Appui au Développement Autonome (ADA)
Over the past 20 years, ADA has been dedicated to building and catalysing the financial inclusion of populations excluded from conventional banking channels in developing countries. ADA empowers microfinance institutions and networks. Through the Luxembourg Microfinance and Development Fund (LMDF), ADA also helps them obtain the funding necessary for their sustainable growth. ADA focuses on the development of innovative inclusive financial services, capacity building, and action research. ADA puts expertise to use in areas including youth financial inclusion, access to green energy through microfinance, microinsurance, and reinvested savings through remittances for migrants as well as collaborating with individual states to support their inclusive finance expansion strategies. ADA is a non-governmental organisation approved and cofinanced by the Luxembourg Directorate for Development Cooperation and Humanitarian Affairs and is placed under the High Patronage of Her Royal Highness the Grand Duchess Maria Teresa. For more information, visit www.ada-microfinance.org.
Calmeadow has a deep history in risk management promotion, technical assistance, and capacity building. As early as 2002, Calmeadow started sponsoring research into the topic of Foreign Exchange Risk in the microfinance industry resulting in initiative such as LocFund and MFX Solutions. Ten years ago Calmeadow was at the forefront of the creation of the Emergency Liquidity Facility (ELF). This last-resort facility created to provide emergency liquidity to worthy MFIs in the wake of an external shock. As part of the program a technical assistance facility was created to provide support to the member MFIs in how best to manage their exposure to external shocks. Through this facility (and a parallel project created to service the Caribbean), close to 70 MFIs in LAC have received technical assistance on how best to deal with the risk of an external shock. Calmeadow also co-funded the Risk Management Facility (RMF), which was managed by Omtrix who also manages Calmeadow. The RMF has supported the development of microfinance risk management tools and has worked on their implementation in 30+ MFIs in Latin America. During 2012, Calmeadow launched a pilot project with MFIs in West Africa aimed at exploring the possibility of replicating the RMF experience in Latin America within the African context. Furthermore, Calmeadow has sponsored many publications touching on risk-related issues including: Failures in Microfinance, Experiences with Credit Bureaus in LAC, and Cautious Resilience. For more information, visit www.calmeadow.com.
Center for Financial Inclusion at Accion (CFI)
The Center for Financial Inclusion at Accion (CFI) is an action-oriented think tank working toward full global financial inclusion. Constructing a financial inclusion sector that reaches everyone with quality services will require the combined efforts of many actors. CFI contributes to full inclusion by collaborating with sector participants to tackle challenges beyond the scope of any one actor, using tools that include research, convening, capacity building, and communications.
Through its Investing in Inclusive Finance program area, the CFI addresses the challenges and opportunities of investing in financial inclusion. Investing in Inclusive Finance focuses on strengthening governance and risk management capacity among investors, boards and management of MFIs, and on fostering responsible investments. It has produced numerous publications on governance and risk including the recently completed three-part Running with Risk project, which aims to create a common framework and language for MFI board members to better execute their roles in managing risk. The CFI is now the institutional home for the Microfinance Banana Skins report, a yearly report reflecting perceptions of risk in microfinance. The report aims to reveal shifts in risk perception and to highlight both emerging and long-term risks in a rapidly changing field. For more information, visit www.centerforfinancialinclusion.org.
Mennonite Economic Development Associates (MEDA)
Mennonite Economic Development Associates (MEDA) is an international economic development organization whose mission is to create business solutions to poverty. MEDA’s Inclusive Financial Services support projects through employing an integrated risk management approach beginning with institutional objectives, risk environment, and institutional risk appetite and limits.
MEDA’s Risk Management Framework helps financial institutions identify what the risk management framework is, how to integrate the framework to MFI’s strategy and who should be involved. Using step-by-step process, this approach guides financial institutions through the understanding of how to manage risk from a strategic and corporate governance level all the way to operations and personnel, instead of seeing risk management as an isolated activity.
MEDA takes risk-based approaches to building capacity of financial institution partners across all inclusive financial services projects in product development, branchless banking and technology, rural finance, and transformation readiness. By integrating the risk-based approaches, MFIs are able to institutionalize a system that identifies risks, evaluates impacts, and implements mitigation plan.
MEDA has conducted hands-on trainings with financial institutions’ board and senior management to build understanding of FI’s risk appetite, definition, and language as well as to apply risk management framework into organizational management in Egypt, Afghanistan, Syria and Haiti. For more information, visit www.meda.org.
MFX Solutions (MFX)
Founded in 2008, MFX Solutions Inc. (MFX) is an initiative of more than 30 microfinance investment vehicles (MIVs) created to support lending to entrepreneurs in low-income countries with affordable hedging products and risk management education as an avenue to reduce risk and catalyze investment flows within the global financial sector. The founders and shareholders of MFX are major global MIVs, rating agencies, networks, and foundations currently managing over US$ 2.5 Billion in financial sector investment. MFX brings a wealth of expertise on issues related to currency risk, liquidity risk, interest rate risk, balance sheet and financial risk management, including asset/liability management (ALM). As recipients of the G-20 SME Finance Challenge Award in 2010, MFX has been able to provide institutional capacity building and technical advisory services in the area of ALM to 30+ MFIs in Sub-Saharan Africa. Similarly, MFX is recognized for its specialized Comprehensive Asset/Liability Management (CALM) Tool, a balance sheet stress testing model which assists MFIs in stress testing their balance sheets against macroeconomic shocks. For more information, visit mfxsolutions.com.
Microfinanza Srl offers consultancy and training services in the areas of risk management and corporate governance. Microfinanza’s approach is to focus on the microfinance institution’s ability to identify, measure, monitor and manage its institutional risks. Specifically, Microfinanza evaluates the institution’s governance, strategy, internal control and information flows and then coach the Institution in setting up a tailored and effective risk management framework.
Microfinanza has been involved since 2001 in the appraisal and rating of microfinance institutions (this part of the business was spun off in 2006 with the creation of Microfinanza Rating). Therefore, Microfinanza’s risk assessment tools are based on a proven methodology with a long track record of implementation (more than 500 ratings worldwide). Additionally, Microfinanza carried out a number of TA assignments on risk management implementation contracted by different TA Facilities (e.g., Promifin Cosude in Central America, Fintech in Africa and Triple Jump Advisory Services in Latin America). Finally, as TA Advisor for the TA Facility of the Regional MSME Investment Fund for sub-Saharan Africa (REGMIFA), Microfinanza has developed and will be developing TA projects on risk management for the REGMIFA partner institutions. For more information, visit www.microfinanza.com.
Oikocredit is a worldwide cooperative and social investor, providing funding to the microfinance sector, fair trade organizations, cooperatives and small to medium enterprises. With operations in over 60 countries, Oikocredit encounters various types of risk, including currency risk, equity risk, liquidity risk and credit risk. As well as mitigating its own risks, Oikocredit also supports its partner organizations in mitigating theirs. As part of its capacity building programme, Oikocredit focusses on training its partners on how to address major risks in areas such as credit, governance, markets, exchange rates, agricultural production and internal auditing. Oikocredit’s training in risk management has spanned across Africa, Eastern Europe, Latin America and Southeast Asia, with a focus on reducing portfolio at risk and strengthening client services for microfinance institutions. For more information, visit www.oikocredit.coop.
Triple Jump manages and advises funds that aim to invest responsibly in developing countries. Our focus is on the bottom of the pyramid, where we improve livelihoods by managing and advising on responsible investment funds. Micro and small & medium sized enterprises are at the centre of our continual development and improvement of an inclusive financial sector.
Triple Jump re-invests a portion of its earnings, through Triple Jump Advisory Services, in technical assistance projects for its investees, with the objective of contributing to a solid, social, and innovative microfinance sector. The core of our work consists of providing hands-on advisory services to financial intermediaries. Our expertise areas are clustered around three main topics: (1) Product/channel development, to help serve the underserved, like up-scaling MFI to the SME market and introducing branchless banking. (2) Risk management, focusing on both financial and social risks. (This includes the strengthening of the foundations for solid risk management, like adequate governance and IT/MIS). (3) Social performance management, with cost effective approaches to assess impact.
In 2010 we launch the risk management pilot in Guatemala to develop an appropriate approach for smaller financial institutions. The results have been scaled in cooperation with Redcamif in the Central American region. We have directly supported more than 40 MFIs in building the foundations and strengthening their risk management. For more information, visit www.triplejump.eu.