Management Education in Microfinance

By K. Sukumaran,

Indian School of Microfinance for Women,

Ahmedabad

Flow of Presentation

Case for Microfinance Growth momentum in the Sector Capacity Building requirements Need for Management Education in

the Sector The School’s Initiative

Case for Microfinance Incidence of Poverty : The World Bank report on

global poverty reveals that India has 421 million people below the $1.25 a day mark in 1981, the number had gone upto 456 million by 2005. While there has been a decline in poverty ratio, the ranks of the poor are still swelling.

Another literature, the Global Hunger Index prepared by International Food Policy Research Institute (IFPRI) puts the number of hungry in India at 200 million – the largest population of hungry in the world.

Hence the incidence of poverty and hunger in India is alarming and to alleviate this situation, microfinance institutions can play a right role by identifying the poor and lending small amounts of money so that the poor invests in income generating activities, earn income, create assets and overcome poverty.

Case…. Social Capital and intervention in Community

Issues: Microfinance in India is evolved mainly through SHG mechanism, and collectively the poor found solutions for their sufferings. Development issues viz. healthcare, education, sanitation, malnourishment etc. were discussed in group meetings and solutions arrived at.

More than 27% of the world’s undernourished population live in India while 43% of the children in India under five years are underweight.

Through microfinance movement, development issues are discussed and entitlements are ensured.

Case… Women Empowerment: A recent

Impact Assessment Study anchored by SIDBI reveals that through women’s access to financial services, empowerment dimensions have been observed.

Control over finance and assets, exhibiting leadership attributes, ensuring accountability, making decisions etc. are those dimensions that transform women in registering economic and social change.

Growth Momentum Community Based Model:

As at end March 2007, under SHG Bank Linkage Program of NABARD, 28.95 lac SHGs are linked to branches of commercial banks with total loans outstanding at Rs 12,366 crores which is a sound indicator of the community based microfinance model.

As per the Study conducted by APMAS, with 58 million members, 3.5 million bank credit groups, Rs 230 billion cumulative loan amount and about 100 thousand SHG Federations, the Indian SHG movement emerged as the largest MFI model in the world and the largest chain of the poor women’s own and only institutions. In the words of the members of the federations, the federation has been described as their (a) Identity (b) Strength (c) Means to build capacities and skills (d) Space to express their views and (e) Methods to fulfill their dreams etc.

Growth… MFI Model: As at end March 2008, 223 MFIs had an

outreach of 14.1million clients with an outstanding microfinance portfolio of Rs 5,954 crores.

The available data reveal that the resource flow to the microfinance sector has increased to around Rs 18,000 crores (around USD 4 billion). Some of the institutions have grown into big size expanding its scale and areas of operations. Today, top 10 MFIs in India alone account for Rs 7000 crores loan outstanding.

Capacity Building Requirements The objective of capacity building in microfinance is to

facilitate the growth process of a microfinance organization through knowledge creation and skill building of the microfinance professionals, to put in place the right systems and procedures, and provide support to organizational building.

The thematic interventions in Community Based Microfinance comprises of SHG Promotion & Management; Book Keeping in SHGs; Credit Management in SHGs; Promotion of SHG Federations; Managing SHG Federations; Micro Enterprise Development/Small Business Planning; SHGs – Best Practices etc

The thematic interventions in MFIs are: Financial Management, Managing Microfinance Operations, OD and Governance, Products and Services etc.

Need for Management Education The biggest challenge facing the Microfinance

Sector is on HR front. The Scale, Outreach and Impact dimensions of the growth process are to be handled and managed through right type of talent available.

The need is to create a conducive environment where management education in microfinance is to be planned, designed and made available to those who aspire to be professionals in the sector. This would fill the gap in demand and supply of microfinance professionals.

The School’s Initiative Indian School of Microfinance for Women,

Ahmedabad has initiated in this front through launching its first certified program – a three weeks residential program on ‘Microfinance for Development’. The first batch has just come out in February 2009.

About the Course: Integrated: Teaches the hard and soft skills in

microfinance Builds a holistic perspective Teaches how the economic and social aspects

integrate to alleviate poverty

Ten Modules

Locating Microfinance 1 & 2• Development and Poverty (General,

household, women)• Microfinance and relation to Development

and Poverty: History, International and National experience

Module 3 & 4 How of Microfinance• Typology of Microfinance: Microcredit,

Microfinance, Plus Models• Methods and Methodology: Individual

lending, SHGs, Federations, Grameen, etc.

Modules 5-6From the supply side

4. Operationalizing Microfinance; Mission, vision, Determination of Market and Clients, Institutional constraints, Legal & regulatory constraints, Microfinance Bill etc.

5.Sustainability: Financial sustainability, Functioning within the market, Role of Wholesalers, Banking institutions, Funders and Donors, Introduction to financial ratios / Financial Management etc.

Module 7: From the Demand Side

7. Delivering Microfinance Appropriately:

Formulation of a pro-poor strategy:, Formulation of a pro-women strategy: services, Mainstreaming a socio-economic approach, Building a gender lens, Roadblocks to effective microfinance.

Module 8Are you on Track?

8. Tracking Impact, Outcomes and Operations : Impact Assessment; MIS Systems, Monitoring and Evaluation, Social Audits, Social Performance Management

Module 9: Better Microfinance

9. Capacity Building : Research, Training, Behaviour Change

Communication, Role, Methods and Need.

Module 10: Adding Value

10: Making a Difference: Value Additions in Microfinance:

Financial Inclusion, ICT and Microfinance, Green Microfinance, Beyond Microfinance- Livelihood

finance

Three Field Visits At beginning, middle and end of course Trains the eye and perception of

participants Urban and Rural field Presentations to be evaluated. In total, there were 48 sessions, 50

articles on microfinance, 10 core faculty, 11 guest lectures etc.

Shaping the Course for Future To garner dedicated professionals for

the microfinance sector, it is suggested to design and implement a longer – one year or six months course in Microfinance for Development. The core papers can be on

i) Efficient Microfinance and ii) Effective Microfinance Optional Subjects can be from ICT and

mF; BCC and mF; SPM and mF; FI and mF; Livelihoods and mF etc.