A Multilateral Donor Triumphs over Disbursement Pressure: The Story of Microfinance at Banco do Nordeste in Brazil

December, 2001     Robert Peck Christen, Steven N. Schonberger

The CrediAmigo microfinance program mounted by Brazil’s Banco do Nordeste (BN) shows how an international financial institution like the World Bank can be a useful catalyst in the development of microfinance retail capacity. The World Bank’s patient, phased support to BN as it designed, launched, and nurtured CrediAmigo goes against the common perception that multilateral banks always focus on large near-term disbursements to the detriment of longer term capacity building. Progress so far suggests some lessons for multilateral donors in microfinance:

• Most important, outcomes may be better when large lending follows, rather than precedes, the development of proven retail capacity.
• Freedom from dogmatic presuppositions (for instance, “large state-owned banks can never do good microfinance”) allows an opportunistic approach that is more likely to yield results.
• After proper pilot work, a bank with a large preexisting branch network can roll out microfinance much more rapidly than a new microfinance-only institution.
• Generalist donor staff working on microfinance activities should get a basic grounding in the elements of sustainable microfinance, preferably through training or, at a minimum, close work with specialists.

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