1. 10 commandments of TMF Capacity Building Angelica Senders For Terrafina Micro Finance (TMF) October 12, 2011

2. 1. Capacity Building is the process of supporting the development of capacities of partner organisations Capacity Development:is an endogenous process of the organisation (or any humans system) to develop its capacities ‘to do something’ (e.g deliver outputs = services or products). Continuous development of it capacities is an objective of all successful organisations Capacity Building: is the process of supporting the development of capacities of an organisation. Capacity Building is an activity/ strategy of development organisations

3. 2. The TMF strategy (= providing loans ànd CB) centers around Capacity Development Taken from TMF business plan: TMF hopes to achieve its objectives through: 1. Building of MFI capacity, resulting in: effective graduation (financial and institutional sustainability) appropriate financial services for rural productive poor effective (SPM) to ensure improved living conditions 2. Facilitation of increased financial service delivery by MFIs in rural areas and in the agricultural sector (including value chain finance). 3. Strengthen the capital base of partner MFIs so as to expand capacity to borrow and/or meet regulatory requirements 4. Facilitate inclusive financial sectors (meso-level, MFI associations etc.).

4. 3. The development of capacities of MFI for TMF is a means to an end: Output: Expanded rural outreach by sustainable microfinance providers for rural producers and entrepreneurs Outcome: rural development and poverty alleviation Internal capacities (capabilities) Input Output Outcome External factors

5. TMF uses MicroScore as tool to systematically identify which capacities are to be developed to ensure graduation of the partner organisation The tool assesses the strengths and weaknesses of an organisation in 4 domains of internal capacity (or capability). They are closely related and by themselves they do not contribute to social change Together they contribute to an organisations capacity to achieve its objectives in bringing about social change

6. Internal capacities (capabilities) Governance Institutional Input Output Outcome Services & SPM Financial performance External factors

7. MicroScore is inspired by other models:

8. 5. Capacity building leads to observable developed capacities Based on MicroScore assessment capacities to be developed are identified Assessment are of a participatory nature but include an expert view Observable improved capacities are agreed upon Capacities to be developed are agreed upon and formalized In observable terms time specific: before contracting, e.g in the first 6 months, within 1 year) Development of capacities is monitored When results are not achieved, this is sanctioned! (‘up or out’) Assessments are repeated on a regular (yearly) basis (for this MicroScore is used in adjusted form (shorter, faster)

9. 6. Capacity building is a tailor-made process involving a variety of activities Capacity building needs of each MFI are specific, related to its history, circumstances and life-cycle. CB involves a combination of formal and informal activities, including training and on the job training and advice and accompaniment: (In)formal training of staff and Board in many different subjects; Coaching of Board, management and staff. Development and implementation of policies, systems and procedures, such as MIS, HRD, manuals; Services, such as audits, ratings, facilitation of strategic and business planning, Assistance in the development of innovative services Improving social performance management of the MFI

10. 7. Funding of CB is joint responsibility of TMF and the partner organisation Grants for capacity building is one of the instruments to support microfinance, others are capital grants and access to loans. A timely, and coherent combination of instruments is needed to effectively strengthen a MFI. This does not imply that TMF takes over the responsibility of the partner to develop its own capacities and contributes to it financially and in kind! In CB trajectories own efforts and contributions of the partner organisations are specified

11. 8. Facilitation of capacity building is the responsibility of TMF staff (international and local), but carried out in close cooperation with locally available expertise As there are local: Consultants Networks Knowledge institutes Associations/ platforms of MFIs Other international organisations involved in CB of MFIs

12. 9. The results of CB are monitored at different levels, with different methods, on a regular basis CB Input: CB trajectories as facilitated by TMF staff Capacity Development (graduation) Progress on 4 MicroScore domain Output (service delivery of partners): Expansion (broadening/ deepening) of rural client outreach Strengthening of the enabling environment for rural microfinance, through support to sector initiatives Outcome: Development and poverty alleviation (incl gender) through improved access to microfinance for rural entrepreneurs and producers

13. 10. Multi-stakeholder platforms play an important role in the TMF strategy; systematically enhancing their capacities is a crucial element in the TMF strategy Examples are: Associations of MFIs, platforms of value chain actors Support to the development of their capacities follows the same logic as described for individual organisations GIZ formulate 5 domains for capacity development of multi stakeholder processes in it new strategy called Capacity Works:1. Strategy : clear and plausible strategic orientation2. Cooperation: a clear understanding of who is being cooperated with and how3. Steering structure : an effective steering structure4. Processes: a clear understanding of the key strategic processes5. Learning and innovation: supporting learning capacity development

14. TMF: 10 commandments/ guiding principles for CB Capacity Building is the process of supporting the development of capacities in partner organisations The TMF strategy (= providing loans ànd CB) centers around Capacity Development The development of capacities of MFI for TMF is a means to an end: Output: Expanded rural outreach by sustainable microfinance providers Outcome: rural development and poverty alleviation and increased access to finance for rural entrepreneurs and producers TMF uses MicroScore as tool to systematically identify which capacities are to be developed to ensure graduation of the partner organisation Capacity building leads to observable developed capacities Capacity building is a tailor made process involving a variety of activities Funding of CB is joint responsibility of TMF and the partner Capacity building is the responsibility of TMF staff (international and local), but carried out in close cooperation with locally available expertise The results of CB are monitored at different levels, with different methods, on a regular basis. Multi-stakeholder platforms play an important role in the TMF strategy, systematically enhancing their capacities is a crucial element in the TMF strategy