Practical Microfinance

* essential addition to the microfinance armoury * photocopiable training manual containing step-by-step descriptions for 22 sessions * extensively tested around the world * free material available on the web "Modern" or "new paradigm" microfinancial services are reaching perhaps as many as twenty million people worldwide. These services are being provided by existing banks which have added microfinance to their product portfolio, by specialized microfinance institutions (MFIs) and by non-governmental organization (NGOs) which offer microfinance along with other services. This training manual is designed to meet the needs of those who train staff for banks, MFIs and NGOs. It will enable them to provide effective training for those who work, or may in the future work, in the field of microfinance. "Practical Microfinance" provides detailed step-by-step descriptions for twenty-two sessions which together offer a complete 5--10 day course on microfinance. The sessions may also be used individually, selected from to make up tailor-made courses, or integrated with other materials. The sessions cover a wide range of topics including: introduction to financial accounts; undertaking field visits; analysis of MFIs; group and individual lending; micro-insurance and micro-savings; and measuring the impact of microfinance. The sessions have been extensively tested in courses at the Cranfield School of Management in the UK, and in a number of different institutions in India, Bangladesh, Pakistan, Kenya, Uganda and elsewhere. The session exercise and case study handouts may be photocopied for participants or customized to meet trainees' needs via freely available web files. An introductory chapter includes advice on how to use the material in the book and a list of recommended resources and full index are provided for ease of reference. It is hoped that this manual will help improve the content and delivery of microfinance training and thus contribute to the greater availability of affordable, accessible and profitable financial services to the poor.

Malcolm Harper is Emeritus Professor of Enterprise Development at Cranfield University in the UK.

Acknowledgements

vii

Introduction

1

(1)

What is the purpose of this book?

1

(1)

Why is the manual necessary?

1

(2)

Who are to be trained, to do what and where?

3

(2)

What do the session guides contain?

5

(2)

How should the session guides be used?

7

(5)

`New paradigm microfinance' -- what is it?

12

(6)

The Finance Ministry press release

16

(2)

Introduction to financial accounts and analysis

18

(16)

Financial analysis exercise: Mary the shopkeeper

29

(1)

Financial analysis exercise: Grace's group

30

(1)

Financial analysis exercise: Hannah and Henry's household

31

(2)

Financial analysis exercise: the Best Bank Branch (BBB)

33

(1)

Field visits to microbusinesses

34

(9)

Guidelines for local microenterprise survey

41

(2)

Rates of return and the cost of money

43

(6)

Visit to microfinance groups

49

(6)

Financial analysis of a microfinance institution

55

(6)

Financial analysis exercise: the Mixed Up MFI (MUMFI)

59

(2)

Planning for MFI profitability

61

(6)

Profitability planning exercise: Abdul's problem

65

(2)

Marketing microfinance

67

(5)

Men and women as clients for microfinance

72

(5)

Arrears and defaults -- definition and measurement

77

(4)

Handout Overdues calculation exercise: the Overdue Microfinance Institution (OMFI)

80

(1)

`Graduation' and individual loans

81

(7)

Handout Case study: AMFI's institutional dilemma -- upwards or outwards?

86

(2)

Individual versus group lending -- the pros and cons of each

88

(14)

Case study: the Grameen Bank, Bangladesh, Mizapur branch

92

(4)

Case study: Bank Rakhyat Indonesia, Contoh unit

96

(6)

Bangladesh Grameen groups or self-help on-lending groups?

102

(8)

`Indian' self-help groups and `Bangladesh' solidarity groups: the two systems in summary

106

(2)

Self-help groups and the Grameen method: pros and cons

108

(2)

Subsidies -- when and how?

110

(9)

Subsidy comparison exercise

116

(3)

Commercial banks and microfinance

119

(11)

Case study: the Traditional Commercial Bank's dilemma

122

(2)

Brief for consultant I

124

(2)

Brief for consultant II

126

(2)

Brief for consultant III

128

(2)

The need for microsavings services

130

(8)

Micro-insurance

138

(9)

MFI staffing -- recruitment and motivation

147

(6)

Management information systems -- selection and design

153

(6)

Measuring the impact of microfinance

159

(4)

The `downside' of microfinance

163

(8)

Case study: DUMFI (the Damaging MFI)

168

(3)

Regulation and supervision -- by whom and how?

171

(7)

Case study: the Central Banker's dilemma

176

(2)

Resources Some suggested resources on microfinance

178

(3)

Index

181

What is included with this book?

The New copy of this book will include any supplemental materials advertised. Please check the title of the book to determine if it should include any access cards, study guides, lab manuals, CDs, etc.

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Practical Microfinance

Summary

Author Biography

Table of Contents

Supplemental Materials