commercially priced credit Matching Grant IDPs BDS component to improve firm’s access to technology, markets; to improve productivity

Small Pilots Lead to Large Scale Brazil (Banco do Nordeste - CrediAmigo) Pilot – high admin costs, loan losses; drop in number of clients Training led to changes in institutional culture, incentives, products, staffing Mexico (Nafin – Regional LIL) Marginal states meant start-ups Nafin preference for FIs with implicit Gov’t guarantee Lessons led to national replication

Lessons Learned on Strategies Stand-alones and components can build on best practices Pilots can be fertile learning ground Donor coordination pays dividends (shared reporting, shared philosophy, crisis management) Cross-sectoral programming can pay dividends and add to overall development impact

Lessons Learned on Design Be cautious about credit lines –leverage policy change and TA effectively. IDA countries permit matching grants for MFI IDPs. IBRD countries don’t Transformation is linked to scale (source of funds matters!)