Principles and Practice: Myths of Regulation and Supervision

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This document looks at the issues surrounding regulation and supervision of MFIs seeking to offer savings services and insurance services. The article highlights the convention required by central banks to design and administer regulation and external supervision systems under which MFIs operate in order to offer state-backed deposit insurance.

The paper outlines theoretical framework within which regulation and supervision has traditionally been conceptualised. It examines the short-comings of conventional approaches and looks at what happens when theory collides with practice. It also looks at some of the alternatives that have been proposed by microfinance specialists thinking beyond the conventional approaches, and why these approaches are important for poor around the world.

The paper concludes with a personal view on how different types of MFIs might be supervised.

Necessity as the Mother of Invention How Poor People Protect Themselves Against Risk

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Examines the risks facing the poor and their vulnerability to those risks before going on to examine the various systems and mechanisms that poor people use to protect themselves against these risks.

Use and Impact of Savings Services among the Poor in Tanzania

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The report focuses on the savings practices of poor people in Tanzania. It examines the perceived advantages and disadvantages of these particular savings services including the socio-economic characteristics of the people using each of them. It also explores how savings services are used to manage household income and expenditure flows, reasons for peoples saving in-kind and the kind of financial services that might induce them to start monetised savings. This report draws lessons for microfinance institutions (MFIs) seeking to develop poor-responsive savings services.

Financial Services Associations In Uganda

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This paper presents the mid-term review of the DFID initiated support programme to the seven financial services associations (FSAs) in Uganda, in October 1998. The purpose of this support programme is to facilitate provision of financial services to a wider proportion of the rural population.

The review makes the following observations on the performance of these FSAs:

Location of FSAs is far removed from that of the project monitoring unit (PMU).
Performance on financial, governance and management criteria of five out of the seven FSAs, is good.
Ownership structure of FSAs is ambiguous.
Development of an apex level institution of FSAs is urgently required to ensure proper supervision.
Demarcation of the role of the board and responsibilities of the management is needed, since division between the board and the management is essentially nonexistent.
Management staff of FSAs needs better training.
Prompt repayments by the board members of FSAs is required to set good examples.

This midterm review recommends to DFID to renew its contract with FSAs and provide support to the PMU for the remaining duration of the project.

Vulnerability, Risks, Assets and Empowerment – The Impact of Microfinance on Poverty Alleviation

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The research was conducted throughout Kampala in a range of settings. This research paper examines which groups among the poor Uganda Women’s Finance Trust (UWFT) reaches. It aims at understanding the nature of risks confronting the poor clients of the UWFT and how financial services improve client’s capacity to manage and control assets and build up their asset base to protect against and cope with risks. The research paper analyses how microfinance services enable clients to use assets to maintain a minimum economic threshold.

Savings and Needs in East Africa: An Infinite Variety

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This paper focuses on risk management strategies of the poor people to cope with the crisis situation as it temporarily or permanently disrupts the income stream of the household to meet their basic needs. There are a variety of risk management strategies employed by the poor in the East African countries of Tanzania, Uganda, and Kenya. These include investments in human, physical, financial and social assets. The objective of this report is to assess the financial needs of poor communities in East Africa, and to evaluate existing programs in order to determine potential savings products that not only address those needs but address those needs in a manner best suited to the capabilities and desires of the targeted communities. It details out a framework suggested by Rahman and Hossain for analysing risk that considers the extent to which a specific disruption can be anticipated, and hence planned for, as well as the degree to which these disruptions affect the choice of responses. The risks have been classified as life cycle risks related to events such as marriage, birth, education, healthcare, widowhood, old age, death etc, structural risks such as changes in national or international economy and crisis risks that are sudden and unexpected. It also explains in detail the responses of various informal, semi-formal and formal institutions to these needs through designing client focused products and service delivery innovations to counter these risks.