35830
AID EFFECTIVENESS INITIATIVE
COUNTRY-LEVEL
EFFECTIVENESS AND ACCOUNTABILITY REVIEW
MADAGASCAR
October 2005
Manuel Moyart
Eric Duflos
Alexia Latortue
Francois Lecuyer
Jennifer Isern
Hubert Rauch
TABLE OF CONTENTS
ACRONYMS AND ABBREVIATIONS ............................................................................................. iv
ACKNOWLEDGMENTS ............................................................................................................... vii
MAP OF MADAGASCAR............................................................................................................. viii
EXECUTIVE SUMMARY ............................................................................................................... 1
I. BACKGROUND .................................................................................................................... 3
II. OVERVIEW OF MICROFINANCE IN MADAGASCAR ............................................................. 5
III. CHALLENGES FACING THE THREE LEVELS OF FINANCIAL SYSTEMS ................................ 8
Analytical Framework ..................................................................................................................... 8
Structural Fragility of Malagasy Microfinance: A Recurrent Topic .............................................. 8
MICRO ............................................................................................................................................ 8
Micro-level Strengths ...................................................................................................................... 8
Micro-level Weaknesses ................................................................................................................. 9
Micro-level Donor Recommendations .......................................................................................... 11
MESO ............................................................................................................................................ 12
Meso-level Strengths ..................................................................................................................... 12
Meso-level Weaknesses ................................................................................................................ 13
Meso-level Donor Recommendations ........................................................................................... 14
MACRO ........................................................................................................................................ 17
Macro-level Strengths ................................................................................................................... 17
Macro-level Weaknesses ............................................................................................................... 17
Macro-level Donor Recommendations ......................................................................................... 18
IV. DONOR SYSTEMS .............................................................................................................. 22
Donor System Strengths ................................................................................................................ 22
Donor System Weaknesses ........................................................................................................... 22
Donor System Recommendations ................................................................................................. 25
ANNEXES ............................................................................................................................... 28
Annex 1 Summary of Financial System Weaknesses, Donor Recommendations, and
Essential Prerequisites ................................................................................................... 28
Annex 2 The Risks of Subsidies and Subsidized Interest Rates—Some Examples ................... 29
Annex 3 Donor Funding Allocated to Microfinance in 2002–2004, and 2005 Commitments ...30
Annex 4 Donor Activities ............................................................................................................ 31
Annex 5 Donor Microfinance Portfolio ...................................................................................... 32
Annex 6 Summary of Projects ..................................................................................................... 33
Annex 7 List of Persons Consulted ............................................................................................. 37
Annex 8 List of Documents Consulted ....................................................................................... 41
iii
ACRONYMS AND ABBREVIATIONS
ADEFI Action pour le Développement et le Financement des Microentreprises
(microfinance development and financing agency)
AECA Association d’Epargne et de Crédit Autogérée
(self-managed savings and loan association)
AFD Agence Française de Développement
(French development agency)
AfDB African Development Bank
AFMIN Africa Microfinance Network
AGEPMF Agence d’Exécution du Projet Microfinance
(executing agency for microfinance project)
AIM Association des Institutions de Microfinance non Mutualistes
(association of nonmutual microfinance institutions)
APEM Association pour la Promotion de l’Entreprise à Madagascar
(Madagascar enterprise promotion association)
APIFM Association Professionnelle des Institutions Financières Mutualistes
(professional association of cooperative financial institutions)
ARIZ Assurance pour le Risque des Investissements
(investment risk insurance)
BFV Bankin’ny Fampandrosoana ny Varotra
BMOI Banque Malgache de l’Océan Indien
(Malagasy bank of the Indian Ocean)
BMZ Bundesministerium für Wirtschaftliche Zusammenarbeit und Entwicklung
(German federal ministry for economic Cooperation and development)
BNI Banque Nationale pour l’Industrie
(national bank for industry)
BOA Bank of Africa
BTA Bons du Trésor par Adjudication
(treasury bills sold at auction)
BTM Bankin’ Ny Tantsaha Mpamokatra
CNMF Coordination Nationale de la Microfinance
(coordinating office for microfinance)
CAPAF Programme de Renforcement des Capacités des Institutions de Microfinance en
Afrique Francophone
(capacity building program for microfinance institutions in French-speaking Africa)
CECAM Caisse d’Epargne et de Crédit Agricole Mutuelle
(cooperative agricultural savings and credit association)
iv
CEFEB Centre d’Etudes Financières, Economiques et Bancaires
(financial, economic, and banking research center)
CEM Caisse d’Epargne de Madagascar
(Madagascar savings bank)
CGAP Consultative Group to Assist the Poor
CIDR Center for International Development Research
CLEAR Country-Level Effectiveness and Accountability Review
CNMF Coordination Nationale de Microfinance
(national coordinating office for microfinance)
CO-SNMF Comité de Pilotage de la Stratégie Nationale de Microfinance
(steering committee for the national microfinance strategy)
CSBF Commission de Supervision Bancaire et Financière
(banking and financial supervision commission)
DFS Decentralized Financial System
DID Développement International Desjardins
(Desjardins international development)
DIRECT CGAP Donor Information Resource Center
EC European Commission
EU European Union
FERT Fondation pour l’Epanouissement et le Renouveau de la Terre
(French agricultural finance foundation)
FGM Fonds de Garantie Mutualiste
(cooperative guarantee fund)
FIRST Financial Sector Reform and Strengthening Initiative
GBF Groupe des Bailleurs de Fonds
(donor group)
GEM Groupement des Entreprises de Madagascar
(Madagascar entreprise association)
GRET Groupe de Recherche et d’Echanges Technologiques
(technological research and exchange group)
GTZ Gesellschaft für Technische Zusammenarbeit
(German development agency)
IBS Impôt sur le Bénéfice des Sociétés
(corporate income tax)
ICAR International de Crédit Agricole et Rural
(international agricultural and rural credit agency)
IDA International Development Association
IFAD International Fund for Agricultural Development
ILO International Labour Office
v
IMF International Monetary Fund
INSCAE Institut National des Sciences Comptables et de l’Administration d’Entreprise
(national accounting and business administration institute)
INTERCECAM Centre de Services des Caisses d’Epargne et de Crédit Agricole Mutuelles
(services center for cooperative agricultural savings and credit banks)
IRAM Institut de Recherche et d’Application des Méthodes de Développement
(institute for research on and application of development methods)
IS Fund Information Systems Fund
MAE Ministère Français des Affaires Etrangères
(French ministry of foreign affairs)
MAEP Ministère de l’Agriculture, de l’Elevage et de la Pêche
(ministry of Agriculture, Livestock, and Fisheries)
MCA Millennium Challenge Account
MEFB Ministère de l’Economie, des Finances et du Budget
(ministry of economy, finance, and budget)
MIS Management information system
MIX Microfinance Information eXchange
MFI Microfinance Institutions
SP Microfinance Support Project
NGO Non Governmental Organization
OTIV Ombona Tahiri Ifampisamborana Vola
PADANE Projet d’Amélioration et de Développement Agricole dans le Nord-Est
(project for agricultural development and improvement in the northeast)
PAIQ Programme d’Appui aux Initiatives de Quartier
(neighborhood initiatives support program
PAR Portfolio at Risk
PRBM Projet de Réhabilitation du Périmètre du Bas-Mangoky
(Bas-Mangoky perimeter redevelopment project)
PRSP Poverty Reduction Strategy Paper
RDSP Rural Development Support Project
SIDI Société d’Investissement et de Développement International
(investment company for international development)
vi
ACKNOWLEDGMENTS
The CLEAR team wishes to thank all the people who dedicated their time to participating in the
review. We especially appreciate their willingness to meet with us, often more than once. From the
Malagasy government, we wish to thank the various ministers, their staffs, and the Commission de
Supervision Bancaire et Financière (CSBF), who met with us and shared their experience with us.
From the donor community, Emmanuel Haye and Denis Castaing from Agence Française de
Développement and Delphin Randriamiharisoa from the European Commission served as prime
movers in promoting this initiative to improve aid effectiveness, for which we are extremely grateful.
Finally, we extend our thanks to the Malagasy directors of the microfinance associations (APIFM and
AIM) who helped us considerably with our analytical work. Our heartfelt thanks also go out to Zoe
Gardner, Hannah Siedek, Aude de Montesquiou, and Jocelyne Ratahiriarinov for their excellent
support in preparing this CLEAR.
vii
MAP OF MADAGASCAR
Grand Comore 45° Îles Glorieuses (France) 50°
Moroni
Foumbouni
Anjouan
Moheli Antsiranana
¨
Comoros Dzaoudzi Nosy Mitsio
Sosumau
Mayotte Nosy Be
(Administered by France, Ambilobe
claimed by Comoros) Andoany Iharäna
Sambava
Antsohihy Andapa Antalaha
15°
Maroantsetra
Mahajanga Befandriana
Île Chesterfield Marovoay
Maevatanana Andilamena Nosy Sainte Marie
Îles Jaun de Nova
(France) Ambakireny Fenoarivo Atsinanana
Ambatondrazaka
Maintirano
Toamasina
Nosy Barren Ankavandra Antananarivo Ampasimanolotra
Tsiroanomandidy
Moramanga
Miandrivazo Ambatolampy Indian Ocean
Antsirabe Mahanoro
20°
Morondava
Ambositra Nosy Varika
Ambohimahasoa
Mananjary
Fianarantsoa
Morombe Ambalavao
Ihosy Manakara
Farafangana
Toliara
0 50 100 km
0 50 100 ml
Ampanihy
Tôlanaro
¨ 25°
Ambovombe
viii
MADAGASCAR CLEAR—EXECUTIVE SUMMARY
The Madagascar Country-Level Effectiveness and Accountability Review (CLEAR) was conducted
in Antananarivo from April 26 to May 17, 2005. The CLEAR analyzes donor effectiveness in micro-
finance and helps donors better adapt their support for developing financial systems (savings, loans,
insurance, transfers, etc.) that benefit the poor. CLEARs are part of the Consultative Group to Assist
the Poor (CGAP) Aid Effectiveness Initiative, which was launched in 2002 with a series of 17
Microfinance Donor Peer Reviews. CLEARs help funders adapt their internal systems to design,
implement, and monitor better programs. They also help funders identify key gaps in the financial
system that inhibit the provision of permanent financial services to poor people. The three levels of
the financial system are the micro level (e.g., retail institutions), the meso level (e.g., apex, technical
service providers), and the macro level (e.g., regulations and policies). While in Madagascar, the
review team consulted over 110 stakeholders, including government officials, practitioners, donor
staff, and microfinance clients.
Donors continue to play a key role in the development of microfinance in Madagascar. In 2005,
Malagasy microfinance served 70,000 clients for loans and more than 500,000 clients for savings
through a large number of points of service. Despite the political and economic crises affecting the
island, Malagasy microfinance grew at a remarkable pace between 1999 and 2004, with an increase
of 246 percent in the number of members and an increase of over 100 percent in the volume of
savings and credit.
Microfinance is developing in Madagascar at all three levels of the financial system (micro, meso, and
macro). At the micro level (financial services providers), there are many stakeholders and growing
interest from banks and private investors. Microfinance institutions (MFIs)1, cooperatives and non-
cooperatives, play a predominant role, with the Caisse d’Epargne and the postal system also playing
a major role. At the meso level (support services suppliers), services such as training or auditing are
available. At the macro level (policy, regulatory framework, and supervision), supervision and
coordination are in place, and a legal framework specifically for microfinance is being introduced.
However, Malagasy microfinance remains fragile. Malagasy MFIs have structural weaknesses at
several levels: governance, portfolio management, internal control, human resources, and lack of
financial sustainability. For example, MFIs have, on average, a negative return on assets and portfolios
at risk (PAR) in excess of 11 percent. Microfinance support services are rare and of unequal quality. Also,
there is a lack of reliable information on financial performance. At the macro level, the supervisory
and coordinating bodies have limited resources, and the legal framework is in a state of flux. There is
a risk that interest rate subsidies will distort the market; the involvement of the Ministry of Agriculture,
Livestock, and Fisheries is not always consistent with the National Microfinance Strategy. Moreover,
the legal system is not sufficiently reliable to help further develop the financial sector.
In light of these weaknesses, donors have a fundamental role to play in consolidating the development
and guaranteeing the sustainability of microfinance in Madagascar. Pulling back from this role would
have negative effects on the country’s development.
The CLEAR recommends that, at the micro level, donors help MFIs clean up their portfolios by
conducting targeted missions and introducing sound management practices. Donors have access to
best practices in microfinance and should be committed to promoting them in Madagascar. Generally,
it is essential that donors help well-performing MFIs tailor their services better. The CLEAR also
finds that donors should promote the diversification of institutions and approaches in microfinance,
for example by creating a microfinance bank.
__________________________
1
In Madagascar most MFIs follow the cooperative model and are referred to as systèmes financiers décentralisés (SFD) or
decentralized financial systems (DFS).
1
MADAGASCAR
At the meso level, donors must improve their investment in training by promoting the availability of
local training that is clear, accessible, and sustainable. The CLEAR recommends that donors establish
multidonor funds that are freely accessible for technical support to the microfinance sector. Donors
must take steps to improve governance within MFIs, particularly regarding cooperative institutions.
Donors need to encourage the merger of the two professional associations and to support the
resulting organization. Finally, the CLEAR recommends that donors promote the emergence of a
sustainable system for refinancing MFIs.
At the macro level, donors should help the government maintain an environment conducive to micro-
finance. Donors need to recognize the risks associated with subsidizing rates and phase out this
practice. Donors could help the various microfinance stakeholders clarify their roles. Finally, donors
should promote capacity building at the CSBF.
To implement these recommendations, donors must improve their own systems. Donors should ensure
that their staff know enough about finance to be able to manage microfinance programs. Donors
should disseminate and implement the key principles set forth in the National Microfinance Strategy.
They need to strengthen performance-based management programs, especially with service providers.
All donor involvement should be aimed at ensuring the sustainability of microfinance, and the tools
available to donors must be better adapted to the requirements of microfinance.
Malagasy microfinance needs donor support to:
l Reduce the fragility of the MFIs
l Develop subsidies for training, but not for interest rates
l Establish multidonor funds freely accessible for technical support
l Promote MFI transparency
l Help the government maintain a favorable environment
l Clarify the roles of the various stakeholders
l Build the capacities of the CSBF
Internally, donors need to:
l Ensure that their staff are qualified in finance
l Apply the key principles of the National Microfinance Strategy
l Reinforce performance based management with service providers
l Reactivate their coordination
2
COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW
I. BACKGROUND CGAP member agencies jointly designed the
Country-level Effectiveness and Accountability
Reviews (CLEARs).3 CLEARs focus on strate-
In early 2002, the Consultative Group to Assist
gic issues relevant to donor effectiveness. They
the Poor (CGAP) and a group of leading donor
are not comprehensive sector studies that
agencies launched an Aid Effectiveness
deeply analyze financial systems development
Initiative, using microfinance as a test case. In
as do the Financial Sector Assessment
its first stage, between April 2002 and
Programs. Rather, CLEARs rely on an inter-
November 2003, the initiative sponsored
view-based methodology and literature review
Microfinance Donor Peer Reviews of 17
to measure development agency systems and
bilateral and multilateral development agencies.
practices against the concrete and specific
The peer reviews helped donors look them-
challenges of building an inclusive financial
selves in the mirror and focus on what they
system in a particular country. CLEARs strive
could most directly influence: their own
to help funding agencies identify gaps in
procedures, processes, practices, and systems.
financial systems and to design interventions
Top management and staff of the participating
that build on their respective comparative
agencies appreciated the frank and actionable
advantage. CLEARs also aspire to motivate
recommendations of the review teams.
donors to improve their internal procedures and
All agencies are currently implementing
systems so they can work more effectively with
recommendations, with promising results.2
others in the field, thus better contributing to
The peer review exercise culminated in a high- poverty reduction and to the Millennium
level meeting in February 2004 called Development Goals (MDGs).
“Leveraging Our Comparative Advantage to
The vision of an inclusive financial system is
Improve Aid Effectiveness.” At that meeting,
client centered. It is based on the assumption
lessons learned from the reviews were
that financial services play a critical role in
synthesized and steps for further collective
reducing poverty by enabling poor people to
action were discussed. Following the meeting,
accumulate and manage assets, conduct
the 17 agencies issued a joint memorandum that
financial transactions, manage cash flows,
endorsed five core elements of donor aid effec-
invest in their businesses, and reduce their
tiveness in microfinance (the “aid effectiveness
vulnerability to external shocks.
star”): (1) strategic clarity, (2) staff capacity,
(3) accountability for results, (4) relevant Five CLEARs will have been conducted from
knowledge management, and (5) appropriate October 2004 through December 2006. The first
instruments. The agencies also committed to CLEARs took place in Cambodia in October
a four-step work program, including a mandate 2004,4 and in Nicaragua in February 2005.
to expand the aid effectiveness work to the
field. The third CLEAR was conducted in from April
26 to May 17, 2005. The CLEAR team com-
Strategic Clarity
prised Eric Duflos, Alexia Latortue, and
Jennifer Isern from CGAP; François Lécuyer
Appropriate Strong Staff
and Emmanuel Moyart, consultants; and Hubert
Instruments Capacity Rauch from GTZ. The team spent a total of
12 staff weeks in country and consulted over
Effectiveness 110 persons representing a broad cross-section
of stakeholders, from government officials to
__________________________
3
Seventeen agencies, including Agence Francaise de
Relevant Knowledge Accountability Développement, African Development Bank, Asian
Management for Results Development Bank, the European Commission, Finland,
__________________________ GTZ, ILO, the Netherlands, Sida, and USAID, took part in
2
For more information on Microfinance Donor Peer Reviews, drafting the Terms of Reference.
4
visit www.cgap.org/projects/donor_peer_reviews.html. For more information on CLEARs, visit www.cgap.org/clear.
3
MADAGASCAR
MFI managers and staff to representatives of engaged in microfinance and offers concrete
donor agencies, investors, and microfinance recommendations on how to tackle them.
projects. Local interviews were supplemented Selected funding agencies will receive an
by the team’s exhaustive review of the existing individual assessment that focuses on specific
literature on Malagasy microfinance. The team issues pertaining to their own effectiveness.
also gathered information through question-
This report begins with a brief overview of
naires followed by telephone interviews of key
microfinance in Madagascar (Section II).
stakeholders based abroad. Finally, the team
Section III presents an analysis of the challenges
presented its initial conclusions to all stake-
facing the three levels of the financial system
holders at two wrap-up meetings in Antananarivo
(micro, meso, and macro). For each of these
on May 17 and at a press conference.
levels, strengths and weaknesses are examined,
This report is addressed to all funders that followed by specific recommendations aimed at
support microfinance in Madagascar. It provides bringing donor support more in line with
examples of good practice from among the demand and helping them build an inclusive
different funders in the country, but does not financial system. Section IV delineates the
seek to assess the work of individual funding strengths and weaknesses of donor operating
agencies. Instead, the report provides a snapshot systems and makes recommendations aimed at
of key issues facing the development community improving their effectiveness in Madagascar.
4
COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW
II OVERVIEW OF MICROFINANCE IN of the penal code, recovery of guarantees, and
MADAGASCAR the reduction of corruption). The sustainable
development of agriculture is yet another major
challenge Madagascar will have to meet in the
Social, economic, and political context medium term. By way of illustration, agricultural
Madagascar is a large country (587,000 km2), output per hectare is among the lowest in the
with a low population density (17 million world.
inhabitants). The vast majority of the population
is rural (80 percent), and there are many land- Financial sector developments
locked areas. Poverty affects 70 percent of the Until the 1990s, the financial sector was largely
population; 85 percent of the poor live in rural controlled by the state and reflected dirigist
areas, according to the 2003 Poverty Reduction policy approaches. The banking system was
Strategy Paper (PRSP). High population growth made up of sector-specific banks—an
(2.8 percent annually), a weak education agricultural bank, a foreign trade bank, and
system, and a high illiteracy rate contribute to so forth.
keeping the poverty level high.
In the late 1980s, the Malagasy economy was
The transition toward a market economy that exposed to free market principles under the
occurred in 1990–2000 had painful economic adjustment programs supported by the World
repercussions and led to political problems. This Bank and the International Monetary Fund. In
difficult period lasted until 2002, when the 1990s, the banking system was completely
Madagascar experienced a serious political and privatized and rehabilitated. The national banks
economic crisis. Although the political situation were purchased by major foreign groups (e.g.,
improved with the election of the president now BTM by BOA, BNI by Crédit Lyonnais, and
in office, the economic situation deteriorated in BFV by Société Générale), and CMB now has
late 2004, with a sharp hike in inflation, a a Chinese majority shareholder. Compared
sizable devaluation, and increase in the price of with the banking sectors of other developing
rice—the basic foodstuff for the majority of the countries, Madagascar’s banking sector is
population. The lingering effects of the rice relatively sound and well capitalized. It includes
crisis are still in the minds of the residents of seven commercial banks, two finance institu-
the capital city who suffered the most from it, tions, at least four insurance companies, the
and rice prices again began to move upwards Caisse d’Epargne de Madagascar (CEM), and a
beginning in June 2005. highly developed network of postal savings
The outlook for 2005 is expected to be more banks.
favorable thanks to economic growth and A 1995 banking law made the Central Bank’s
increasing control over the inflation rate. The Banking and Financial Supervision
ongoing reforms, social development, and Commission (CSBF) responsible for banking
macroeconomic stabilization efforts enabled supervision. The integration of microfinance
Madagascar in October 2004 to reach the into the formal financial sector is off to a good
“completion point” for the Heavily Indebted start in Madagascar. The traditional banking
Poor Countries (HIPC) Initiative and to obtain sector is showing increasing interest in partici-
substantial external debt cancellations (US$ 3.4 pating in the development of microfinance,
billion out of a total of US$ 4.5 billion). which it tends no longer to regard as a fringe
According to the OECD’s African Economic activity of the financial sector but rather as a
Outlook 2004/2005, the projected growth rate of genuine market. Indeed, while the traditional
Madagascar for 2005 is 6 percent. banking sector holds the majority of assets in
Notwithstanding the recent progress, there is a the financial sector, from the standpoint of the
sizable infrastructure deficit in both physical number of borrowers, microfinance is now the
terms (e.g., roads and telecommunications) and main source of financial services for the people
in legal terms (e.g., land records, enforcement of Madagascar.
5
MADAGASCAR
Major stakeholders in Malagasy activities were structured and organized in the
microfinance mid-1990s. A banking law was promulgated in
1995. The law on savings and loan cooperatives
Microfinance in Madagascar involves a sizable dates from 1996. The first cooperative institu-
number of stakeholders in various areas of tions were licensed in 1999. A new law on
activity. microfinance, covering all MFIs, whether
Microfinance providers. Microfinance supply is cooperatives or not, has just been adopted.
covered by many financial services suppliers. The Ministry of Agriculture, Livestock, and
There are 477 points of service, a vast majority of Fisheries (MAEP), which turned the responsi-
which are cooperative financial institutions bility for microfinance over to MEFB, still
known as Decentralized Financial Systems manages several credit components relating to
(MFIs), but they also include noncooperative rural development projects.
financial institutions, joined recently by at least
one bank. The first MFIs were established in the Funders. Most funding is still provided by
early 1990s and achieved formal status shortly donors, but the contribution from savings and
thereafter: in 1993 for Caisses d’Epargne et de local banks is increasing. The latter refinance
Crédit Agricole Mutuelle (CECAMs ) and in MFIs and take equity positions directly in some
1994 for Ombona Tahiry Ifampisamborana Vola MFIs. Some national and international private
(OTIVs ). The Bank of Africa (BOA), formerly investors are involved as well. Many of these
Bankin’ Ny Tantsaha Mpamokatra (BTM), has a funders work directly with national and interna-
sizable network and contact with the rural popu- tional service suppliers to support financial
lation, making it one of the most important stake- services providers.
holders in microfinance (both for direct distribu-
tion of services and for refinancing of networks). Box 1. Main Microfinance Providers
Financial services also are offered through l Cooperative financial institutions that are
public institutions, such as Caisse d’Epargne members of APIFM: URCECAM, TIAVO, OTIV,
AECA, and ADEFI
de Madagascar, which is currently being priva-
l Nonmutual financial institutions that are
tized, and Paositra Malagasy (Madagascar Post). members of AIM: SIPEM, Vola Mahasoa,
APEM/PAIQ, and APEM Farahitso
Professional associations. The Professional
l Bank: BOA
Association of Cooperative Financial
Institutions (APIFM), founded in 1997, covers l Caisse d’Epargne de Madagascar
all cooperative institutions. Nonmutual institu- l Paositra Malagasy
tions are grouped together in the Association of
Non-Mutual Microfinance Institutions (AIM),
Customers and recent growth
founded in 1999.
Microfinance in Madagascar showed significant
The government. The Ministry of Economy,
growth over 1999–2004. The number of mem-
Finance, and Budget (MEFB) is the supervisory
bers of cooperative institutions increased by 246
ministry for microfinance. Coordination is
percent, and the number of loans in the portfolio
provided by the government mostly through the
rose by 290 percent. This growth continued
National Coordinating Office for Microfinance
despite the 2002 crisis. From 2002 to 2004, the
(CNMF), which reports to the MEFB through
number of clients/members grew by 40 percent,
the Treasury Directorate. A National Micro-
savings balances rose by 110 percent, and out-
finance Strategy (SNMF) was approved by all
standing loans increased by 119 percent. In
stakeholders in 2004. Its coordinator is based in
2004, average savings came to MGA 110,000,
MEFB, while a steering committee for SNMF
and average loan volume was MGA 428,000.
brings together the major stakeholders.
Exchange rate in 2004 was 1,868.9 Malagasy
CSBF is responsible for the regulation and ariary per US dollar and was of 2,003 Malagasy
supervision of microfinance. Microfinance ariary per US dollar in 2005.
6
COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW
Growth in the Number of Members and Loans in APIFM and AIM Portfolios, 1999–2004
250,000 216,157
200,000 175,360
143,779
150,000 116,977
91,964
100,000 62,408 59,284
36,378 43,096
50,000 20,492 26,350
15,209
-
1999 2000 2001 2002 2003 2004
Members Loans in the Portfolio
Sources: 1999–2001, APIFM, and 2002–2004, APIFM and AIM.
Growth in Volume of Savings and Lending, APIFM and AIM (in millions of ariary)
28,016
30,000
21,339 21,803
25,000 18,992
20,000
12,768
15,000 10,372
10,000
5,000
-
2002 2003 2004
Potential Savings Potential Loans
Sources: 1999–2001, APIFM, and 2002–2004, APIFM and AIM.
Despite growth in client base, the microfinance and covered only 2 percent of the potential
penetration rate in Madagascar remains low. demand for credit. As for savings, the coverage
Indeed, according to UNDP’s Microfinance rate is 30 percent when the Caisse d’Epargne de
Support Project (MSP), microfinance has Madagascar (CEM) is included and just 4.4
reached only 6 percent of its potential market percent when it is excluded.
7
MADAGASCAR
III. CHALLENGES FACING THE system. It includes MFIs in regard to their
THREE LEVELS OF FINANCIAL financial structure and governance. It relates to
support services, such as information tech-
SYSTEMS
nology, auditing, and training, which remain
difficult to obtain and of mixed quality. It also
Analytical framework extends to the regulatory and supervisory area,
which is poorly equipped to deal with a growing
Microfinance is growing rapidly. International
financial sector. To permit the rapid and sound
development agencies have recently adopted
expansion of microfinance, these fragilities
new guidelines on good practice that will be
must be reduced considerably.
updated regularly to keep pace with innova-
tions.5 These guidelines show that the integra- Donors still have a crucial role to play in
tion of microfinance into the formal financial consolidating microfinance in Madagascar. This
system enables it to reach a maximum number report outlines specific steps donors can take to
of clients and have an optimum impact. improve their support, which remains essential
for viable microfinance. It builds on the vision
The full integration of microfinance into the
of the National Microfinance Strategy aimed at
formal financial sector calls for work at all three
ensuring that Madagascar has a professional,
levels of the financial system: micro, meso, and
viable, and sustainable microfinance sector that
macro. Although institutions that offer micro-
is integrated into the financial sector, diversi-
finance services (micro level) constitute the
fied, and innovative—one that covers demand
backbone of the financial system, they also need
to a satisfactory degree and functions within a
suppliers of support services (meso level) to
legal, regulatory, tax, and institutional frame-
train their staff, improve their systems, and
work that is appropriate and favorable.6
enhance their transparency. Policies, regula-
tions, and supervision must provide rules of
the game that are conducive to the sound and MICRO
rapid development of the various stakeholders MFIs must be structurally strong to offer
(macro level). sustainable and high-quality services to their
clients. Despite their significant presence and
Box 2. Three Levels of the Financial System growth, most MFIs in Madagascar are far from
Micro: Retail financial service institutions (e.g., achieving financial and institutional sustain-
NGOs, finance companies, banks, financial coopera- ability. Given that the micro level is the back-
tives, and other suppliers, such as moneylenders, bone of the financial system, this fragility poses
agricultural traders, etc.)
risks to the system as a whole.
Meso: Service providers and industry infrastructure
(e.g., networks, trainers, auditors, information
technology providers, wholesale financing facilities, Micro-level strengths
credit bureaus)
Growth of inclusive financial services despite
Macro: policy, laws, and the regulation and
recent difficult circumstances. In 2002–2004,
supervision framework (e.g., banking regulations and
interest rate policy) all types of MFIs grew despite the serious polit-
ical crisis of 2002 that paralyzed the country for
six months. The survival of these institutions
Structural fragility of Malagasy micro- bears witness to their tenacity and commitment.
finance: A recurrent topic
Large number of points of service. Thanks to
Microfinance in Madagascar is expanding the large number of bank branches, savings
rapidly, but is still structurally fragile. This banks, and post offices, the Malagasy financial
fragility affects all levels of the financial infrastructure has immense opportunities for
__________________________ microfinance development. For example, with
5
CGAP. “Building Inclusive Financial Systems: Donor
Guidelines on Good Practice in Microfinance.” Washington, __________________________
6
D.C.: CGAP, 2004. See the national strategy (SNMF) in the bibliography.
8
COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW
its seven banks and 117 branches, the banking
Box 3. Participation of Banking Sector and
network is relatively extensive compared with Private Sector in Microfinance
other like countries. Fortunately, most of the
network was preserved when the banks were Banking Sector
privatized. Caisse d’Epargne is solidly estab- l BNI has a 15 percent participation in SIPEM
lished, with 19 branches (created following its l BOA, BMOI, and BFV are in competitive
separation from the postal system in 1995) and bidding for an opening of the capital of
ADEFI
especially its 770,000 passbook savings
accounts, of which roughly a third are active. Private Sector
Half of these passbook accounts are held by l GEM/APEM participation in SIPEM
low-income clients. The postal system is the
l SIDI participation in SIPEM
most extensive network by far, with 230 multi-
service offices, 30 rural post offices, 150 postal Private Sector (with a focus on investment)
agencies in the bush, and a project on Postal l Crédit Agricole of France (3 regional banks
Service Points with merchants. In February through an investment structure) in
2005, its clients held 44,000 postal checking Intercecam
accounts and 77,000 passbook accounts. l ICAR (Intercecam and new MFIs to be
created)
Sizable presence of MFIs in rural areas. Using l Aga Khan Group
the division of the country into 20 agro-
Note: The banking sector and the MFIs also are
ecological regions as defined by MSP (statistics linked commercially. The banks can refinance the
as of 30 June 2003),7 only two regions have no MFIs, accept deposits from them, guarantee their
point of service (Betsiboka and Melaky). assets, etc. This aspect is addressed in the section
However, several regions have sparse coverage on the meso level.
by MFIs extending credit (Atsimo-Andrefana,
Mangoro, Tolagnaro, Atsimo-Atsinana, and
Horombé), and there are disparities between Desire of some cooperative institutions to
regions. This relatively good representation in adapt their structure to the environment.
rural areas is essential in view of the high level Cooperative institutions, such as TIAVO, the
of rural poverty. Rural finance remains one of OTIVs, or CECAM, have modified their
the major challenges facing microfinance, and structures and innovated in order to adapt to
many other countries could draw lessons from local circumstances. They have found solutions
the Malagasy experience. for improving their profitability while meeting
local demand, for example by placing teller
Large number of savers. Often called the windows linked with their branches in remote
“forgotten half of microfinance,” savings are areas and by grouping certain branches. Another
particularly well developed in Madagascar. innovation is the creation of apex structures they
MSP estimates indicate a 30 percent penetration seek to convert into joint limited companies
rate for savings when all accounts with Caisse licensed to function as financial institutions
d’Epargne are considered. (INTERCECAM authorizations have been
Increasing linkages among the banking obtained for CECAMs).
sector, private sector, and microfinance. BOA Micro-level weaknesses
constitutes a good example of the banking sec-
tor’s growing interest in clients who are less One distinguishing feature of microfinance in
well off. It is already offering microcredit Madagascar is the relative fragility of MFIs.
services through its 30 branches to about 6,000 This fragility is described below, with particular
grouped clients. In addition, banks are begin- reference to comparisons with the statistics
ning to invest in the capital of MFIs. The box obtained by the Micro Banking Bulletin (MBB),
below provides additional information. which assembles financial information on MFIs
__________________________ throughout the world.
7
This division closely resembles the new administrative
division, which features 22 regions.
9
MADAGASCAR
1. Structural fragility of the MFIs achieved belatedly, and the additional costs are
reflected in the interest rate charged to clients.
Governance problems. There is a serious gover-
nance problem among cooperative institutions Lack of internal systems and controls. In a
that make up the vast majority of MFIs in period of growth, this weakness poses even
Madagascar. The market as a whole is thus greater risks, and many of the individuals
made more fragile. Several difficulties are interviewed referred to many instances of
apparent: misappropriation. Computerized management
information systems (MIS) are still not in wide-
l Volunteer work may make some elected
spread use. Even where procedures are in place,
heads not as motivated and lead to frequent
it is difficult to monitor activity closely. This
departures before the end of terms. The
lack of technical resources is compounded by
need to engage in remunerated activity is
the problems of introducing efficient internal
not always compatible with their mission.
controls attributable to insufficient human and
l Some managers lack the training and skills financial resources.
in management and finance to carry out
their duties effectively. Scarcity of human resources. The recruitment
and management of human resources are
l Some social behaviors are inconsistent with
challenges for MFIs in Madagascar, particularly
the cooperative principle: favoritism in
for those established in rural areas. The scarcity
extending credit, embezzlement, and setting
of skilled staff leads to sizable recruitment and
poor examples regarding loan repayment.
training costs. It is particularly difficult to find
The cooperative institutions often are poorly qualified staff in rural areas or to attract such
managed as a result. Relationships between staff from the cities. In addition, there is consid-
salaried technicians and elected officers are erable turnover among staff, who are constantly
sometimes tense, particularly regarding attracted by new opportunities.
decision making and allocation of work within
institutions. Problems in achieving financial sustainability
without subsidies. According to MIX statistics
There also are governance problems between from end-2003, Madagascar’s nine major MFIs
apex institutions and cooperative banks. For had a total return on assets of -3.3 percent.
example, cost allocation policies are not always Even taking the particularly difficult rural con-
clear. These issues are important because they text into account, this figure raises no prospects
can jeopardize the overall financial equilibrium of financial sustainability in the short term. The
of networks in a context in which subsidies for figure for return on assets weighted by volume
networks are tending to decline. of assets for Madagascar is well below the
Poor portfolio management. According to data average returns in Sub-Saharan Africa (1.6
gathered as part of a recent study by the MIX percent). The low productivity of MFIs, with
and CGAP,8 the ratio of PAR for over 30 days at 29 borrowers per staff member as compared
end-2003 is 11.6 percent for the nine major with the world average of 139 (MIX data for
MFIs in the country (ADEFI, 5 OTIVs, SIPEM, end-2003), is another drag on achieving
TIAVO, and UNICECAM). This ratio is sustainability. Finally, relatively high bank rates
extremely high compared with world averages. give MFIs no incentive to seek commercial
It is recommended that PAR > 30 days not financing. This engenders a “donor culture” that
exceed 3–5 percent. A sizable PAR poses a cost is contrary to the vision of sustainability.
burden (decreased interest income, increased
collection costs, larger reserves provisioning, etc.). 2. Supply not fully meeting demand
The sustainability of these institutions is thus Inadequate supply of credit. The demand for
__________________________ credit is not adequately covered, particularly
8
“Overview of the Outreach and Financial Performance of
Microfinance Institutions in Africa,” MIX, April 2005,
regarding medium- and long-term credit.
www.mixmarket.org/medialibrary/mixmarket/ MFIs, as a whole, cover only about 70,000 loan
Africa_Data_Study.pdf. customers, with outstanding credit estimated
10
COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW
at MGA 30 billion at end-2004. There are Encourage MFIs to professionalize their
several reasons for the limited number of bor- governance. This recommendation requires
rowers: (i) methodological shortcomings, such technical solutions that take into account the
as requiring real guarantees that poor clients special characteristics of the cooperative
have difficulty providing; (ii) the attractiveness model. Donors should provide assistance with
of placing assets in Treasury bills (BTAs) with improving the definition of the allocation of
rates of about 20 percent as compared to loan responsibilities among elected officers and tech-
portfolios; and (iii) the fact that most deposits nical personnel. This can be done, for example,
are short-term provides no incentive for MFIs to by drafting terms of reference for the entire staff
grant medium- and long-term loans. and through awareness sessions devoted to the
various roles. Donors also can support the tech-
Micro-level donor recommendations nical training of elected officers and technical
specialists through networks. Finally, emphasis
Although these recommendations are addressed needs to be placed on the importance of gener-
to donors, close cooperation between donors ating greater revenue to compensate personnel
and key stakeholders in microfinance, namely needed for proper functioning, a question that is
practitioners, the private sector, and govern- linked to the recommendations on cost control
ment, is required for success. and productivity. This enhanced professional-
ism also can be supported by donors by group-
1. Help MFIs reduce their fragility. ing cooperative institutions, creating points of
MFIs suffer from structural fragilities. To service, and strengthening apex institutions.
address this problem, four lines of action Contribute to the strengthening of human
growing out of the vision defined by the resources. Enhancing human resources in
National Microfinance Strategy are suggested. Madagascar is an issue that extends substan-
Provide MFIs with incentives to improve port- tially beyond microfinance and has long-term
folio quality. Donors could finance technical implications. Donors can nevertheless help
assistance targeting MFIs to resolve this MFIs acquire and maintain staff they require, by
problem as rapidly as possible: (i) introduce (i) financing activities to enhance the awareness
portfolio rehabilitation plans that include of microfinance of Malagasy students and (ii)
special procedures for recovering arrears, the financing technical assistance relating to the
creation of teams devoted to collections, and the development of human resources for MFIs.
establishment of targets and incentives systems Such assistance could address improving
for these teams; (ii) finance studies on the recruitment methods, introducing career and
causes of the arrears to remedy and prevent training plans for employees, developing incen-
them; (iii) promote the adoption of inter- tive systems, and creating other mechanisms to
national standards for calculating PAR (that is, increase staff motivation and loyalty.
monitor the portfolio at 30 days or more and not
at 90 days as is often the case in Madagascar) 2. Help MFIs better adapt their services.
and the dissemination of other quality standards To improve the linkage between supply and
for portfolio management (e.g., provisioning demand, donors can help MFIs improve the
rules). analysis of market needs:
Finance studies on MFI costs and revenue. Finance market research on demand to better
Donors could support MFIs in the analysis of assess clients. Although there are many
their cost and revenue structures. This should research and evaluation tools already available
enable them to gain better knowledge of and (see www.lamicrofinance.org for resources in
mastery over their expenses and possibly to French, or www.microfinancegateway.org for
revise their fees, always with a view to resources in English),9 donors can finance
achieving greater efficiency and financial __________________________
viability. 9
Resources can be identified by searching on product devel-
opment and market research.
11
MADAGASCAR
research as well. Such studies could be devoted capable of functioning on a large scale. As
to (i) the client base and its needs; (ii) client indicated by a recent study carried out in
satisfaction; (iii) factors behind abandoning Madagascar, a local microfinance bank could
efforts; and (iv) the organization of test groups make it possible to cover certain market
to obtain more hands-on knowledge of the segments. It would be beneficial for a donor
market and how it reacts. consortium to consider establishing such an
institution (its charter, shareholders, products,
Support the development of new services
etc.). In addition to creating new institutions,
and/or distribution methods. Donors could
donors could also promote ties between MFIs
finance pilot testing of new products and/or
and various types of commercial stakeholders,
markets. This kind of support could take the
such as wholesalers of agricultural equipment
form of a fund accessible by all MFIs based on
and inputs, merchants, etc., that can provide serv-
the model of the capacity-building fund referred
ices in support of MFIs (e.g., an MFI might use a
to below (see meso-level recommendations).
merchant to open a teller window on market day).
Disseminate the knowledge and know-how
Finance a supplementary study on the poten-
already gained in Madagascar and elsewhere.
tial role in microfinance of Caisse d’Epargne
Donors could support the establishment of a
and the postal system. Such studies have been
database that includes local and international
conducted previously, but they need to be
experiences. There are several financial tools
updated and supplemented. If the findings indi-
and products tailored to rural people already
cate these institutions have an important role to
available in Madagascar, and they could be
play, donors could then participate in the search
disseminated more widely (e.g., equipment
for technical partners, or in the development of
lease with option to purchase).
these institutions’ microfinance activities.
3. Promote diversification of institutions Subsidize extension of the network of well-
and approaches. performing MFIs. Donors could subsidize the
There is still scope in Madagascar for other expansion of MFIs according to strict criteria:
methodologies and institutions, especially (i) existence of a business plan that includes
regarding the supply of credit. To meet this expansion-related projections; (ii) achievement
challenge, donors will have to: of financial and institutional sustainability, as
measured by critical international indicators; and
Continue enhancing banks’ awareness of (iii) financial contribution to the expansion by
microfinance. In collaboration with the the MFI. This subsidy could be used to finance
Professional Banking Association, donors can physical infrastructure (branches, teller windows,
finance a discussion panel that would enable commercial partnerships), new technologies, or a
Malagasy bankers to meet bankers involved in portion of operating costs for the short term.
microfinance (e.g., Sogesol in Haiti and
Bancosol in Bolivia). Donors might also MESO
support the direct activities of banks involved
in the sector (in Madagascar, the BOA) and MFIs need support services, such as training,
disseminate good microfinance practice infor- auditing, or private refinancing. The team
mation to all banks.10 observed the weakness of this portion of the
market, which began to develop only recently.
Study the establishment of new institutions and The fragility found at the meso level thus risks
partnerships. Through their work in many broadening, or perpetuating, fragility at the level
different countries, donors have gained familiarity described above.
with various types of institutions that are
Meso-level strengths
__________________________
10
Resources can be identified by searching on product Start of microfinance refinancing by the bank-
develSee the recent CGAP Focus Note on the various
ing sector in Madagascar. The participation of
models of successful commercial bank involvement in
microfinance, at www.cgap.org/docs/FocusNote_28.pdf. local banks helps promote the sustainability of
12
COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW
MFIs, their expansion, and their integration into Interest shown in microfinance by audit firms
the national financial system. While donors and consultants. The most important firms
have a role to play when it comes to priming the (those affiliated with international firms) are
pump, it is the local financial markets them- involved in MFI audits. Several firms have
selves that must carry out the task. Institutions received CGAP/CAPAF training on the
like CECAM, OTIV, Lac Alaotra, ADEFI, or specifics of microfinance, and some have gone
AECA are partially refinanced by BOA, BNI, so far as to establish special units for micro-
or BFV. These institutions’ outstanding credit finance activities. The fact that MFIs have
to MFIs represents MGA 4 billion–6 billion— access to audits on a regular basis enables
about 15 percent of outstanding MFI loans to them to have audited financial statements. This
clients. This is a sizable share, and it is tending benefits sound management and transparency
to increase. and eases access to commercial refinancing
or participation in their capital by national or
Existence of professional associations. MFIs
international investors.
are grouped within two professional associa-
tions: APIFM for cooperative institutions and
Meso-level weaknesses
AIM for nonmutual MFIs. These associations
are financed primarily by their members, 1. Fragility of services provided to MFIs
although APIFM has received assistance from
The services provided to MFIs are still rather
donors on individual issues. The new law on
scant and depend on outside elements that
microfinance requires a microfinance associa-
jeopardize their sustainability.
tion to have ties to the Professional Banking
Association, constituting another step toward Inadequate number of skilled national service
integrating microfinance into the formal providers. The small size of the Malagasy
financial sector. These associations have played market and the lack of trained personnel explain
an important role in enhancing professionalism the gap between the supply of and demand for
and protecting their members’ interests in the national consultants and service providers. The
past and will be called on to continue to do so. supply is inadequate for several different types
They have solid ties with their counterpart of services, including internal control, manage-
organizations abroad, as illustrated by the fact ment consulting (business plans, for example),
that the annual meeting of the Africa MIS, and accounting.
Microfinance Network (AFMIN) was just held
Problems with accessing training. The lack
in Madagascar.
of MFI access to training can be attributed to
Initial supply of specialized training. MFIs several factors. First, existing training is poorly
already have a training base in microfinance, promoted and coordinated. There is no central-
finance, and accounting available in ized information on training, making it is
Madagascar and abroad. It includes, for difficult to determine who is offering what.
example, “training of trainers” modules Consequently, training sessions are sometimes
(CGAP/CAPAF), operational and financial offered at the same time and topics sometimes
training modules (seven courses from overlap. Training can be relatively unpre-
CGAP/CAPAF with APIFM), “training for dictable given that it often depends on outside
technical specialists and elected officers” by participation.
AGEPMF (risk management, institutional man-
Finally, training is excessively centralized in
agement, etc.), and the “INSCAE master’s”
Antananarivo. There is genuine demand for
(Master’s in Cooperative Financial Institutions
training that is more readily accessible by
and Banking). Other training is offered by the
MFIs established in remote areas. Attempts to
Banking Technical Institute (National Center
address this issue are currently being made. For
for Banking Training) and is available abroad,
example, AGEPMF has begun to offer training
for example at CEFEB (AFD’s training center
in Diego and Fianarantsoa.
in Marseilles).
13
MADAGASCAR
Risk of unfair competition in training and familiarity may harm the development of micro-
other technical support areas. Subsidies from finance (e.g., through the belief that microcredit
donor projects sometimes compete with is at usurious rates, subsidizing purchase of
services offered by the private sector. Unfair inputs, or interest rates).
competition jeopardizes the viability of a private
Lack of technical representation at APIFM.
services sector, which is still fragile, thus
The cooperative institutions are represented
boosting the fear of a rupture in unsubsidized
in their professional association by elected
support services.
officers only. The lack of technical specialists
Limited transfers of skills. There is a lack of limits the potential for technical exchanges of
skills transfers under the technical assistance views and leveraging experiences, even though
from abroad. Training missions follow one after this is one of the main roles of a professional
the other without the training really being incor- association.
porated into MFIs operations. References are
sometimes made to the sustainability of service 3. Unavailability and unreliability of
providers rather than that of the MFIs. information
Nonetheless, it is possible that the MFIs do not Lack of comprehensive, standardized, and
always do everything they can to view training regular statistics. Statistics on MFIs and their
as an ongoing and essential investment in their activities available from CSBF, the professional
sustainability. associations, CNMF, and some projects are
Uneven audit quality and perception of high partial and not cross-comparable. For example,
costs. Despite the interest shown in micro- to prepare the statistics for this report, the team
finance by audit firms, a majority of them have had to reconcile divergent data from APIFM,
little training in the special characteristics of AIM, and AGEPMF.
microfinance, and audit quality is considered Lack of client information sharing. The lack
uneven. Some auditors fail to adopt an adequate of information on clients and their financial
approach (for example, the loan portfolio audit behavior engenders costs and risks for MFIs. In
may be insufficient) and do not probe deeply the absence of a credit information bureau,
enough, either because of a lack of financial MFIs make decisions without complete infor-
motivation to do so or because of a lack of mation on the histories of their clients, thereby
knowledge. The findings do not always enable increasing the risk of default and the risk that
stakeholders (banks, donors, potential investors, clients are borrowing from several MFIs at the
and the MFIs themselves) to gain a clear vision same time. However, there are the beginnings of
of the financial health of MFIs, especially with- information sharing about delinquent payers
out an in-depth portfolio analysis. Moreover, under the auspices of APIFM. Furthermore,
MFIs consider the service to be costly despite CSBF, with support from FIRST and MCA, is
the fact that the firms often offer a 25 percent conducting a study on the feasibility options for
rebate from the normal rate, while in turn the a credit information bureau.
audit firms do not yet consider this activity to be
profitable.
Meso-level donor recommendations
2. Current limitations of the professional 1. Improve investment in training.
associations
The training system is still fragile, in terms of
Limited clout and visibility. The professional structure and availability. Donors must there-
associations appear to lack sufficient clout to fore continue to buttress MFIs with training
defend the interests of the profession. activities, but adopt as a priority the transfer of
Conversely, the advantages of microfinance and skills—an essential prerequisite for sustainability.
the way it functions are not widely known by
the authorities, donors, the public, or sometimes Finance a descriptive inventory of training.
and even the MFIs themselves. This lack of There is a sizable supply of available training
14
COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW
(public and private, Malagasy and international). 2. Establish multidonor funds that are
Donors should finance a study on existing freely accessible for technical support.
training that would gather information on avail-
It is essential to create a technical and financial
ability, costs, terms of use, assessments,
tool base that is accessible to MFIs outside of
sources of financing, and quality. The conclu-
projects when they have specific needs.
sions of the recent APIFM study taking stock of
MFI training needs in Madagascar could be Donors could pool resources available for MFIs
matched against the inventory to show the gap when they apply. This fund could, for example,
between training supply and demand. The study finance scholarships for technical support,
should be widely disseminated among MFIs, audits, MIS, the introduction of a computer
donors, and any other potential participants system, studies on the implementation of insti-
(ministries, banks, etc.). The association could tutional transformation, the development of
subsequently update the information if it so business plans and action plans, and so forth.
desired. This type of multidonor fund already exists in
other countries (for example, in Tanzania where
Streamline and coordinate the financing of
it has been created through a DFID initiative). It
training. Generally speaking, it is preferable to
requires a manager who centralizes resources
subsidize training from the demand side.
and transparently performs the following tasks:
Regarding subsidizing training from the supply
side, donors should make their financing l Defines the minimum eligibility criteria for
contingent on several criteria, such as: MFIs that will receive financing from the
fund, for example the size of the institution
l Require training to be open to all MFIs that
or the regularity of the information submit-
meet a minimum set of criteria (size, trans-
ted to CSBF and APIFM;
parency, etc.). Offering training to each
MFI individually is far too costly and does l Launches requests for proposals and
not always succeed in strengthening the responds to ad hoc requests;
market. l Defines the selection criteria for proposals
l Promote cofinancing, to ensure clients are and for the use of funds;
motivated. To achieve financial sustain- l Evaluates applications; and
ability, donors’ subsidies will have to l Monitors the approved funding.
decline over time and ultimately give way
to financing assumed by the client in its To ensure system sustainability, eligible insti-
entirety. tutions will have to cofinance the effort covered
by the applications. The partial and declining
l Ensure information on the training organi- subsidization makes it possible to gradually
zation is widely disseminated (using the list integrate training costs into the MFI balance
drawn up with the CLEAR and the one sheets.
from the APIFM inventory, for example).
l Avoid duplicating training programs, 3. Promote MFI transparency.
especially when they are available in the
Transparency is essential for all aspects of insti-
private sector.
tutions’ lives—not only for the management and
Make skills transfer sustainable. To encourage supervisory authority, but also for the protection
the transfer of skills, donors could finance of savers or the search for investors. To ensure
capacity building for national trainings by MFI transparency, donors should help do the
facilitating “training of trainers” programs, following:
offering “coaching” with international trainers,
Disseminate standards on good practice for
and preparing and disseminating instructional
financial disclosure. Donors could finance a
materials, with particular attention to internal
seminar on these standards to enhance the
training.
awareness of MFIs and encourage them to move
15
MADAGASCAR
toward harmonization of the indicators used.11 4. Encourage and support the merger of the
To provide MFIs an incentive to adopt and use two professional associations.
these standards, donors, in cooperation with
Donors should support the creation of a new
CSBF, could jointly establish a Certificate of
professional association as proposed in the draft
Quality Financial Disclosure based on the
law on microfinance. Merging APIFM and AIM
CGAP Transparency Award. To bring together
will allow a sizable number of stakeholders
the DSF databases, donors could provide
to speak with one voice and exercise greater
support to CSBF becoming the depositary of
influence in the economic, social, and political
an accessible and consistent database on MFI
sphere. Donors should encourage cooperative
financial information. The professional associa-
institutions to include technical specialists in
tion could work closely with CSBF to bring
their representation, because these specialists
together and cross-check data provided by
have more comprehensive knowledge of micro-
MFIs.
finance than the elected officers and could help
Disseminate the existing information on MIS. define the association’s priorities. Integrating
To avoid creating MIS from scratch, donors banks that serve poor people into the profession-
should ensure that information is disseminated al association would strengthen the insertion of
on existing MIS and the terms for using them microfinance into the formal financial system.
(by using the resource center on information
l Donor support for the new association
systems at www.microfinancegateway.org). To
could take the following forms:
help MFIs understand their needs, donors could
steer them toward CGAP’s IS Fund or turn to l Preparation of the strategic plan of the
the multidonor fund mentioned previously.12 association.
l Development of member services.
Cofinance MFI audits digressively. Because
few Malagasy MFIs are sustainable, subsidizing l Strengthening of advocacy activities: One
audit costs may be justified. This subsidy should priority would be training in lobbying and
be associated with digressive cofinancing. In communication and the training of members
all cases, donors should avoid making direct in the international principles of micro-
payment for the audits, so that the institutions finance. Specifically, donors could finance
will become accustomed to paying for their and train the elected officers of cooperative
own audits while including the projected costs institutions in sound microfinance policies
in their financial plans. and conduct pinpoint communications
campaigns.
Follow up on the study on the credit
information bureau and reach agreement on 5. Promote a sustainable refinancing sys-
the response. Donors should work with CSBF tem for MFIs.
to analyze the findings on the feasibility of a Donor financing could have a leverage effect to
credit information bureau. Two options may be give MFIs access to the capital market. This
considered: expanding the banking risk bureau, type of support does not require large subsidies,
or creating a credit information bureau from the but does call for in-depth understanding of
ground up. Once a decision is made, donors financial tools and markets. Donors with such
specialized in this area ( e.g., the World Bank) knowledge (e.g., IFC, the AFD, and USAID)
could provide the necessary support (e.g., could do the following:
structuring the credit information bureau and
providing support in technology and in training l Continue to put MFIs in touch with banks,
bureau and MFI staff). and private investors and then give them
__________________________ sample contracts to help them prepare for
11
See the Disclosure Guidelines at www.cgap.org/docs/ negotiations.
Guideline_disclosure.pdf and
www.cgap.org/docs/Guideline_definitions.pdf.
l Establish guarantee funds. This often
12
www.microfinancegateway.org/resource_centers/
controversial tool will have to be handled
technology. prudently and professionally, stressing the
16
COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW
leverage effect, sharing risks, and avoiding National Microfinance Strategy consistent
potential adverse effects (e.g., negligence in with good practices. The national strategy
monitoring repayments). statement of aims repeats all 11 key principles
l Help MFIs identify sources of financing in of microfinance.14 These principles were
local currency, from local or international disseminated during the participatory drafting
institutions, to protect MFIs against process. The strong involvement of key donors
exchange rate fluctuations. (especially the UNDP) and the government’s
commitment in this process of drafting the
l Encourage MFI access to financial ratings
national strategy are positive factors. The
and to the training and subsidies of the
strategy clearly establishes the exclusive role of
Rating Fund (www.ratingfund.org) or to the
the private sector in the implementation of
multidonor fund to finance these activities.
microcredit. Its Steering Committee (CP–
A rating report brings transparency and
SNMF) is inclusive, with representation from
constitutes a critical tool for gaining access
the professional associations, donors, and the
to private capital from investors and banks.
government.
MACRO Proper assignment of microfinance to MEFB.
While recognizing that microfinance has
Although it is promising, the policy framework positive effects in several development areas
for microfinance is relatively new and fragile. (e.g., education, health, rural development,
There are still several challenges to be met in etc.), the policy responsibility of MEFB stresses
the area of supervision, in understanding good that microfinance is part of the financial system.
practices, and in the conditions necessary for The National Coordinating Office for Micro-
establishing an environment conducive to the finance has thus been in MEFB since 2004.
development of sustainable institutions.
Existence of a specialized microfinance unit
within CSBF. Recognizing the importance and
Macro-level strengths
specific nature of microfinance, CSFB created a
Positive change in the general environment. specialized unit devoted to crafting the new law,
Improvements in Madagascar’s overall studying the establishment of the credit infor-
development climate are helping to develop the mation bureau, and having sole responsibility
financial sector. Progress in critical infra- for supervising MFIs.
structure, such as roads and telecommunications
Inclusive draft law. The recently approved
in particular, is reducing transaction costs for
microfinance law accords priority to an activity
MFIs and their clients. It is not unusual for MFIs
rather than to a particular institutional status and
to begin operations in a new area once a road is
allows for better matching of stakeholders with
completed.13 Another area of progress is the
the market. It opens the door to all cooperative
National Land Tenure Program, which will
and nonmutual institution stakeholders and to
make it possible to secure land tenure and
new stakeholders, such as joint stock compa-
hence production, investment, and the provision
nies. Donors, particularly the World Bank, were
of guarantees. Donors are already making a
deeply involved alongside CSBF in preparing
substantial contribution to these efforts. For
this draft law.
example, the European Commission is sup-
porting telecoms and roads, and the AFD is
supporting the National Land Tenure Program. Macro-level weaknesses
The strengths of the financial sector are as Fragilities of the general environment. Despite
follows: progress made in key infrastructure, the macro-
__________________________ economic situation remains unstable. This has
13
Many regions could benefit from this policy of relieving direct implications for microfinance and the
isolation, which will make it possible to interconnect
isolated areas and connect them to the capital (this is true __________________________
14
of the Sofia region, for example). www.cgap.org/docs/KeyPrincMicrofinance_CG_eng.pdf
17
MADAGASCAR
financial sector in general through the increase makes both the demand for and supply of
in the banks’ leading rates and competition with credit in rural areas more fragile and also risks
Treasury bills. MFIs will sometimes invest in increasing inflation. (See the box below for
BTAs rather than extend credit, while inflation additional details.)
increases MFIs’ operating costs. Finally, the
Supervision by CSBF remains weak. The super-
devaluation of the ariary exceeding 30 percent
visory body is in place, but the team specialized
in 2004 and 2005 had a negative impact on the
in microfinance is still relatively small and
repayment of MFI loans contracted in foreign
resources are scarce. One consequence of this
exchange and on the purchase of imported
situation is that the process for examining and
goods necessary for activity (e.g., vehicles,
issuing licenses is time consuming. The law on
information technology, etc.).
microfinance has been approved, but the imple-
The structural fragility of agriculture is another menting decrees have yet to be issued. Some of
problem with direct consequences for all micro- the prudential rules and their application also
finance stakeholders. Increasing agricultural must be brought in line with international
output and productivity requires many different standards. For example, several MFIs monitor
interventions. Financial investments are essen- their PAR only at the 90-day mark, which is too
tial, but improvements in agricultural infra- long to effectively assess the risk of short-term
structures and techniques, resolution of the products, such as microcredits.
land tenure problem, the organization of the
Questions about the involvement and role of
rural world, and the processing, distribution, and
MAEP in the financial sector. Donors are
marketing of agricultural products are also
urging MAEP to play a role in providing finan-
important to enhancing the productivity of
cial services in rural areas, even though respon-
Malagasy agriculture. However, there is a lack
sibility for microfinance is vested in MEFB.
of cohesiveness, to which donors contribute, in
The financing of multisectoral projects through
agriculture financing policy: the need to increase
MAEP, though it is becoming less frequent,
output rapidly exerts pressure on MFIs to lend
illustrates this practice. A June 2003 study on
regardless of the risks and their lack of internal
rural finance15 opens the door for MAEP
capacity. The need to act rapidly is often used to
involvement, even though the 2004 five-year
justify recourse to sub-standard microfinance
plan for rural development does not mention it.
practices, ultimately jeopardizing the sustain-
ability of MFIs without doing anything to Ineffective legal system. The team was told of
resolve the agriculture problem. By making many instances of criminal activities (embezzle-
MFIs more vulnerable, these measures may ment) that went lightly punished or not punished
slow access to financial services by the poor. at all. The slowness of court proceedings and
their high costs (fees for mortgages), particu-
Risk of market distortions from subsidies. With
larly regarding collateral collection, undermines
all the best intentions, donors use credit—
the financial equilibrium of MFIs. More gener-
sometimes by encouraging the subsidization of
ally, the widespread absence of valid ownership
interest rates—out of a sense of urgency and
deeds and other real guarantees poses a genuine
because it seems simple to do so. They call on
obstacle to microfinance development.
MFIs and their networks to channel funds
directly to the people, in particular to increase
agricultural production. Financial services then Macro-level donor recommendations
become tools for distributing subsidies. Many donor interventions in areas other than the
Unfortunately, the consequences of such opera- financial sector have a beneficial impact on
tions are not always as positive as expected. microfinance. This is particularly applicable to
Other more direct measures to boost production
could have better outcomes (e.g., production __________________________
15
“Quelle politique de financement de l’agriculture?” [What
techniques, improved seed, irrigation, price
is the best agricultural financing policy?], Directorate for
supports, etc.). Subsidized rates pose many risks Enhancing the Professionalism of Producers, Rural Finance
for the Malagasy financial sector, because it Support Service.
18
COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW
infrastructure investments (e.g., roads, commu- law on cooperative and nonmutual institutions.
nications, and electricity).16 Specifically, donors If MEFB wishes to keep the exemptions in
can do the following: place, donors could help the government estab-
lish an equitable system adhering to principles
1. Help the government maintain a favorable
such as (i) providing exemptions linked to activ-
environment.
ities rather than the status of MFIs; (ii) making
Support the government’s efforts to maintain exemptions transparent; (iii) ensuring exemp-
macroeconomic stability. The best way for tions are limited in time and declining; and (iv)
donors to contribute to microfinance at the clearly indicating that they are incentives. This
macro level is to help the government ensure system should guard against use by organiza-
macroeconomic stability. In cooperation with tions that try to benefit from exemptions without
the IMF, donors can finance focused studies providing microfinance services.18
illustrating the linkage between economic
stability and the development of the financial 2. Beware of subsidized rates.
sector (including microfinance), perhaps Study and explain the risks of subsidization.
making use of the results of the analysis of Interest rate rebates, as practiced in Madagascar,
MFI costs and revenue streams. These studies are similar to providing an interest rate subsidy
could show the impact of inflation on MFIs to microfinance. It would be worthwhile to
and analyze the implications of a high Treasury examine the results of the tests conducted in
bill rate on operations and on the supply of Madagascar and to share the lessons learned.
credit. The subsidization of client interest rates, even
Support the reform of the legal system. The on a temporary basis, has been studied in
reform of the land tenure and legal system several countries. Despite its attractiveness at
calls for long-term investments by donors. In first glance, this practice has often narrowed
addition to providing ongoing support for the microfinance market rather than broadened
this reform, donors should devote particular it, with an undesirable impact on poverty
attention to current issues, such as the prelimi- reduction.
nary draft law on guarantees with respect to Even though many wealthy countries (includ-
collateral security and pledging or the National ing France) have used or currently use interest
Land Tenure Plan. rate subsidies to finance agriculture, the review
Contribute to analysis of the tax system for the team has found no examples of successes
financial sector. Current law provides for associated with such practices in developing
sizable tax exemptions for cooperative MFIs17 countries. It is unlikely that the experience of
that are subject to review under the new draft wealthy countries in this area can be used as a
model given the economic disparities involved.
__________________________ Donors should be the first to evaluate the risks
16
One example is the Lax Alaotra region—one of
of credit subsidization if they seek to advocate
Madagascar’s “rice granaries” near Antananarivo, where
two MFIs operate (OTIV and CECAM)—which has good practices vis-à-vis the government and
extremely poor connections to the capital city. In the dry MFIs.
season, when transport is the most favorable, it still takes
three days by road from the Diana OTIV to Antananarivo. More specifically, interest rate subsidization
Within the regional networks, some offices are difficult to poses the following risks:
reach, as in the case of CECAM movement throughout
Bongolava, Menabé, and Sofia, where that network has l The risk of confusion between credit and
established regional unions that are extremely difficult to subsidy, leading to the likely increase in
monitor.
17
Declining exemption from the business profits tax (IBS), loan defaults, in particular as from the
featuring full exemption for five years followed by second cycle
reductions (for years 5 through 10), exemptions from the
professional tax, exemption from the VAT on interest __________________________
18
charged on member deposits and loans, and exemptions See page 14 of the “Guiding Principles on Regulation and
from taxes and registration fees on asset components related Supervision of Microfinance,” available at www.cgap.org/
to operation (see Chapter IV of the law on tax provisions). docs/Guideline_RegSup.pdf.
19
MADAGASCAR
l Problems with returning to applying market rate, MFIs must increase their productivity and
terms once the subsidy period has ended efficiency to improve their cost controls to
benefit their clients. Instead of subsidizing
l A higher risk customer base attracted by the
interest rates, donors should subsidize the
subsidized rates
transformation of MFIs into more effective
l Unfair competition with MFIs opting to use institutions, with more diversified services to
a real market rate better serve the rural population. They should
also improve the dissemination of information
While the recovery of operating costs and finan-
on interest rates that are intended to cover MFI
cial costs needs to be included in the interest
costs and expansion (see the box below).
Box 4. Subsidized Rates in Madagascar (“Bonification”)
How the mechanism works
The current agricultural investment credit system is subsidized as follows:
l MFIs that so request can offer their clients loans at subsidized rates (1 percent a month instead of the
normal 3 percent).
l The subsidy is applied at the end of the loan and is subject to timely repayment and the proven increase in
the profitability of the activity.
l The state—sometimes with donor subsidies—pays the difference to the client’s account. For the MFI, the
operation is transparent, because it collects the customary 3 percent interest.
l Supply is limited over time and intended solely to jump-start the financing of rural investment (e.g., the
construction of village-level granaries or agricultural equipment).
Advantages
l Resource transfers to the rural sector
l Subsidization subject to a satisfactory payment history and improved productivity
l No short-term revenue loss for MFIs
l Limited cost to the state, because the offer is temporary (one year)
Drawbacks
l The rebate stemming from the subsidized rate (2 percent on the total loan cost) is negligible in comparison
with farmers’ total production costs and does nothing to address the fundamental problems of agricultural
production.
l While cost is relatively easy to calculate, benefits are difficult to quantify (initial findings show little evidence
of agricultural product growth).
l Clients forget the true cost of credit (even when informed of the exceptional nature of the subsidy). How
will clients react when real rates resume?
l To the extent that the money is fungible, a portion of the loans is probably used for purposes other than
production (“windfall effect”).
l MFIs that are not or refuse to be subsidized are at a disadvantage when competing with cut-rate prices.
l There is little likelihood productivity will improve solely because of subsidization for such a short period.
l Institutions that offer credit at market rates but are competing with artificial prices may be penalized.
l There is a risk of inappropriate use of subsidies as “gifts,” which may induce favoritism for some clients.
See the annex for some examples of the negative effects of subsidized rates.
Subsidization is contrary to SNMF
l The principles defined by SNMF (Chapter 5.2) and adopted by all Malagasy stakeholders are undermined
by subsidies. In particular, the government’s direct involvement in the loan and rate subsidy runs counter
to principles of good practice.
20
COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW
3. Clarify the roles of the various working closely with the steering committee as
stakeholders. a whole vis-à-vis the government’s decision-
making entities, such as the National Assembly
Donors must ensure that the programs they
and the Senate, the Office of the President, etc.
finance have a market orientation and distin-
This facilitator role will also enable the private
guish between the roles of the private and
sector to offer financial and support services to
public sectors. To this end, they could do the
MFIs, and CSBF to fully play its supervisory
following:
and regulatory role.
Finance a seminar on the public sector’s role
in microfinance. Donors could follow the 4. Build the capacity of CSBF.
example of existing training modules on the
role of government in microfinance19 to reaffirm Help establish an efficient supervisory organi-
the respective roles of the private sector zation. Donors should help CSBF improve the
(operational) and public sector (environment organization of its services, for example regard-
and regulation). This seminar could be used to ing issuing and examining licenses, centralizing
disseminate the concepts already set forth in the data, training inspectors, and coordinating with
context of SNMF. the internal control personnel of MFIs and with
audit firms. This could involve training, but also
Ensure that MEFB plays its proper role as the equipment, technical support, and so forth.
sole ministry in charge of microfinance.
Donors should encourage the government to Support CSBF’s human resources. CSBF
confirm MEFB’s exclusive role in program needs to have an adequate number of trained
design and day-to-day management. All micro- staff to guarantee efficient supervision of MFIs,
finance activity, even when its components are whose fragility is already evident, especially
part of programs managed by MAEP, should be regarding governance. In particular, there is a
supervised by MEFB. Moreover, donors should need for a team of inspectors that can have a
ensure that projects that include a financial presence in the field. Donors could second an
component, whether in the urban, agricultural, expert to CSBF to this end.
or rural environment, incorporate the good Support the drafting and dissemination of
practices of SNMF. Given the large number of decrees and instructions on the new law. This
coordination bodies20 involved in microfinance, urgent task requires focused technical support
donors should focus their support on CNMF from donors. With the support of the World
within MEFB. Bank, for example, CSBF could continue to take
Promote the National Coordinating Office as stock of worldwide experience and apply the
facilitator. Donors should help the National lessons learned to the situation locally. Donors
Coordinating Office establish the primacy of its should encourage the government to adopt the
responsibilities, such as adequate coordination relevant decrees and instructions promptly to
and the dissemination of good practices, by avoid a legal vacuum.
__________________________
19
Presentation No. 18 at
www.cgap.org/direct/resources/presentations.php.
20
SNMF Steering Committee, National Coordinating
Office, MAEP financial group, Rural Credit Support
Activities Coordinating Office, Producer Professionalism
Support Directorate, and Central Rural Finance Subgroup.
21
MADAGASCAR
IV DONOR SYSTEMS ILO/BMZ financing for the APIFM, Microstart
UNDP/AGEPMF financing for TIAVO and the
OTIVs, and AFD, EC and UNDP (Microstart)
Analysis of the strengths and weaknesses at
financing for Vola Mahasoa. This kind of
the micro, meso, and macro levels identifies
cooperation is frequently the best way for
specific recommendations for donor actions at
donors to make the best of their comparative
each level of the financial system. Donors them-
advantages, as demonstrated by the cooperation
selves have strengths and weaknesses in their
between AFD and EC. The sizable financing
operating systems that have an impact on their
from EC supplements that of AFD, which has
capacity to address the challenges highlighted in
strong internal technical capacities both on site
the preceding section.
and at its head office.
Disbursements and Commitments of Cooperation on individual problems. Donors
Major Donors in Madagascar
have met to adopt a common stance on ques-
Disbursements Commitments tioning the RDSP program, said to compete
Donor
2002–2004 2005 with MFIs with direct subsidies to the people.
(in millions of (in millions of This type of cooperation is essential if donors
US$) US$)
are to respect a code of good practices and steer
World Bank—IDA 1221 4 clear of contradictions between programs, as is
the case with RDSP.
AFD 4,8 ?
IFAD 0,8 0,49 2. Movement from a “project” approach
UNDP 1,2 0,8 toward institution building
USAID 0,15 0,1 Donors tend to support existing MFIs rather
European than putting projects together from scratch. In
4,81 0,55
Commission
addition, fewer and fewer projects have credit
TOTAL 23,76 5,94 components. This has a positive effect on
building MFIs, in that such components rarely
For 1€ = 1.3 US$
have suitable technical support and hence have
As well as other smaller donors (details in the annex).
low success rates.
Donor System Strengths 3. Sensitivity to conditions in Madagascar
1. Solid capacity for collaborative action
Donors are trying to understand the special
and mobilization
features of the situation in Madagascar and are
Commitment to the national strategy. Donors trying to adapt their interventions to it. Within
collaborated in SNMF and have adopted it. donor structures themselves, the team noted
Donors are active participants in the steering significant involvement of Malagasy staff, in
committee, which also includes the private particular in the representative positions.
sector and the government (AFD, UNDP, Swiss
Cooperation, with USAID, the World Bank, and Donor system weaknesses
the EU as alternates), and also take part in the
round tables organized by the committee on a 1. Lack of a clear vision
regular basis. Because of the lack of strategic clarity with
Cooperation on joint financing. Donor coordi- regard to the definition of microfinance and
nation goes well beyond meetings and strategy related good practices, it is extremely difficult
agreements. For example, there is parallel for a development agency to adopt a cohesive
European Commission financing for CECAM, approach to microfinance. In Madagascar,
despite efforts regarding the national strategy,
__________________________ donor approaches have tended to diverge rather
21
Disbursements 2002–2005, not including RDSP.
22
COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW
than complement one another. The absence of a 2. Inappropriate selection and management
cohesive common vision may be explained by of operators
the factors cited below.
Operator selection and monitoring are essential
Uncertainties regarding donor ownership of to ensure the sustainability of MFIs:
the national strategy. There is no clear sense
Absence of transparency in contract awards.
that all donors have assimilated the guiding
Some MFIs have observed that competitive
principles of the National Microfinance
bidding procedures and requests for proposals
Strategy. Notwithstanding the participatory
are not open to a sufficient number of candidates
nature of the drafting process, the key messages
and that there is a lack of transparency in the
seem not to have been imparted and are not used
selection process. According to several indi-
as a common starting point. Thus, although the
viduals interviewed, the terms of reference for
strategy has been adopted, donors do not appear
bidding sometimes appear to have been drafted
to be working toward implementing an action
specifically by and for particular candidates
plan.
preselected by donors. This practice creates
The dual approach of financial support for virtual monopolies, with repercussions on the
agricultural production and the development quality of bids and the accountability for results.
of microfinance. The lack of communication
Unpredictable use of performance-based
between agronomists and financial specialists
contracts. Contracts are often based on a fixed
within donors partly explains this problem,
period rather than on the results to be achieved.
discussed previously in the macro-level section
Contract objectives are not clearly defined (in
of this report. In addition, there is a shortage
quantitative and qualitative terms). They do not
of personnel with training or professional
include incentives for achieving good results,
experience in finance and economics. The
such as improving efficiency or skills transfer.
team identified only two individuals with eco-
Finally, poor outcomes and failure to achieve
nomic or financial training among the donor
objectives are rarely penalized.
staff responsible for managing microfinance
programs. Insufficient insistence on skills transfer in
contracts. Given the pressing need to ensure the
Confusion between credit and subsidization.
sustainability of Malagasy MFIs, donors are not
Donors sometimes mix subsidies—which are
sufficiently stressing skills transfer in their con-
resource transfers—with loans for clients. The
tracts.
upshot is unfair competition between subsidies
and credit in the same areas, sometimes at the 3. Weak knowledge management
initiative the same donor. For example, the team
found that one MFI is proposing loans for inputs When knowledge is properly capitalized and
that RDSP is distributing free. This confusion shared, donors can take lessons learned into
extends to the problem of interest rate subsidies, account when designing new programs.
resulting in clients having difficulty distin-
Insufficient knowledge for managing practi-
guishing between what is owed and what has
tioners and consultants. While many donors
been given to them.
work through practitioners, it is the donors who
Absence of exit and backup strategies. Donor are ultimately responsible for ensuring the qual-
exit strategies are not always clearly defined. As ity of services rendered. Management of practi-
a result, some donors, such as the World Bank tioners requires a minimum amount of technical
through DID in the context of OTIV support, know-how and knowledge of the situation on
frequently have been accused of lacking vision the ground. In Madagascar, only rarely do
on disengagement. Conversely, and with donors have the internal technical capacity in
negative consequences, some other donors microfinance needed to guide, orient, or take
withdraw prematurely (AECA) and/or on a control of their programs. Frequent staff
poorly planned basis (Microstart). turnover accentuates this problem.
23
MADAGASCAR
Lack of transparency for properly measuring projects through credit components, for example
outcomes. Donors rarely establish clear indica- in the rural development programs financed by
tors for evaluating results in their contracts with AfDB, FIDA, or the World Bank. Credit
their partners (i.e., practitioners, executing components pose difficulties for sustainability,
agencies, and MFIs). Key performance indica- to the extent that they frequently lack special-
tors not only make it possible to manage financ- ized technical assistance or target a population
ing in light of outcomes, but also permit internal that may not have the capacity to manage a debt.
and external communication on the results of Moreover, the choice of executing agency
each initiative. becomes more sensitive because the credit
components may then become the responsibility
4. Inadequate “loan to government” of officials who have no knowledge of the
instrument for microfinance financial sector.
The financing instruments for microfinance are Cumbersome and slow procedures that penalize
similar to the instruments needed for the MFIs. MFIs are particularly penalized by the
financing of the private sector (e.g., grants in failure to observe certain commitments,
technical assistance, guarantees, and loans). especially by delays in donor funds disburse-
They need to be flexible, adapted to the market, ment. One can well imagine the disastrous
and often relatively small. In Madagascar, consequences of delayed disbursement for an
the main instrument used by the largest multi- MFI that is counting on this money to pass on to
lateral donors (WB, EU, IFAD, and AfDB) is its clients.
the loan to the government. This raises several
constraints: 5. Challenges for donor coordination
Inappropriate cooperation with the government. The word “coordination” comes up often in
Passage through the government raises a discussions on aid effectiveness. Coordination
concern because microfinance is targeted for refers not to large meetings with many presenta-
the private sector. Very few loans to the gov- tions, but rather to the manner in which donor
ernment are intended exclusively for micro- objectives and interventions are aligned to
finance or even the financial sector. provide maximum support to the country
Consequently, donors incorporate amounts for concerned.
microfinance in larger projects, as in rural
development programs, for example. This prac- Limited representation of donors on the SNMF
tice runs the risk of giving an operational role to steering committee. Donors are represented on
the government, which is above all responsible the steering committee by AFD, UNDP, and
for the policy, economic, and legal framework. Swiss Cooperation. With the exception of AFD,
Making ministries other than MEFB responsible these are not among the largest donors in terms
for executing projects or credit components of amounts allocated or experience in the micro-
aggravates this problem. finance sector. The World Bank, the EU, and
USAID are only alternates. While this structure
Pressure to disburse. Donors are often pressured was established out of a concern for easing the
by unrealistic disbursement objectives. Rapid burden, it also creates the danger of lesser
and excessively sizable disbursement is danger- involvement on the part of some donors and the
ous for the viability of MFIs and the market. risk that a large donor may not be “playing
When external financing exceeds absorptive along.”
capacity, it can pollute the microfinance envi-
ronment and promote unfortunate practices on Lack of a lead donor. While the strong desire of
the part of clients, or even disrupt the financial donors to shift the leadership of coordination
market in the long term. efforts to the government is understandable, it
decreases multidonor cooperation. Donors seem
Counterproductive credit components. Donors more focused on their individual problems and
sometimes build lines of credit into larger less disposed to seek a collective approach.
24
COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW
Since the voluntary dissolution of SMB,22 there modules for donors (DIRECT)23 could be used.
is no longer an official forum for donors or a Donors should ensure the dissemination of the
single spokesperson, which weakens the Key Principles of Microfinance summarized in
message they might convey and the timeliness SNMF (p. 35) and the Donor Guidelines on
with which common solutions can be found for Good Practice in Microfinance recently
improving aid efficiency and resolving their endorsed by donors.24
problems.
Make donors accountable. Donors should
establish a system for ensuring that operations
Donor Systems Recommendations conform with the key principles of SNMF. Such
The fragility of Malagasy microfinance requires a system might include positive incentives (e.g.,
prolonged intervention by donors. This support a prize for the donor who best applies good
should be reflected not only in new programs, practices) and should also establish methods
but also in improved management of these for admonishing donors who fail to observe
programs. To achieve this, donors have to work them (a “red card”). This task could be assigned
“differently.” As a consortium of 33 donors, to a subgroup of donors that would submit its
CGAP is available to help its members in project for approval by the steering committee
Madagascar implement the recommendations. for the national strategy.
1. Ensure that staff are qualified in finance 3. Steer all interventions toward promoting
sustainability.
Donors that are heavily engaged in micro-
finance should have at least one staff member The role of donors is to stimulate the private
trained in microfinance or finance. A minimum sector, not to replace it. Subsidies should not be
option would be to train the individual with permanent, and the way they are used should
responsibility in this area. A more sustainable evolve. Experience worldwide shows that MFIs
and less costly solution would be for donors that can effectively be made sustainable. Figures
wish to remain involved to recruit and train from the MIX bear this out: In 2003, 66 of the
Malagasy personnel. This would also permit 124 MFIs registered had attained operational
greater capitalization and improve knowledge self-sufficiency. To make Malagasy MFIs
management. sustainable, donors should do the following:
l Promote institutional sustainability from
2. Apply the key principles of the national the outset through a business plan that
strategy includes an exit strategy and makes
Prepare a simple listing of key principles. To managers accountable. Donors should
make the national strategy operational, donors make their financing conditional on the
should create a brief document that summarizes achievement of the stages of sustainability.
the vision of SNMF, its key principles, and the l Maximize skills transfers. Such transfers
roles of the various stakeholders. should occur in all technical, commercial,
Internalize the key principles. These principles and administrative areas, from the report to
should be disseminated among donors and clients to the report to the financial system,
upheld at all levels. To this end, donor staff and including the MIS, the accounting
could be trained with field visits and periodic system, and human resources management.
presentations on technical topics. Online course l Give MFIs incentives to make immediate
__________________________ use of market sources of financing, using
22
Donors formed a group in 1997, with an operational arm
known as the Multidonor Secretariat (SMB), that held
subsidies for leverage and not as the only
regular meetings and maintained a Web site. In December resource.
2003, the microfinance group of the Donor Group dissolved
and integrated the National Coordinating Office for __________________________
23
Microfinance (CNMF). Donors are members of the Steering www.cgap.org/direct
24
Committee of National Microfinance Strategy (SNMF). www.cgap.org/donorguidelines
25
MADAGASCAR
4. Strengthen performance-based costs, the rates charged by MFIs will always be
management with service providers. higher than the rates on “traditional” bank loans.
Give preference to requests for proposals over Use MEFB as a conduit in the event of
calls for bids. Requests for proposals define a financing through the government. Donors
broad objective and allow candidates to prepare a who are obliged to finance all their programs or
proposal more freely, whereas a call for bids credit components through the government
tends to set rules that adhere to a contract method- should work through MEFB.
ology and specific contract objectives, such as to
offer credit to a given population group. Requests Avoid pressures to disburse. Budgets should be
for proposals allow greater scope for innovation limited to the absorptive capacity of MFIs, that
and open the contract to a more diverse range of is, their capacity to develop in a sound manner
bids. Requests for proposals also may help without jeopardizing their sustainability. If the
prevent instances of terms of reference being amounts of funding are too large, donors should
tailored specifically for certain practitioners, reallocate them to other sectors.
which restricts the market at the outset.
6. Reactivate coordination.
Allow MFIs to select their own service
Donors have a number of challenges to meet
providers. To enhance transparency and increase
that depend on them alone. For example, most
the accountability of MFIs and technical
of the recommendations on donor systems do
services providers, donors could allow MFIs to
not require government participation.
enter into contracts directly with their technical
service providers. Funds could be transferred to Enlarge and energize the donor subgroup of
MFIs, which would select their technical service the SNMF Steering Committee. Increased
provider from a sufficiently broad list pre- donor coordination could be brought about on
approved by the donor. To enhance MFI pre- the basis of the donor subgroup already in place
paredness, donors could train them in selecting within the committee. It will be necessary to
and drawing up contracts with providers. include new arrivals, such as MCA and AfDB.
5. Adapt the tools and interventions systems Ensure that coordination is operational. Create a
to the needs of microfinance. group of technical specialists or direct managers
of microfinance within the subgroup to focus
Subsidize good MFIs, not interest rates. When coordination efforts on specific issues, such as the
properly managed, direct subsidies to institu- adoption of key performance indicators or the
tions can strengthen their effectiveness and harmonization of disclosure standards. In addi-
competitiveness. It is important to select MFIs tion, this subgroup could work in cooperation
that have the capacity and the will to develop with agricultural subgroups to discuss agricultural
while maintaining efficiency and seeking financing. The technical specialists group could
financial sustainability. These direct subsidies also work on follow-up on the CLEAR recom-
to MFIs must be targeted, declining in amount, mendations and discussions on subsidized rates.
limited in time, and performance based. They Because different donors have varying levels of
will exist only as long as there is no reasonable expertise in microfinance, these meetings will
alternative in the private sector and will always serve as a venue for the exchange of skills. In turn,
entail a strategy for being replaced by loans or agency heads could intervene at strategic
equity investments. moments in the decision-making process.
To go beyond subsidizing interest rates, which Encourage joint initiatives. Donors should
has negative effects for microfinance, donors increase focused cooperation efforts in microfi-
could promote a reduction in interest rates by nance, taking successful experiences into account.
promoting competition and by giving MFIs For example, donors could cofinance the multi-
incentives to reduce their operating costs donor fund (see the meso-level recommendation)
while adopting greater transparency about their and cofinance MFIs. This should make the most
interest rates. This said, owing to transaction of the comparative advantages of each donor.
26
COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW
Box 5. Factors Behind Good Donor Collaboration
In the course of its experience with donor operations and collaboration, CGAP has updated the essential elements
for ensuring success: individuals, the common interest, and instruments (the three “I”s). Donors, of course, do not
operate in a vacuum, and collaboration with the government and with practitioners is critical.
The individuals involved
l The involvement of personnel with technical skills allows for richer discussion focused on concrete
initiatives.
l There must be a critical mass of individuals committed to participating collaboratively, which is not always
easy for donors that have a sizable number of different projects.
l The local presence of donors is essential in order to have frequent and informal contact on site, the core
component of vibrant collaboration.
l The presence of decision-makers at key moments makes the collaboration functional and more
efficient.
l “Champions” on each initiative are essential for transforming hopes into realities.
A common interest in collaboration
l Clarity of the goal pursued is essential for focusing attention and ensuring the participation of all.
l The common interest must be shared, and all must be cognizant of the advantages that can stem from
collaboration in the work of their organization.
l Prior knowledge of the subject by participants is essential, even if advance training for some may be
required.
The Instruments of collaboration
l A minimum structure is necessary for sustainable collaboration, though informal contacts continue to be
vital.
l Always preserve transparency in operations, decision-making, follow-up, and ensuring stakeholder
accountability.
27
MADAGASCAR
ANNEX 1—SUMMARY OF FINANCIAL SYSTEM WEAKNESSES, DONOR RECOMMENDATIONS, AND ESSENTIAL PREREQUISITES
ESSENTIAL PREREQUISITES FOR
LEVEL WEAKNESSES DONOR RECOMMENDATIONS
EFFECTIVE DONOR ACTION
• Structural fragility of MFIs • Help the MFIs reduce their fragility • Internal expertise in microfinance
(governance, portfolio management, • Help the MFIs better adapt their services • Performance-based project management (contracts by
internal systems and controls, human • Promote diversification of institutions and approaches objectives, requests for proposals).
resources, financial sustainability) • Vision of sustainability with skills transfers and exit
MICRO • Supply not fully meeting demand strategies.
• Transparency in contract awards and delegation of
selection to the MFIs.
• Products and financing suitably adapted (in terms of
objectives and amounts).
• Fragility of services provided to MFIs • Improve investment in training • Vision of sustainability through integration of
• •Current limitations of the professional • Establish multidonor funds that are freely accessible microfinance into the financial sector.
associations for technical support • Subsidies directly to the private sector for support.
MESO • •Unavailability and unreliability of • Promote MFI transparency • Flexibility in the use of products.
information • Encourage and support the merger of the two • Capacity to share resources (pooling of tools).
professional associations
• Promote a sustainable refinancing system for MFIs
• Fragility of general environment • Help the government maintain a favorable • Internalization of the key principles for good practices in
• Risk of market distortions because of environment the National Strategy.
subsidies • Beware of subsidized rates • Reopening of a donors’ forum.
• Supervision by the CSBF remains • Clarify the roles of various stakeholders • Better representation within the SNMF.
MACRO
weak • Build the capacity of the CSBF (staffing, training) • Active and operational cooperation between and among
• Questionable involvement of MAEP in donors.
microfinance • Creation of a lead donor status to improve leadership
• Ineffective legal system and ensure more effective lobbying.
• Lack of a clear vision • Ensure that staff are qualified in microfinance
• Selection and management of • Apply the key principles of good practices from the
inappropriate operators National Strategy
• Inadequate knowledge management • Steer all interventions toward promoting sustainability
DONOR • Inadequate “loan to government” • Strengthen performance-based management with
SYSTEMS instrument for microfinance service providers
• Challenges for donor coordination • Adapt the tools and interventions systems to the
needs of microfinance
• Reactivate coordination efforts
28
COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW
ANNEX 2—THE RISKS OF SUBSIDIES AND SUBSIDIZED INTEREST RATES—some examples
Public authorities often opt to intervene in certain markets by subsidizing or otherwise under-
writing lending rates to reach a target group of poor clients or to boost agricultural output. While
the objectives pursued are frequently laudable, methods involving rate subsidies entail a high cost
for the entities offering the subsidies, even as they have little influence on production, and they
often lead to deterioration in the supply of long-term financial services to the targeted groups. The
experiences below illustrate several problems that can arise because of these methods and invite
the reader to consider the high costs of subsidization in relation to its benefits.
Uganda: Subsidized government programs—the Entandikwa Credit Scheme (ECS) and
the Poverty Alleviation Programme (PAP). In Uganda, the government introduced subsidized
credit programs focused on the rural poor. The two most developed programs (ECS and PAP)
offer credit for rural investment at subsidized rates. The repayment rates range from 20 percent
to 80 percent. “Subsidized credit attracts non-poor borrowers and encourages default. [It]
should, therefore be […] avoided.” Source: ILO/UNHCR Technical Workshops. See
www.ilo.org/public/english/employment/finance/workshop/execsum.htm.
Vietnam: Subsidized rates slow the development of microfinance: Microcredit subsidies
have created market distortions. These restrictions on interest rates constrain risk taking in
microfinance and cast doubt on the viability of microfinance programs. Source: Asian
Development Bank, 1999, Gilberto Llanto. See www.adb.org/documents/books/
central_banks_microfinance/country_studies/vietnam.pdf.
India: Integrated Rural Development Program (IRDP): In the 1980s, the Indian government
introduced a set of targeted subsidized financing programs, including IRDP. The latter experi-
enced the three classic problems of subsidized lending mechanisms: the diversion of funds to
benefit those more well off, a low recovery rate, and the impossibility of operating without siz-
able subsidies. The recovery rate on the amounts lent by IRDP ranges from 10 percent to 55
percent. A 1993 study on rural finance identified widespread embezzlement of loans and a lack
of awareness of repayment terms on the part of borrowers. In contrast, the main Indian MFIs
(Share and BASIX) have repayment rates approaching 100 percent. The foregoing study also
found that the total cost assumed by clients under IRDP ranged from 26 percent to 38 percent
when transaction costs (including bribes) are considered. Other studies have shown that IRDP
tends to favor rural population groups that are better-off, rather than the poorest groups.
Sources: Mahajan and Ramola, “Financial Services for the Rural Poor,” World Bank,
Microfinance in India; and 2002 data from MIX Market.
Thailand: Loans at preferential rates go to those who know the agricultural extension agents.
The case of BAAC in Thailand shows that subsidized credit does not benefit the population
groups for which it was intended. A 1996 study by the Thai Development Research Institute
shows that such loans instead go to producers who know the agricultural promotion agents or
lending representatives. Source: GTZ, Marie Louise Haberberger.
Tunisia: In Tunisia, the Banque Tunisienne de Solidarité functions as part of a subsidized
mechanism that applies an annual interest rate of 5 percent, a level below that required to ensure
cost recovery. Consequently, the bank must systematically turn to the state for subsidies to be
able to survive. Sources: Interview with Michael Cracknell, CGAP Occasional Paper No. 9,
September 2004.
29
MADAGASCAR
ANNEX 3—DONOR FUNDING ALLOCATED TO MICROFINANCE IN 2002–2004, AND
2005 COMMITMENTS
Estimated amounts in millions of U.S. dollars
Disbursed Committed Planned Projects
Donor
2002–2004 2005 2006–2007 1999–2005
AFD 4.8 1.3 13
European Commission 4.81 0.55 1.3 9.07
WB (excl. RDSP) 12 4 16.4
IFAD 0.8 0.49 1.5 2.5
UNDP 1.2 0.8 2 2.9
USAID 0.15 0.1 3
Japan 0.04 0.03
MCA 2.5 2.6 2.53
Swiss Cooperation 0.03 0.02
ILO/BMZ 1.25
GTZ 0.39
AfDB 1
Total 23.83 8.46 8.7 52.07
For 1€ = 1.3 US$
30
COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW
ANNEX 4—DONOR ACTIVITIES
AREAS OF ACTIVITY AFD AfDB WB IFAD GTZ Japan MCA Switzerland UNDP EC USAID
MACRO X X X X X
MESO X X X X
MICRO X X X X X X X X X X X
Institution building X X X X X X X
Credit funding X X X
MFIs X X X X X X X
Commercial banks X
State-owned banks (CEM, postal
X X
system)
Savings and loan cooperatives X X X X X X X
Credit component of development
X X X X
projects
Capital subsidies (and investment
X X X X X X
subsidies)
Subsidies for technical assistance X X X X X X X
Portfolio refinancing loans in euros X X X
Technical assistance loans in euros X
Lending to the government X X X
Capital endowments X
Bank guarantees, specifying local
local
currency or foreign exchange X
currency
(for MFI refinancing)
State
Subordinated NGO subsidy
Other lending grants on-lent in
MFI loans
Local staff with expertise in 1 to 2 3 incl.
3 0 0 0 0 0 3 0 1
microfinance (acc. to donor) pending 2 project
31
MADAGASCAR
ANNEX 5—DONOR MICROFINANCE PORTFOLIO
In millions of U.S. dollars
(unless otherwise indicated)
AREAS OF ACTIVITY AFD AfDB ILO/BMZ WB IFAD GTZ Japan MCA Switzerland UNDP EC USAID
10 0.3 0.03 0.036 7
Microfinance budgets 1999-2005 1 1.25 16.4 2.5 2.9 3
(euros) (euros) (euros) (CHF) (euros)
Microfinance disbursements 4
2002-2004 (microfinance + 3.7
1.25 12 0.8 0.03 0.030 1.2 0.15
credit component of integrated (euros) (euros)
projects)
Integrated projects with credit 0.0 15 0.075
1 4 0 .5 0.3
component (completed or current) (CHF) (euros)
Microfinance commitments 2005
(microfinance + credit component 3 0.5 2.53 0.021 0.8 0.420 0.10
of projects) (euros)
5
Later planned commitments 1.3 1.3 1.5 5 (*) 2
(euros)
For 1€ = 1.3 US$
(*) US$32 million for the financial sector as a whole.
32
COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW
ANNEX 6—SUMMARY OF PROJECTS
MICRO LEVEL
Support for MFIs:
l AFD supported and continues to support 3 MFIs (€ 10 million): ADEFI Phases 1 and 2 maturing
end-2006, CECAM maturing 2005/2006, Vola Mahasoa phases 1 and 2 maturing 2006.
Investment and operating subsidies, Credit Fund for professionalization, autonomy building, and
institutionalization of networks.
l EU supports or has supported several MFIs (in the amount of about € 7 million), principally the
CECAM and Vola Mahasoa networks.
l WB/AGEOMF has, since 2000, supported five cooperative networks (OTIV Toamasina, Lac
Alaotra, Antananarivo, Diana, and the TIAVO network) in an overall program amounting to US$
16.6 million.
l Japanese Cooperation helped create 4 savings and loan banks (Inter-Aides/CEFOR) in poor
districts of Antananarivo.
l MCA will be supporting the expansion and development of MFIs in five geographical areas
under a program in the amount of US$ 5 million (CECAM in particular).
l UNDP supported the Microstart program in the amount of US$ 1.61 million (credit for education
savings of poor women to assist with its introduction in several MFIs). It worked with CIDR to
help with the start-up of the Ambato Boeni network.
Swiss Cooperation is assisting the SAHA NGO.
l Support for credit components of Integrated Development Projects:
l AfDB is supporting two programs with credit components: Young Rural Entrepreneurs (total
program of UA 7,350,000 of which UA 520,000 in credit lines) and the Project to Rehabilitate
the Bas Mangoky Perimeter (total commitments: UA 10 million of which UA 290,000 in credit
components) conducted with CIDR.
l IFAD is supporting three programs with credit components: Agricultural Improvement and
Development Project in the Northeast (PADANE, 1997–2005) entrusted to OTIV SAVA; the
Project to Improve the Upper Mandrare Watershed, Phase II (PHBM 2004–2007) with ICAR;
and the Program to Promote Rural Incomes (PPRR: 2005–2012).
l UNDP is supporting a microfinance component under RPPMED (poverty reduction program),
which provides lines of credit to MFIs (TIAVO, Haingonala, CECAM); UNDP is supporting a
Job Creation and Income Boosting Component through a credit fund in the amount of US$
500,000.
l EU is supporting food security programs with NGOs, for microcredit of € 75,000 (GRET,
CARE, ICCO).
l USAID is supporting a credit component of US$ 300,000 under the BAMEX program.
Support for authorized financial institutions:
l USAID has supported the Caisse d’Epargne de Madagascar (CEM).
l MCA is supporting CEM.
33
MADAGASCAR
Support to commercial banks
l BOA is involved in direct microfinance with small farmer groups.
l AFD: proposing a guarantee fund (ARIZ) that counter guarantees banks up to 75 percent for the
refinancing of MFIs (for example, CECAM by BNI).
l UNDP/UNCDF: Microfinance Support Program (MSP) supported the development of business
relations between banks and MFIs with a UNCDF guarantee fund for the refinancing of MFIs
(BOA), benefiting five MFIs in the amount of FMG 20 billion (MGA 4 billion).
Support for cooperatives and savings and loan banks
l AFD (CECAM), WB/AGEPMF (4 OTIV and TIAVO networks), FIDA (OTIV SAVA) are
supporting networks of cooperative institutions.
l CIDA/DID is supporting OTIV cooperative networks and a project to create a federation of
OTIVs.
l GTZ has supported two CECAMs and UNICECAM.
l ILO/BMZ has supported UNICECAM Antsirabe.
Commercial bank investments in MFIs
l BNI is a 15 percent shareholder in SIPEM.
l BOA, BFV, and BMOI are also SIPEM shareholders.
l BNI might invest in the central financial institution for CECAMs.
l BFV, BNI, and BMOI may be interested in investing in the capital of a new ADEFI financial
institution.
Investors/shareholders in support of MFIs
l SIDI (international NGO) is a shareholder in SIPEM.
l GEM (Malagasy enterprise group) is a shareholder in SIPEM and APEM, and APEM supports
Vola Mahasoa.
l Patrice Hoppenot (investor and partner) is a shareholder in ADEFI.
l AFD will provide quasi-capital (subordinated debt) to MFIs in the context of its microfinance
“investment facility.”
l An investment company owned by Crédit Agricole France (3 CRCA Reims, La Réunion, Centre
Loire) will provide capital to the central financial institution of the CECAMs.
l ICAR is investing in the central financial institution of the CECAMs and is expected to invest in
a MFI in the south (PHBM program).
l QMMM (Canadian mines) has been invited to invest in the PHBM program.
l The Aga Khan group is expected to invest in private MFIs to be established (in the West and
South of Madagascar).
l Public companies (ARO, CEM) are expected to provide capital to the central financial institution
of the CECAMs.
34
COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW
MESO LEVEL
Capacity building: Training (completed or underway)
l WB (AGEPMF) is disseminating, through local and international consultants, eight major
training modules in microfinance for local offices, supervisors, and paid technical specialists of
MFIs (microcredit demand analysis, internal audit and control, credit disputes and collection,
MFI marketing/development, application of the chart of accounts, personnel management, good
governance, management, and administration of microfinance units). The training also applies to
senior personnel of cooperative institutions.
l APIFM disseminates seven CAPAF/CGAP course modules via local consultants: training the
trainers (basic principles of MFI accounting, quantification and control of arrears/calculation and
setting of interest rates, financial analysis, development plan and financial projections with
Microfin, management information systems, management of operating risks, and development of
new products).
l INSCAE is proposing a master’s degree in “Cooperative Financial Institutions and Banking.”
Advocates for the sector
l Existence of two professional associations, for cooperative institutions (APIFM) and nonmutual
institutions (AIM), that are expected to merge under the new regulations.
l ILO/BMZ has supported the creation and launch of the APIFM.
Refinancing
l Several commercial banks (BOA, BNI, BFV) are refinancing MFIs (CECAM, AECA, ADEFI,
OTIV Lac Alaotra) in the amount of MGA 4 billion–6 billion.
l AFD is providing a guarantee (ARIZ guarantee fund) to commercial banks that refinance micro-
finance.
l UNDP’s Microfinance Support Program provided a guarantee fund to commercial banks for
refinancing MFIs.
l EU provided a subsidy to the government, which is onlent as a concessional loan (40 year term,
10 year grace period, 1 percent rate).
Accounting reform and audits
l MCA plans to support training programs in accounting and management, the creation of
management centers for small entrepreneur capacity building, and to provide small entrepreneurs
with access to credit.
l MPA and CGA audit firms are involved in supporting MFIs and creating an offer adapted to this
customer base.
l CGAP/CAPAF training of auditors.
MIS
The ORCHID firm is the national software supplier for Vola Mahasoa, SIPEM, and TIAVO (under
study).
35
MADAGASCAR
Institutional rating and evaluation
l HORUS has conducted institutional evaluations (OTIV Toamasina and Lac Alaotra,
Antananarivo, TIAVO) for AGEPMF.
l UNDP/UNCDF conducted the institutional audit of its four programs in 2002 with HORUS.
Other
l MCA is expected to support the improvement of payment circuits (check encashment, reform of
the BTA system for improved access by the public).
l MCA is expected to support the creation of the credit information bureau.
l HORUS developed the strategic plan for CECAMs 2001–2005.
MACRO LEVEL
Regulation and supervision
l AFD: support to the CSBF for improving microfinance regulation in the context of the
institutional support program for the CECAM network.
l WB: AGEPMF. Microfinance Project 3217, MAG. Legal and regulatory aspects for micro-
finance (strengthening legal framework, strengthening of the CSBF’s internal supervision
capacity).
Advice on national strategies and policies
l IFAD is supporting the strengthening of the institutions and structures implementing national
policies (CNMF, APIFM, CP SNMF); budget of US$150,000 usable as needs dictate. MCA
will support SNMF implementation.
l MCA will support the financial system modernization plan (computerization of land registry)
and engage in activities relating to the financial sector (total budget of US$110 million of which
US$32 million is for the financial sector).
l UNDP will support SNMF implementation (budget of US$2 million).
36
COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW
ANNEX 7—LIST OF PERSONS CONSULTED
GOVERNMENT:
ORGANIZATION NAME FUNCTION E-MAIL
CSBF RATOVONDRAHONA Guy Secretary General sg.csbf@yahoo.fr
CSBF ANDRIANASOLO Emma Director exe_andria@yahoo.fr
CSBF RAZAFINTSALAMA Yves Authorized officer yrazaf@hotmail.com
CSBF RAMANANDRAIBE Stéphane Head of Unit s.ramanandraibe@wanadoo.mg
Ministry of Economy, ANDRIAMPARANY
Minister radavben@hotmail.com
Finance, and Budget Radavidson
Ministry of Economy,
RAZAKARIASA Henri Bernard Secretary General hrazakariasa@mefb.gov.mg
Finance, and Budget
Ministry of Economy, Coordinator of
RAJOELINA Francis Blaise coordmicrofinance@netclub.mg
Finance, and Budget Microfinance
Ministry of Agriculture,
RANDRIARIMANANA Harison Minister maep.mi@wanadoo.mg
Livestock, and Fisheries
Ministry of Agriculture,
RATOLOJANAHARY Marius Secretary General M. dgdrah@wanadoo.mg
Livestock, and Fisheries
Director of Support for
Ministry of Agriculture,
RATOHIARIJAONA Suzelin Producer r _suzelin@yahoo.fr
Livestock, and Fisheries
Professionalism
Head of Unit for
Ministry of Agriculture, RASOARIMALALA Janis
Support of Rural saholyjanis@yahoo.fr
Livestock, and Fisheries Saholy
Finance
Office of the President
Director of Good
of The Republic of RABESAHALA Henri henrirabesahala@yahoo.com
Governance
Madagascar
Advisor to the Prime
Office of the Prime Minister, Head of
RABEKORIANA Céline Not available
Minister Government (former
Sec.-Gen. of APEM
DONORS AND SERVICE PROVIDERS
AfDB NADIJ Safir Future representative n.safir@afdb.org
AfDB BARRY Ahmadou a.h.barry@afdb.org
Aga Khan Foundation TOUREILLE Jacques Director jacques.toureille@aiglemont.org
Agence Française de
CASTAING Denis Agency Director castaingd@mg.groupe-afd.org
Développement
Agence Française de
DEBRA Jean Michel Deputy Agency Director debrajm@afd.fr
Développement
Agence Française de
HAYEE Emmanuel Chargé de Mission hayee@mg.groupe-afd.org
Développement
CIDR CHAOBEROFF Renée Research Director renee.chaoberoff@groupecidr.org
Chief, Microfinance
DFID VOLOLONDRAVAHY Britta ukembant@simicro.mg
Project
Embassy of Japan HIROSE Shinichi First Secretary ambjapon@wanadoo.mg
European Union BOIDIN Jean-Claude Resident Representative delegation-madagascar@cec.eu.int
European Union DE GROOT Advisor berend.DE-GROOT@cec.eu.int
European Union RANDRIAMIHARISOA Delphin Program Officer delphin.randriamiarisoa@cec.eu.int
RANARIVELO–KOURIEH Kourieh.Gtz-
GTZ Director
Randa madagascar@Mg.GTZ.De
Country portfolio
IFAD BENOIT Thierry b.thierry@ifad.org
manager
37
MADAGASCAR
DONORS AND SERVICE PROVIDERS cont.
ORGANIZATION NAME FUNCTION E-MAIL
IFAD RAKOTONDRATISMA Ha Liaison officer haingo@simicro.mg
ILO DAYINA Mayenga Director mayenga@ilo.org
Resident
IMF DJAHDJAH Samir mramino@imf.org
Representative
sandramai.hamilton@
LFS Financial System Economist—
HAMILTON Sandra Ifs-consulting.de
GmbH Banking Advisor
www.Ifs-consulting.de
LFS Financial System Economist, Regional
Diehl Christoph Not available
GmbH Manager for Africa
LFS Financial System
BARLEON Michael michael.barleon@lfs.consulting.de
GmbH
Millennium Challenge
RALIJHON Emma Coordinator mcamadagascar@yahoo.fr
Account
Norway LEHLE Hans Ssredrik Ambassador emb.antananarivo@mfa.no
Chief, Service for
jean-christophe.DEBERRE@
SCAC DE BERRE Cultural Cooperation
diplomatie.gouv.fr
and Action
Patrick.MEDORI@
SCAC MEDORI Patrick Microfinance Officer
diplomatie.gouv.fr
Jean-luc.FRANCOIS@
SCAC FRANCOIS Jean Luc Advisor
diplomatie.gouv.fr
SSC-IFC RAJAOBELINA Johane Program Director Jrajaobelina@ifc.org
Advisor on Rural
Swiss Cooperation MORGANTI Nicola saha@iris.mg
Economy and Finance
Resident
UNDP BOURI Sanhouidi bouri.sanhouidi@undp.org
Representative
Deputy Resident
UNDP CHITOU Mansourou mansourou.chitou@undp.org
Representative
UNDP SABO Isiyaka Economics expert isiyaka.sabo@undp.org
UNDP NDIAYE Fode Regional unit fode.ndiaye@undp.org
Technical Manager,
UNDP ADEBOUCHOU Makarimi Regional Unit for makarimi.adechoubou@undp.org
Central and West Africa
mamy.nirina@wanadoo.mg or
UNDP/MSP ANDRIAMAHENINA Mamy National expert
fenu.mad@dts.mg
UNDP/MSP RAKOTOMAHARO Fanja Monitoring expert fenu@dts.mg
Program louisette.ranorovololona@
UNDP/UNCDF RAHARIVOLONA Louisette
Officer undp.org
USAID RABEMANANJARA Fidèle Economist frabemananjara@usaid.gov
Resident
Representative,
World Bank BOND James Madagascar jbond@worldbank.org
Comoros, Mauritius,
and Seychelles
Senior Operations
World Bank BETTENCOURT Sophia sbettencourt@worldbank.org
Officer
Senior Investment
World Bank LANSKY Tamara tlansky@ifc.org
Officer
World Bank Public Finance Expert Kouattara@worldbank.org
KOROTOUMOU Ouattara
and Macroeconomist
World Bank RABARIJHON Henri Country Manager/IFC hrabarijhon@ifc.org
Rural Development Zrazafintsalama@worldbank.org
World Bank RAZAFINTSALAMA Ziva
Expert
38
COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW
SERVICE PROVIDERS AND NGOs
ORGANIZATION NAME FUNCTION E-MAIL
RAMAROSON
ADEFI Director ramarosonandria@hotmail.com
ANDRIAMANGAZATO
AGEPMF RASOLOFO Robin Secretary General agepmf.se@dts.mg
AGEPMF RANDRIANTSOTSY Miguel Senior banking officer Agepmf.se@dts.mg
Senior assessment
AGEPMF RAVAOARIMINO Lova agepmf.lova@wanadoo.mg
officer
AIM ANDRIANASOLO Monique Chair sipem@wanadoo.mg
APB RAKOTOMANANDRAY Cécile Advisor on Microfinance c.rakotomanandray@bni.mg
APEM ANDRIANTAVY Hanta Secretary General apem@wanadoo.mg
RANDRIAMAMAONJY
APEM Director apem@wanadoo.mg
Dieudonnée
APEM ANDRIANTAVY Hanta Secretary General apem@wanadoo.mg
RAMAHOLIMIHASO
APEM Chair mrcabram@wanadoo.mg
Madeleine
APIFM ANDRIAMBALO Monah Secretary General apifm@simicro.mg
APIFM RAZAKAMAHEFA Josée 1 VPCA otivtnr@blueline.mg
APIFM RAKOTOARIVAO Andrianina apifm@simicro.mg
ARO RAKOTOARISOA Tahiana Deputy Agency Director arodg@wanadoo.mg
BFV–SG BOULIER Alain Interenterprise Director alain.boulier@socgen.com
BFV–SG RAOELINA A. Norosoa Agency Director norosoa.raoelina@socgen.com
BMOI HERIDE Jean Claude General Manager bmoi.st@simicro.mg
ANDRIAMANOHISOA
BNI–CL Secretary General d.andriamanohisoa@bni.mg
Damase
RANDRIANARIVELO Rural Development
BNI–CL Lantorandrianarivelo@yahoo.fr
Lantonirina Consultant
Senior Director for
BOA CHUCK HEN SHUN boa9130@boa.mg
Microfinance
CABINET RANDRIANONIMANDIMBY
Expert mpanazava@simicro.mg
MPANAZAVA Olivia
Cabinet DELTA RASOARISOA Sahondra Manager deltadt@wanadoo.mg
Cabinet Fivoarana RANDRIANARISOA Frederic Authorized officer cabfiv@dts.mg
Caisse d’Epargne de
RAZAFITSIATOSIKA Calixte General Manager dgsacem@dts.mg
Madagascar
Caisse d’Epargne de Deputy General
RAJERISON Dominique rdominique@dts.mg
Madagascar Manager
Caisse d’Epargne de
ANDRIAMANANTSOA Claude Audit Director comcem@wanadoo.mg
Madagascar
CECAM RAJAONA Thierry Central Director trajaona@fthm.mg
CECAM RAKOTOARISOA Brillant Deputy Central Director icarintercecam@wanadoo.mg
CIDR–Antananarivo MANANJARA Gaston Coordinator cidrcn@dts.mg
CIDR/Vola Mahasoa RAZAKAHARIVELO Charlot Director cidrvm@wanadoo.mg
DID TREMBLAY Jacques Project Director jtremblay.otiv@blueline.mg
RAKOTOARIVAO Network
DID dirtana.otiv@netclub
Andrianiaina Director
Director of
DID/LAC ALAOTRA RABOTOVAO Adèle didwam@wanadoo.mg
Operations
39
MADAGASCAR
SERVICE PROVIDERS AND NGOs cont.
ORGANIZATION NAME FUNCTION E-MAIL
Network Director,
DID/LAC ALAOTRA GARNIER PARENT garparent@hotmail.com
Alaotra and Toamasina
DID/OTIV CHARLAND Yves Program Officer ycharland@did.qc.ca
DID/OTIV/DIANA REAL VERONNEAU Project Director otivdiego@wanadoo.mg
GAMA CONSULT RANDRIANASOLO Dina Director gamaconsult@wanadoo.mg
Guarantee Fund ANDRIANAIVO Jeanine Secretary General fgdm@wanadoo.mg
HAINGONALA RAKOTONIAINA Michel Director haingonala@yahoo.fr
Haut Bassin du RAKOTONDRATSIMA phbm@fortnet.net or
Director
Mandrare Project Andrianiainasoa mandrare@simicro.mg
ICAR FRASLIN Jean Hervé General Manager icar@wanadoo.mg
ROBIARIVONY
Individual consultant Microfinance Consultant robiarjo@hotmail.com
RAKOTOMANGA Josiane
INSCAE ARISON Victor Director drinscae@inscae.mg
Integrated growth pole PREVOST Michel Financing Advisor michel.prevost@mttpat.gov.mg
INTERAIDE+CEFOR REME CEBE +
Senior Officer cefor@simicro.mg
(NGO) ANDRIANOME
RAMAMPANJATO
INTERCECAM PCA unicecam@wanadoo.mg
RAMILIJAONA Pierre Marcel
IRAM TIAVO LEPOIVRE Emmanuel Project Director tiavo@wanadoo.mg
Martin Audit Office RASOANAIVO Martin Manager cabmr@wanadoo.mg
siege@orchid.mg
ORCHID SYSTEM RAJAOBELINA Mamy Manager
www.orchid.mg
PAOMA RANAIVOSOA Martial General Manager paositra@dts.mg
RDSP/UNEP RATSIMBARISON Rivo Director psdr.unep@wanadoo.mg
Head of AECA
SOA–IFD/AECA RAFILIPOSON apifm@simicro.mg
MAROVOAY
RANDRIAMAMPIANINA
SOA–IFD/AECA Chair apifm@simicro.mg
Robert
SOA–IFD/AECA Clément AECA MAROVOAY apifm@simicro.mg
Statutory Auditors, RANDRIANONIMANDIMBY mpanazava@simicro.mg or
Director
Mpanazava Oliva olivarandria@simicro.mg
Statutory Auditors,
RAJAONARY Mampianina Manager aa-cga@wanadoo.mg
CGA
TIAVO–
RAZANAKOTO Ranaivoniasy Chair tiavo@wanadoo.mg
FIANARANTSOA
TIAVO–
BARITOA Ghislaine General Manager tiavo@dts.mg
FIANARANTSOA
Trade Council RAVELOJAONA Maxime Chair trajaona@fthm.mg
UNICECAM HARINIAINA Sahondra Executive Secretary unicecam@wanadoo.mg
OTHER
alphoneralison@wanadoo.mg,
SIPEM RALISON Alphonse Chair alphonseralison@yahoo.fr,
sipem@wanadoo.mg
We apologize for any changes in addresses or titles which may have occurred since the CLEAR.
40
COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW
ANNEX 8—LIST OF DOCUMENTS CONSULTED
Adébouchou, Makarimi, and Jo Woodfin: Madagascar, Le secteur de la microfinance—Diagnostic
et analyse des opportunités d’investissement (September 2003).
AFD. Antananarivo Agency. L’AFD et la microfinance [The AFD and microfinance]. March 2005.
AFD. L’intervention de l’AFD dans le secteur de la microfinance (plaquette de présentation) [AFD
intervention in the microfinance sector (presentation)]. January 2004.
AIM. Institutions non mutualistes [Nonmutual institutions], SIPEM, Vola Mahasoa, APEM/PAIQ,
APEM/Faratsiho, Statement as of 12/31/04 (cf: 31).
APIFM. Evolution des Activités des IMFs Mutualistes [Trends in activities of cooperative MFIs]
(1999–31/12/2004).
APIFM. Statistical data on MFI networks as at 12/31/2004.
APIFM with the Rating and Evaluation Fund for Microfinance. Workshop “Evaluation de
performance des IMF and notation,” May 17–19, 2005.
Bank of Africa Madagascar—Secrétariat Général—Direction déléguée aux Micro Finances:
“Présentation des activités de microfinance de la Boa Madagascar” (January 2003).
Bennet, Jake, Saidja Drentje, Mark Pickens, and Carl Wydner: “Performance of mutual Guarantee
associations in Madagascar—Findings and Recommendations.” Study prepared for UN Public
Private alliance for rural development (March 2005).
CGAP. Aid Effectiveness Initiative. Country Level Effectiveness and Accountability Review
(CLEAR) “Clear Reviewer’s Manual,” Draft, May 2005.
CGAP. “Building Inclusive Financial Systems: CGAP Donor Guidelines on Good Practice in
Microfinance.” December 2004.
CGAP. “Key Principles of Microfinance,” available www.cgap.org.
CGAP. Scaling up Poverty reduction—case studies in Microfinance. Washington D.C., 2004
(Mongolia, Bangladesh, Madagascar, Indonesia, Mexico, Kazakhstan, Kenya).
CGAP/CLEAR. Aid Effectiveness Initiative, “Using Microfinance as a test case,” Draft Terms of
Reference, Country Level Effectiveness and Accountability Reviews (CLEARs). 2005.
CSBF/AGEPMF Rapport d’évaluation à mi-parcours de la première phase du programme micro-
finance [Midterm assessment report on the first phase of the microfinance program], Projet CR
3217, Madagascar 1999–2004, February 2004, Draft 3.
Cuevas, Carlos E., World Bank. Midterm review. Presentation on “Projet microfinance,” Crédit
3217, MAG. February 2004 (Final version and recommendations).
Documentation APIFM. 2004: ADEFI, AECA, OTIV, TIAVO. Plaquette de présentation des
réseaux.
Duflos, Eric, and Kathryn Imboden. “The Role of Governments in Microfinance.” CGAP Donor
Brief, No. 19. Washington, D.C.: CGAP, June 2004.
Duflos, Eric, Brigit Helms, Alexia Latortue, and Hannah Siedek. “Global Results: Analysis and
Lessons.” CGAP Aid Effectiveness Initiative. Washington, D.C.: CGAP, April 2004.
41
MADAGASCAR
Economist Intelligence Unit. “Madagascar, Country Profile 2004.” 2004.
Economist Intelligence Unit. “Madagascar, Country Report.” March 2005.
EU. Accès des ruraux aux services financiers. Analyse des options d’amélioration de l’accès des
ruraux aux services financiers pour favoriser l’investissement dans le secteur agricole. Pohl
Consulting and Associates. Munich. Rapport provisoire. February 2005.
European Community. “Stratégie de coopération et Programme Indicatif, pour la période
2002–2007” and Annexes.
Flaming, Mark, Eric Duflos, Alexia Latortue, Nina Nayar, and Jimmy Roth. “Country Level
Effectiveness and Accountability Review (CLEAR): Cambodia.” Washington, D.C.: CGAP, 2005.
Fraslin, Jean-Hervé. “A cooperative agricultural financial institution CECAM providing credit
adapted to farmer’s demand in Madagascar” ICAR, Case study USAID/WOCCU, Conference
on best practices, 2004.
Helms, Brigit, and Alexia Latortue. “Elements of Donor Effectiveness in Microfinance: Policy
Implications.” CGAP Aid Effectiveness Initiative. Washington, D.C.: CGAP, April 2004.
Helms, Brigit, and Xavier Reille. “Interest Rate Ceilings and Microfinance: The Story So Far.”
CGAP Occasional Paper, No. 9. Washington, D.C.: CGAP, September 2004.
HORUS. Définition de programmes et systèmes de formation en faveur des institutions de micro-
finance à Madagascar [Definition of training programs and systems for MFIs in Madagascar].
PMF. Final report. April 1998.
HORUS. “Evaluation conjointe des programmes et projets en appui au développement de la micro-
finance à Madagascar [Joint evaluation of programs and projects in support of developing
microfinance in Madagascar], MSP/MICROSTART/RPPMED/CIDR-UNCDF-AMBATO-
BOENI,” October 2002, Final report.
HORUS. “Evaluation Finale de la Phase Pilote du Programme Microstart PNUD/FENU à
Madagascar [Final evaluation of the pilot phase of the Microstart UNDP/UNCDF Program in
Madagascar].” Rapport définitif. Octobre 2002.
IFC. “Republic of Madagascar Market Analysis for leasing.” Antananarivo, June 2004.
ILO (International Labour Organization). Working Paper No. 37. De Gobbi Maria Sabrina “The role
of a professional Association in Mutual Microfinance,” The Case of Madagascar, Geneva,
September 2003.
Institut National des Sciences Comptables et de l’Administration des Entreprises (INSCAE), Liste
des sortants de l’INSCAE travaillant dans les Banques et IFM, Liste des mémoires et projets
concernant Banques et IFM, May 6, 2005.
Intercoopération SUISSE. DEZA/DDC/SDC/COSUDE. Les Interventions de la SUISSE dans le
secteur de la microfinance, March 23, 2005.
International Monetary Fund (IMF) Monetary and Financial Systems Department/The World Bank-
Financial Sector Vice Presidency. FSAP mission, Terms of reference for joint Bank–Fund
Financial Sector Assessment Program (FSAP) Mission, March 2005.
International Monetary Fund. Sixth Review under the Three-Year Arrangement Under the Poverty
Reduction and Growth Facility. IMF Country Report No. 05/156. May 2005.
Japan’s Official Development Assistance (ODA). Accomplishment and progress of 50 years.
Ministry of Foreign Affairs. March 2005.
42
COUNTRY-LEVEL EFFECTIVENESS AND ACCOUNTABILITY REVIEW
Le monde à Madagascar. “Les trésors de la Grande Ile.” Communication Intermédia Journal Le
Monde. April 2005.
LFS Financial systems Gmbh. “Madagascar, results of a prefeasability study for investing in a
microfinance bank in Madagascar.” Berlin, August 2004.
Madagascar—Financial Sector Assessment Program (FSAP), Seven Questions on Microfinance,
March 23, 2005.
Ministère de l’agriculture, de l’Elevage et de la pêche “Plan Directeur Quinquennal pour le
développement rural. Une approche de marché pour la lutte contre la pauvreté en milieu rural à
Madagascar,” avril 2004-mars 2009 (February 17, 2004).
Ministère de l’Economie, des Finances et du Budget. Coordination Nationale de la Microfinance.
Fiche de suivi trimestriel des activités de microfinance (modèle d’Identification: CEFOR, 1er
trimestre 2005).
Ministère de l’Economie, des Finances et du Budget (MEFB). Coordination Nationale de la
Microfinance. Compte-rendu de la Table Ronde des bailleurs de fonds du secteur de la
microfinance à Madagascar. Hôtel Colbert, March 23, 2005.
Ministère de l’Economie, des Finances et du Budget (MEFB). Suite de la Table Ronde du 23 mars
2005. “Information sur les interventions des bailleurs de fonds dans le secteur de la
microfinance.”
National Microfinance Strategy (SNMF). Document de Stratégie Nationale de Microfinance
(DSNMF) 2004 – 2009 », Approved June 15, 2004, Antanarivo, Madagascar.
National Microfinance Strategy (SNMF). Stratégie Nationale de la Microfinance, Table Ronde des
Bailleurs de Fonds. Gouvernement. Termes de références, March 2005, “Les Interventions des
bailleurs de fonds dans le secteur de la microfinance.”
Perrin, Jean Noël. Note sur les commentaires formulés par la délégationl, 24.03 .2005. a délégation,
24.03 .2005.
Perrin, Jean Noël. Note sur les commentaires formulés par le réseau CECAM, OTIV 2005.
PNUD. “Inventaire national des organisations financières de proximité (OFP) à Madagascar.” Juin
2004, PNUD/MAG/00/06/USM (unité spéciale de microfinance).
PNUD/FENU/USM. Aide mémoire de la mission “Madagascar—le secteur de la microfinance:
diagnostic et opportunités d’investissement” (14 juillet–06 août 2003).
Présidence de la République de Madagascar. Présentation “Madagascar naturellement! Une vision
pour Madagascar et ses régions,” 2004.
Press. “Madagascar made ‘Extraordinary’ effort to become First Millennium Account Recipient,”
Applegarth, April 2005.
Projet de Mise en Valeur Du Haut Bassin Du Mandrare. 2e Phase. Composante Appui aux services
financiers. FIVOY. 2005.
PRSP. “Poverty Reduction Strategy Paper,” Update of July 2003.
Rajeriarison, Patricia, and Fidy Raharimanana. Final draft, “Madagascar SME Country Study”
prepared for IFC, Antananarivo Office. September 2003.
Reda, Mamari, and Roland Rasoamanarivo. “UNDP Microfinance Assessment report.” June 1997.
43
MADAGASCAR
SEEP. Définitions de certains termes, ratios et retraitements financiers dans le domaine de la
microfinance. November 2002.
TITEM (Union des mutuelles d’Epargne et de Crédit des Agriculteurs de Madagascar), Rapport
Final “Recherche Action sur les pratiques paysannes de financement” dans la commune
d’Antakavana, Sous-Préfecture d’Ankazobe, septembre 2004.
TITEM (Union des mutuelles d’Epargne et de Crédit des Agriculteurs de Madagascar)—Rapport
Final Recherche—Action pour l’identification et la valorisation des pratiques paysannes de
financement dans la Commune rurale d’Ambatomanjaka/Région de l’ITASY, March 2004.
UE/ACP. Présentation du Programme-Cadre: Union Européenne/Etats d’Afrique, des Caraïbes et du
Pacifique (UE/ACP) sur la Microfinance, 2005.
UNOPS. Document, project number: MAG/92/COI, Guarantee Fund and Line of Credit Refinance
for small and micro enterprises, 1997, mid-term evaluation.
World Bank. Indicateur PAD par réseau. Septembre 2004, Agepmf. 1999–2003 et 2004 (réseaux
OTIV et TIAVO). Tableaux: Indicateurs de performance quantitatifs des Régions Lac Alaotra,
Fianarantsoa, Tamatave, Antsiranana, Antananarivo de 2002 à 2004.
World Bank. International Development Association Program Document for a proposal credit and
an IDA grant, for a first poverty reduction support project to the republic of Madagascar, report
No. 29376, MAG, June 2004.
World Bank. Project Appraisal document for the second private sector development project to the
Republic of Madagascar, report No. 20988-MAG, August 2001.
World Bank. Report No. n 2151 6-MAG. Project appraisal document on a proposed credit in the
amount of SDR 69.2 Million to the Republic of Madagascar for a rural development support
project. May 16, 2001.
44
The Consultative Group to Assist the Poor
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CGAP Paris Office
66, Avenue d'Iena, 75116 Paris
Tel: 33 (0) 1 40 69 32 73 Fax: 33 (0) 1 40 69 32 76
www.cgap.org
For more information and to provide feedback on the CLEARs please contact
Eric Duflos (eduflos@worldbank.org) or Alexia Latortue (alatortue@worldbank.org)
cgap@worldbank.org