Technical Assistance to the Democratic Republic of Timor-Leste for Strengthening Microfinance Operations

Features of the Foundation for Poverty Reduction and the Microfinance Institution of Timor-Leste
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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.

About this Publication

By Bruun, A.