Danish NGOs and Microfinance
This report presents findings from a study that examined Danish NGOs involvement in microfinance, and finalizes the learning process initiated in November 2006 by Projektrådgivningen, a network of Danish NGOs, interested in development efforts in developing countries. The report responds to the need to learn more about different microfinance delivery models. It analyzes specialized MFIs, savings and credit groups (SCGs) and integrated projects with credit components. Findings include:
- Specialized MFIs and well-structured stand-alone SCGs are feasible and effective models for financial services delivery;
- Credit components within integrated projects might not be a feasible mode of sustainable and effective credit delivery;
- Danish NGOs mostly support integrated projects that include credit components;
- Danish portfolios have high incidence of SCGs;
- Very few Danish projects support the development of specialized MFIs.
The report stresses the need to outline ways in which Danish NGOs can participate in promoting microfinance. It recommends strengthening Danish NGOs capacity in microfinance, phasing out or redesigning projects with microfinance components and supporting only those NGO microfinance projects that have microfinance competence and proper exit strategies.