5

Scaling Up in Microfinance - Issues and Challenges

Across federations, there is a serious

the above mentioned issues are

problem of good accounting, monitoring

mentioned below:

and MIS. For the financial institutions to

Developing a team of Community

run efficiently and effectively, accurate

Resource Persons (CRPs) selected from

a n d up-to-date accounting and

among the SHG leaders/members to

reporting is necessary. The capacities of

promote/strengthen new SHGs may be

the board of directors of federations

need to be built to interpret financial

an effective alternative option, and

where the SHPI staff move on to perform

statements such as balance sheet,

It is absolutely

a facilitating and monitoring role, while

receipts and payments and income and

critical that these

the CRPs perform the implementation

expenditure statements.

federations are

role. This might help achieve targets,

built based on the

The most significant challenge i s

without compromising on the process

felt need of the

and quality.

developing  appropriate  human

members through

capacity and commitment. Capacity

a process-

Ensure attendance at all levels (SHG and

building, including on-the-job support

oriented

federations) to be in excess of 90 per cent,

and exposure visits, needs to be

approach

at all times and have a compact board

provided to the staff and members of

with the members not exceeding 15.

the federations on an on-going basis.

Leadership,

governance

and

Developing sharing mechanisms of best

participatory decision-making result in a

p r a c t i c e s among SHGs and their

perceptible difference in the functioning

federations is a challenge, but when

accomplished will go a long way in

and performance of the federations.

ensuring sustainability of the scaling-up

Set standards and indicators for assessing

process.

the performance and maturity of the

SHGs. Promote federations only after the

While  networking  has  distinct

SHGs achieve the set standards and

advantages, it also has several

maturity. Federations should always be

disadvantages. It is absolutely critical

promoted after creating an awareness

that these federations are built based

and `felt need' among the SHGs.

on the felt need of the members through

a process-oriented approach. The task

SHGs may federate at the mandal /block

becomes even more challenging if these

level to form an independent but

institutions are to be owned and

interdependent federation, to play the

managed by poor women.

role of a catalyst to bring about social

change. Such a federation may function

Scaling up requires focused leadership

l i k e an NGO/SHPI and focus on

and commitment from SHPIs, donors, the

strengthening the village/cluster

government, and other stakeholders to

federations and SHGs, and might even

succeed. A conscious decision is to be

depend on grant funds, if needed. This

made as to when to scale-up. Ideally,

would help the social agenda not get

one would expect SHPIs to go in for

mixed up with the financial activity,

scale-up after some standardisation of

which is the focus of the village/cluster

processes, systems and capacity building

federations and run the risk of dilution.

of staff and local leadership.

Footnotes

Promoters may wish to look into the

aspects of compulsory leadership rotation

DHAN Foundation Study "Capacity

1

and not working through staff. The

Building for Enhancing Availability of

aspect of not working through staff, but

I n s t i t u t i o n a l  Finance  for  the

with leaders is tedious, time-consuming

Unorganized Sector", April 2002

Financial or financial and social.

and requires patience, but would yield

2

greater member control and ownership

Administrative Unit below the district

3

of these federations. Considering that

consisting of a group of Villages/

good leaders are not available easily,

Panchayats (in Andhra Pradesh blocks

and the time taken to groom second-

were subdivided into mandals but

level leadership, rotation need not be

retained the administrative and local

mandatory.

government functions of blocks)

L B Prakash

Mr. Prakash is currently the Executive Director, Akshara. Akshara is a development

support organization focusing on livelihoods and microfinance, and was initiated

by practicing development management professionals to fulfill the need for

affordable and timely professional support to individuals and organisations in

the development sector.

lbprakash@rediffmail.com