Indonesia Microfinance Technical Assistance Programme
Cordaid-Rabo Bank Foundation-MicroSave Indonesia microfinance technical assistance programme is aimed at strengthening a select group of microfinance institutions (MFI) in Indonesia. The programme is sponsored by Rabo Bank Foundation, Netherlands and Cordaid Netherlands. MicroSave is the Technical Assistance (TA) provider to partner MFIs. To know about MicroSave's institutional profile, please click here .
Under the TA, partner MFIs shall receive consulting services and training in the areas of Strategic Business Planning, Operations Management, Human Resource Management, Internal Audit and Control, Financial Accounting, Financial Management and Ratio Analysis, MIS and Governance over a period of 2-3 years.
MFIs under the TA programme shall be selected through a process called Rapid Institutional Assessment. The selected MFIs will benefit from, over 50 days (spread over 2-3 years) of on-site consulting services and 15 days of training through Applied Microfinance Institute. This will result in enhanced institutional capacity leading to improved scalability and profitability of operations.
Read further to know the details. Click on the links below to directly go to relevant sections.
The programme envisions intensive technical assistance to the microfinance institutions (MFIs) over a period of three years, on eight functional areas (see the details below). In addition, the programme also encompasses two training programmes on relevant toolkits for the partner MFIs.
Technical Assistance Areas
Although the technical assistance areas shall be finalised during the assessment of partner MFI for selection, broad areas identified at this stage are given below along with the description of proposed technical assistance.
Technical assistance areas can be broadly divided into two categories:
Technical Assistance Programme | |
3 Weeks Training Programme | 10-11 Weeks On-Site Consulting Assistance |
A. Training Programmes: The programme proposes two training programme within a span of one year from the start of technical assistance. It provides an opportunity to build capacity on at least 5-6 MicroSave's toolkits.
The training programme shall be delivered through MicroSave's Applied Microfinance Institute (AMI) which aims to bring together microfinance practitioners from across the sector and provides a platform of learning, experience sharing and networking.
B. On-site technical assistance (consulting): A team of consultants shall keep visiting the MFI to provide technical assistance on 8-10 different areas for a period of two years, details provided below. Please click here to know more about MicroSave's toolkits in these areas. However, these areas may be further customised as per the requirements of the MFIs. For complete list of MicroSave's toolkits, please click here.
1. Strategic Business Planning (Year 1)
Technical assistance on Strategic Business Planning will be delivered in 5 days workshop mode. The workshop should be attended by senior management team, representatives from board, middle management team and field level staff. Technical assistance will entail a discussion/ review of institutions' mission, vision and values and will undertake analyses of market, competition, institution and macro-environment. On the basis of analyses, strategy for the institution will be developed and will outline market and scope, its strategy towards competition, how it will develop and maintain a competitive advantage in the market place and a strategic road map consisting of Key Objectives, Goals, Measures (along with targets) and Activities (required to achieve the goals) called KOGMA. Finally, financial projection for a period of 5 years will be prepared on internationally accepted Microfin application.
The key deliverable of the technical assistance will be the Strategic Business Plan document and financial projection on Microfin.
2. Process Mapping (Year 1)
The assignment shall be undertaken separately to map the processes of credit and savings. The duration of the assignment will be 10 days wherein all the operational processes involved in delivering credit and savings services will be evaluated in order to enhance the efficiency and minimise the risks involved. The assignment will involve intensive engagement of selected middle management persons for the entire duration of assignment. Process mapping will play a key role in optimising:
• Policies, procedures and works flows
• Staff training
• Risk analysis
• Internal control
• Customer service
• Activity Based Costing
There will be two key deliverables of the technical assistance:
First, a revised Process Map document which uses four-tiered process mapping framework that would encompass:
• Flowcharting the processes
• Describing the processes
• Analysing the risks in the processes
• Analysing the internal controls and other risk management strategies to manage the Risks
and second, institutional capacity building to use the tool to standardise other institutional processes.
3. Human Resource Management (Year 1)
The technical assistance in this area will encompass review of policies related to organisation structure, job descriptions, compensation structure (salary, benefits and incentives), recruitment, selection, orientation, staff performance management and training along with general HR policies. The assignment will involve HR team led by HR Manager for a period of 5 days besides scope to interact with employees at different levels.
The key deliverable of the technical assistance will be revised HR Policy and Procedures Manual to be adopted by the institution.
4. Internal Audit and Controls for MFIs (Year 2)
The technical assistance will involve assessment of institution's control structure, including monitoring functions within the operations and related team and internal audit funtions. Depending upon the assessment, the required forms and formats related to monitoring and audit functions will be developed. The assignment will involve engagement of Operations and Audit team for a period of 5 days.
The key deliverable of the technical assistance will be Internal Audit and Controls Manual including revised monitoring/ audit formats to be adopted by the institution.
5. Financial Accounting Systems (Year 2)
The technical assistance in this area will involve review of institution's accounting system and will evaluate it on the parameters of local and international accounting guidelines. It will introduce the generally accepted accounting principles and concepts that guide accounting practice and procedures. The assignment will involve engagement of accounting team for a period of 5 days.
The key deliverable of the technical assistance will be Internal Accounting Manual containing revised charts of accounts and other accounting policies to be adopted by the institution.
6. Management Information Systems (Year 2)
The technical assistance in this area will involve review of institution's MIS and will evaluate it on the parameters of adequacy, accuracy, timeliness and adherence with local regulatory requirements. It will involve engagement of MIS head and other relevant staff for a period of 5 days.
The key deliverable of the technical assistance will be a set of recommendations to improve the quality of MIS while providing rationale and details on the aspects of improvement.
7. Financial Management and Ratio Analysis (Year 3)
The technical assistance in this area will evaluate the existing capacity of microfinance institutions in financial management including the review of tools and techniques. Further, it will aim to instil capacity within the institution as per internationally accepted SEEP guidelines for microfinance institutions to undertake the function of financial management in a rigorous manner.
The input will be delivered in a 5 day workshop to be attended by board members, senior management team and representatives from middle management team. The key deliverable of the assignment will be a set of recommendations to institutions in order to improve its financial management capacity.
8. Board and Governance (Year 3)
The technical assistance will involve assessing the status of governance of institutions as compared to the local regulatory requirements and industry's best practices. Assignment duration will be of 3-5 days and will involve engagement of senior management team. The key deliverable of the assignment will be a set of recommendations to institutions in order to improve its governance.
The process of becoming a partner under the programme
MicroSave shall assess the interested MFIs on their requirements and capacity to utilise the proposed programme effectively. Once interested MFIs contact us, we shall send them a proforma to fill in and send us back. This proforma forms the initial basis of assessing the institutional capacity to benefit from the programme. If found positive, MicroSave shall plan a two-three day long ‘Rapid Institutional Assessment (RIA)' visit of consultants to the organisation. On the basis of RIA, we shall communicate if the institutions have been shortlisted to get into partnership for the programme.
Once shortlisted, the MFIs will be required to get into a simple agreement with MicroSave, Rabo Bank Foundation/Cordaid outlining the roles and responsibilities of partners. Specifically, partner MFI has to assure that the programme shall be received and utilised by them in the most optimal manner.
Who may be a partner MFIs to receive technical assistance?
The programme proposes to be model neutral to provide the technical assistance to a range of MFIs (such as BPRs, Cooperatives etc.) or any other kind of MFI. However, to become a partner, the MFI needs to undergo a selection process aimed at assessing the institutional requirement and capacity to receive the technical assistance in the areas broadly identified. However, following aspects are important to qualify for the technical assistance:
- Strong desire to enhance the outreach of microfinance services by the institutions
- Flexibility to effect changes in strategy and operational model, as per the technical assistance
- Existence for more than 2 years in operations
What are the costs involved?
Proposed technical assistance programme has been highly subsidised by Rabo Bank Foundation and Cordaid to attain the philanthropic aim of strengthening microfinance sector in Indonesia. However, in order to ensure that the programme is utilised in an optimal and serious manner, partner MFIs have to bear a minimum of following costs:
- Devoting staff to visiting consulting team as per the requirements of assignments.
- Devoting staff to attend the training programmes as and when conducted by MicroSave.
- Bearing travel and accommodation cost of staff in case of training programmes.
- Bearing the cost of local travel of visiting consultants during on-site technical assistance.
What would be the potential benefits to the partner MFIs under the programme?
Potential benefits to the institutions under this programme would be numerous, some of which are:
- Minimum of 15 days of training and 50 days of on-site technical assistance by a qualified team of consultants spread over a period of 2-3 years.
- Improved institutional capacity in delivering microfinance services.
- Improved efficiency and efficacy in delivery system enhancing the profitability of operations.
- Improved institutional capacity to assume high growth trajectory thereby significantly improving the scalability and profitability of services.
- Improved institutional capacity in attracting external sources of funds by achieving adherence with international standards in delivery of microfinance.
- Documented policies and procedures for all major functional areas.
Has similar programme been delivered before by MicroSave?
Similar programme has been delivered successfully by MicroSave in association with Royal Bank of Scotland Foundation of India (RBSFI) and Cordaid in India. It included technical assistance to more than 40 MFIs on six broad management areas spread over a period of 1.5 years. To access the mid-term review report of the programme, please click here. Some of the statistics related with the programme are presented below:
Interest from the microfinance institutions shall be received till February 28, 2011. To initiate the process of selection, please fill this sheet and send it to herman@Microsave.net. For further details, please contact neeraj@Microsave.net, sonmani@Microsave.net or herman@Microsave.net
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