National Microfinance Strategies

This document explores the recent trend of countries developing national microfinance strategies (NMS). It suggests that heightened visibility and new development modalities that favor sector-wide approaches and policy work are fueling this trend. The paper states that:

• NMS are publicly approved documents, developed through a consultative process, aimed at increasing poor people's access to finance;
• Stages in NMS development include a diagnostic analysis of the microfinance sector, consultations with stakeholders, drafting the document and implementing the strategy;
• Benefits of NMS are improved dialogue, increased knowledge of the sector and commitment to good practices;
• Challenges comprise weak diagnostics, isolation from broader financial sector, inadequate government leadership and unrealistic action plans.

In conclusion, the paper offers suggestions to donors on NMS development. These include:

• Investing in comprehensive sector diagnostics;
• Analyzing the political climate;
• Ensuring local ownership;
• Evaluating results and being open to changing course.