7 Steps to build sustainable
credit and savings programmes

1. Choose a programme model
One specific programme model for financial services and microenterprise development cannot be recommended for all situations. However certain basic technical and socio-economic criteria can be be employed - large scale, reaching the poor, providing easy access to savings and credit services, mechanisms for cost recovery and financial sustainability. Combining credit and savings, and credit with other socio-economic programes also ensure better participation and sustanability.

2. Build consensus
Building a consensus among the various stakeholders, whether project staff members, the target community, or other indiciduals/organizations, is an important element in the success of credit programmes. This is critical in facing the challenge of adjusting their values and roles as new financial service models reduce the subsidy element, stress the rotation of funds and feature partnerships.

3. Designate staff for economic development
Project staff members specifically designated to oversee development and implementation of financial services, play a critical role in facilitating an increased undersanding and awareness, and in transferring lessons learned. Experience in project design, implementation, management and evaluation, and experience in working with poor women is essential for effective outreach.

4. Formalize national policies
Clear national/regional policies for microcredit and poverty lending permit greater scale, specialization and sustainability. This avoids local programme design and budget decisions, as well as enables sharing of best practices and high performance ideas.

5. Assess and choose financial institutions as partners
Dynamic partnership models are necessary to successfully promote sustainable financial institutions. Partners typically take up the activities of managing funds or provide services to poor clients; they may also monitor service delivery and socio-economic impact, and assist in financial management and management information systems. As a result, both parties enhance their understanding of effective development and become stronger organizations.

6. Create agreements with partners
Agreements with partners define common visions and spell out contents of the programme. Roles and responsibilities, joint review, problem solving/mediation, and performance indicators are also identified. Agreememnts specify reporting standards and forms that ill be similar so that performance measuring becomes easy. These include loan portfolio performance, cost-recovery, progress toward sustainability, and socio-economic impact (overcoming gender inequities, effects on children).

7. Manage partnership agreements
Managing partnership agreements requires an understanding of the broader programmatic, institutional and financial issues associated with developing partner organizations. This may require technical assistance, training and systems development etc. to make partnerships more efficient. Measuring programme impact and institutional development of partners depends on good information systems and monitoring instruments.

Garber, Carter (1997) Private Investmnet as a Financing Source for Microcredit. The North-South Center, University of Miami.

Hari Srinivas - hsrinivas@gdrc.org
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