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The Island - Sri Lanka
October 2005
© Copyright 2005, The Island, All Rights Reserved.

Development agencies tackle aid effectiveness

Microfinance (the provision of financial services such as savings, credit, and insurance to the poor) is an area where good practices exist but where they are not systematically translated into actions by donors.

CGAP, a global resource center for microfinance, launched an aid effectiveness initiative in 2002. The first phase of this initiative consisted of 17 Microfinance Donor Peer Reviews that took place at the head offices of 17 of CGAP members between 2002 and 2003. The Peer Reviews focused on analysing donor systems and making concrete recommendations on how to improve them to reach greater aid effectiveness. Since then, participating agencies have started to implement the recommendations. To build on the success of the Peer Reviews and deepen their scope, CGAP designed a new phase at the demand of its members. The core of this new phase consists in a series of six Country Level Effectiveness and Accountability Reviews (CLEARs). The CLEARs aim at helping donors improve their effectiveness in building financial systems that work for the poor and are three week "country-based" reviews. They gather the views of a broad range of actors in microfinance through interviews and focus groups to analyse key challenges and to make recommendations to donors. The first three CLEARs took place in Cambodia, Nicaragua and Madagascar. The fourth CLEAR is taking place in Sri Lanka from 9 to 28 October.

Sri Lanka was selected by CGAP’s members as a relevant country to conduct such a review due to the large number of donors involved in microfinance (including INGOs), and the significant challenges of making aid effective after the tsunami.

CGAP is a microfinance specialist agency dedicated to building financial systems for the poor. CGAP is composed of 31 development agencies that work in the field of microfinance (multilateral, bilateral agencies and private foundations). CGAP was created by the major donor countries and leading practitioners to be a resource to the industry in setting standards, providing advisory services, undertaking research and development and funding innovations in the field. CGAP serves financial service providers, donor agencies, governments and others in over 60 countries. Additional information may be found at wwe.cgap.org

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