Technical Assistance to the Democratic Republic of Timor-Leste for Strengthening Microfinance Operations
This paper discusses the technical assistance provided to the government of Timor-Leste by the Asian Development Bank (ADB) for its Microfinance Development Project. The features of the project were:
- It was to support community based opportunities for income generation and sustainable employment;
- It established and registered the Foundation for Poverty Reduction and the Microfinance Institution of Timor-Leste (IMFTL);
- ADB provided two grants to:
- Strengthen the microfinance policy and legal framework;
- Develop microfinance information technology systems.
The paper then discusses:
- Various aspects of the functioning of IMFTL, such as competition, market penetration, revenues and operational performance, etc.
- The different aspects of the TA provided in terms of:
- Purpose and output;
- Methodology and key activities;
- Corporate governance;
- Operational performance and monitoring;
- Client orientation;
- Business and strategic plans;
- Cost and financing.
Some of the recommendations that the paper makes are:
- The management capacity, operational and financial performance, and product and service delivery of IMFTL has to be improved;
- Outreach to certain market segments, such as market vendors and the rural poor has to be improved;
- The board of directors need to focus on key performance indicators for outreach, efficiency, asset quality and profitability and set performance targets;
- IMFTL's salary structure needs to be reviewed and staff incentives need to be provided for productivity and high asset quality.