Institutional Action Plans: FINCA Faces the Summit's Challenges
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The Goal:
1 million borrowers by 2005--750,000 from the world's poorest families
FINCA's action plan is a little different in that we're trying to create a composite action plan for our whole network of 14 programs in different parts of the world. We've modified the format just a little bit because of that....
We already had a strategic plan until the year 2000, which we started creating two years ago in consensus with our affiliates. Basically, to go to the year 2005 was then to extrapolate from our target for the year 2000.
In that process we became somewhat unscientific. We decided that the first thing we needed to do was to leap to the year 2005 and give ourselves a goal that we think will completely stretch our organization. That's why we decided that we would try to reach one million borrowers.... Currently we have 70,000 borrowers....
The purpose of the number is to stretch us-something that is high enough to capture our imagination. All of these numbers in the FINCA action plan [percent female borrowers, average savings, average loan size] come from year-by-year projections that we've created in an action plan. It's very important to realize that this two-page summary is not going to pass muster.... Nobody is going to confuse this with a business plan. Behind these numbers is a pile of documents-documents which have gone through a professional planning process.... Those are the kinds of in-house documents that institutions have to create-year-by-year business plans-to accomplish their targets.
The Strategies:
The Village Bank Capital Fund and Regional Technical Assistance Centers
Up to the year 2000, FINCA has decided to invest very heavily in capacity building. During this consolidation period we modestly expect to grow to 150,000 borrowers. Then, in the year 2000...that's when the results of all this capacity building allow our affiliates to really stand up.... The year 2001 is where we start seeing a high rate of growth....
We have created what I like to think of as a team of oxen-two instruments that really assist us in capacity building. The first is the creation of a village bank capital fund to guarantee loans from commercial banks to our affiliates.... The second ox is...regional technical assistance centers. As we cluster our affiliates in groups of four or five in a region, we will create a technical assistance center in the field that works on a continuous basis with those affiliates, providing them with assistance tailored to their needs.
One of the services provided is "certification" for the village bank capital fund. It's almost like a medical check-up every year. The technical assistance center will come in and look at the affiliate and figure out what the strengths and deficiencies of this affiliate are, and score the affiliate as ready or not for capital from the commercial sector.... If the affiliate doesn't reach certification from these types of studies, it triggers a technical assistance plan designed specifically to get that affiliate up to certification in the shortest possible time.
On one hand FINCA will have the capital fund, on the other we'll have the technical assistance capacity, and those two pulling together create the capacity-building machine for getting affiliates to self-sufficiency.
The Challenge:
Reaching the Poorest
One of the disadvantages we face right now is that we don't yet have a cost-effective poverty assessment tool for targeting the very poor. Nor have we finalized our impact evaluation instruments for monitoring how well they are doing in the program. I have been working on evaluations in FINCA, and I can say that this is a very challenging topic. I've looked at a lot of other people's evaluation efforts, and we've got a lot to learn from each other about how best to do this in a very cost-effective way.
But the important point I want to leave is that if you're going to monitor, if you're going to screen borrowers and monitor their poverty levels, then there are critical windows of time in which that has to be done. You just can't say, "Once we get some money we're going to do an evaluation of our program." The time to do it...is just as borrowers have been approved for membership in the program and are waiting for their first loan. That is the critical time when you've got to get baseline data on them.... It's exactly the question asked by the Summit on the Action Plan Summary: How many of your clients were 'very poor' when they joined the program?
FINCA believes, at a policy level, that we focus on the very poor. But FINCA also acknowledges that we don't have tools yet for guaranteeing such targeting. Now we are involved in a Microenterprise Best Practices activity, funded by USAID. The purpose of this project is to review existing poverty assessment tools currently available among microfinance NGOs and donor agencies.
One of the reasons we know that our village banks cannot exclusively consist of very poor people is that the very poor are mostly illiterate. And if we only serve the illiterate, who will keep the books? FINCA banks are self-managed. As Grameen found overwhelmingly, their very poor members are also illiterate. The illiteracy of the borrower doesn't matter in Grameen's system because they have outside workers who do all the paperwork and bookkeeping and management. In the FINCA system, for it to be self-managed, we have to go to the not-so-poor, or better-educated people in the community.
I think the direction that FINCA is going in is not so much creating tools that screen people and then saying, "you're in" or "you're out." Rather, we wish to create tools that allow us-no matter who comes in to the bank-to make the [poverty assessment] measurement.... We want to work with the natural groupings of people-the not-so-poor, poor, and very poor-and then grow from that. Once you have a poverty assessment capacity, you can say, "Okay, our program is predominantly reaching only the poor, and therefore we have to go out there and encourage even poorer people to join this program, so that the percentage of very poor borrowers can grow to, say, 75 or 80 percent."
