Paper

Strengthening Governance for Responsible Finance: Examples from European Investment Funds

Studying the role of microfinance investment funds in strengthening institutional governance
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Brief No. 2 from the e-MFP Brief Series explores examples of the increasing role microfinance investment funds (MIVs) are playing to improve governance, both across the sector through investor coordination, and at the MFI level through operational tools. The Brief focuses on the microfinance sector's renewed commitment to the double bottom line. MIVs are collecting more social performance data than ever before. This enthusiasm, however, does not reduce the risks that MFIs face. Strong governance would help decrease such risks. MIVs play an important role in governance. They carry considerable weight at the sector level, channeling USD eight billion in investments to MFIs worldwide. They have the potential to influence strategy and operations at the MFI-level. Examples in the Brief include:

  • GCAMF and Triple Jump conducted joint due diligence and proposed a syndicated loan to MFI MBK Ventura in Indonesia;
  • ADA and PlaNIS-responsAbility conducted joint due diligence of ProMujer in Argentina;
  • ResponAbility, Triodos, and the Council of Microfinance Equity Funds are co-financing a research team to explore over-indebtedness;
  • Ujjivan in India created a Social Performance Committee composed of investors and the Managing Director in 2010.