An increasing number of countries are developing national microfinance strategies, bringing the topic to the forefront of national development priorities. Over 30 countries, most in Africa, now have such strategies. This trend appears to be fueled by microfinance’s heightened visibility and new development modalities that favor sector-wide approaches and policy work.
After reviewing 29 national microfinance strategy/policy documents, CGAP identified common elements, early benefits, and challenges. While the jury is still out on whether national microfinance strategies contribute to expanding poor people’s access to finance, this Brief offers suggestions on how donors can avoid some pitfalls when developing these strategies.
Typically, national microfinance strategies are publicly approved documents, developed through a consultative process, aimed at increasing poor people’s access to finance. These strategy documents usually include an overview of microfinance, a vision for the sector, strategic objectives, and an action plan for implementation.
Developing a national microfinance strategy usually involves four stages: (i) conducting a diagnostic/gap analysis of the microfinance sector; (ii) consulting with stakeholders (more or less extensively); (iii) drafting a document, usually by a consultant in cooperation with government; and (iv) adopting and implementing the strategy, including approval by a governmental body and, in some cases, defining action steps to put the strategy into practice.
Donors almost always initiated this process through a national or regional project. UNCDF is the donor most often associated with national microfinance strategies, followed by the World Bank, AsDB, IFAD, KfW, GTZ, and USAID. In some cases, donors provided funding to help implementation.