Microfinance with a Mission: Learning Together

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Microfinance with a Mission Learning Together
Sustainability without Transformation Issues and
Alternatives
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Building Financial Systems for the
PoorSustainability Without Transformation
Issues and Alternatives Budapest, June 9, 2006
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Overview of the workshop

• Background what are we talking about and why do
  we care? (Tim Lyman, CGAP, Moderator)
• Experience from around the world with
  sustainable approaches without transformation
  (Deborah Drake, ACCION, Panelist)
• One MFIs perspective from here in the region
  (Kenan Crnkic, Prizma, Panelist)
• Discussion

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Understanding what were talking about

• What is an NGO transformation?
• Two main models (1) portfolio exchange and (2)
  portfolio sale
• Likely outcome a commercial entity owned in part
  by an NGO
• What connection between NGO transformation and
  sustainability?
• Access to new funding source(s) (equity investors
  and possibly depositors)
• Improved access (perhaps) to debt funding

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Why do we care?

• Lots of hype around transformation (e.g., last
  several years MFC transformation workshops)
• Sustainability an appropriate obsession
• But does sustainability require transformation?
• Changing donor/investor landscape
• New models of service delivery
• Transformation may not be possible or may not be
  desired

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Is transformation in this region different?

• NGO (civil society) laws are young
• Negative perceptions of privatization
  (windfalls)
• In many legal frameworks NGO transformation is
  impossible

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Cautionary experiences from near and far

• Costs of transformation (financial)
• Costs of transformation (cultural)
• Regulatory barriers (foreseen and unforeseen)
• Who are these new shareholders, and do they care
  about the poor?

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Where to look for guidance?

• Outside the region
• Lots of experience where transformations are
  legally impossible or difficult
• Inside the region
• Examples Russia, Kyrgyzstan and Tajikistan
  Legally possible, but at what cost?
• Example Serbia Legally impossible, but
  workable models exist
• Example Bosnia Herzegovina Soon to be
  legally possible, but is it advisable?

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Building Financial Systems for the PoorThank
you!