Institutional Transformation to Create Linkages that Enhance Rural Access to Financial Services: The Case of the Fundación Integral Campesina (FINCA) in Costa Rica
This case study on FINCA in Costa Rica demonstrates how institutional transformation and flexibility can help MFIs leverage alliances and linkages. It discusses the institutions transformation from a village banking program with a resource intensive model of creating and funding village banks to an organization highly specialized in creating and linking village banks with financial and non-financial actors. FINCAs institutional innovations improved opportunities for linkages that enhance rural access to financial services. Lessons learned through FINCAs experience include:
- Alliances with the state must be carefully whetted to avoid conditionalities like interest rate restrictions;
- Organizations must be flexible and willing to change;
- MFIs must take advantage of private sector interest in alliances, particularly firms involved in value chain relationships with village banks;
- Alliances with third parties has an impact on governance at the headquarter level;
- Creation of regional networks presents opportunities to compare similar alliances in different social, economic, regulatory and institutional situations.
In conclusion, the case study cautions on the risk of conditionalities embedded in inter-institutional linkages and that of the state using the partnership for political purposes.
