Making Microfinance

Work

This document has been produced with

the financial assistance of the EU.

The views expressed herein can in no way

be taken to reflect the official opinion

of the European Union

Making Microfinance Work (MMW)

“Today, there is a growing recognition that not all poor people are necessarily entrepreneurs, but all poor people do need and use a variety of financial services. The challenge is to understand and meet this demand among increasingly poor and remote populations.”

Access for All (2008) The International Labour Organization (ILO) invests

in microfinance, and in the capacity building of

MFI managers in particular, because it believes that

microfinance can help realize its vision of decent work

for all. Microcredit and micro-leasing products provide

opportunities for small investments in self-employment

and job creation. Emergency loans, savings and

microinsurance provide the means for poor people to

better cope with risk. When microfinance is delivered

through group-based models, it can provide opportunities

for the poor to organize and have a voice. Some MFIs,

particularly those that partner with other public or

private actors in pursuit of a social mission, are actively

discouraging child and bonded labour, and helping

microentrepreneurs to grow and formalize.

As the focal point for microfinance within the ILO, the

Social Finance Programme initiated the development of

the Making Microfinance Work training series in 2003,

building on another area of ILO expertise and

concern-management. The ILO has a long history of

involvement in strengthening management practices as

a strategy for improving labour relations and working

conditions.

Its International Training Centre (ITCILO) in Turin, Italy

has been developing and delivering management training

curricula for more than four decades. The International

Training Centre of the International Labour Organization

(ITCILO) brought this experience to bear when it joined

forces with the Social Finance Programme to develop the

Making Microfinance Work management training program.

The MMW capacity building and training program is based

on two publications:

• Making Microfinance Work: Managing for Improved

Performance

• Making Microfinance Work: Managing Product

Diversification

The publications and training curricula draw from

experiences and techniques of microfinance service

providers worldwide. The training activities are delivered

locally by ITC ILO certified trainers and are supplemented

by additional exercises, tools and case studies adapted to

the local context.

THE MMW CERTIFICATION PROCESS

Making Microfinance Work (MMW) is designed to be

delivered locally by accredited ITC ILO trainers who are

capable of adapting the course materials to their local

environment. The ITC ILO has developed a three-phase

certification process that builds on the pool of resource

people available to retail microfinance institutions in a

particular region or country and aims to develop a cadre

of ITC ILO-accredited trainers who can deliver the MMW

curriculum with quality over time. The process has been

implemented in over 20 countries in Latin America, the

Middle East, Africa and Asia since 2004. The three

phases of the certification process are briefly summarized

below.

Phase I: A minimum of five and a maximum of twelve

local trainer candidates are selected to participate in the

certification process on the basis of their microfinance,

management and training experience, as well as their

capacity to offer the course on an ongoing basis if

certified. The selected trainers attend a demonstration

delivery of the full two-week course, which is facilitated

by at least one ITC ILO Master Trainer. They attend

the course as participants, together with 15-20 MFI

managers, so that they can absorb the materials and

delivery methodology through “live” experience. At the

end of each day, they meet with the ITC ILO Master

Trainer to review the day’s events from a trainer’s

perspective, discuss core adult learning principles,

and practice implementing those principles in brief

presentations receiving feedback from their peers.

Approximately one month after the Phase I event,

trainer candidates are given a content exam. The results

of this exam and the Master Trainer’s assessment of

each candidate’s performance during the Phase I event

determine which trainers move to the next phase.

Phase II: Up to eight trainer candidates participate in a

5 or 6-day training-of-trainers workshop with an

ITC ILO Master Trainer to understand the course design

and practice applying its methodology in role play

sessions using materials that they have adapted for their

local environment. Skill clinics focus on strengthening

training techniques that were identified as weak during

the training needs assessment conducted during Phase

I. At the end of this workshop, the strongest trainers are

invited to participate in the third and final phase of the

certification process.

Phase III: Up to six trainer candidates deliver the

complete two-week training to a real audience of 20-25

MFI managers. An ITC ILO Master Trainer is present to

support the trainers, provide feedback at the end of each

training day, and monitor the quality of delivery against ITC

ILO certification standards. Trainers who meet the ITC

ILO’s twelve certification criteria during this delivery are

accredited and will be able to offer the course on behalf

of the ITC ILO in the future.

Accredited Trainers have access to a complete set of

participant and trainer materials for the course, which are

regularly updated and distributed via the course website.

To maintain their Accredited Trainer status, they must

deliver the course at least once per year and make at least

one contribution to the ongoing development of course

materials.

OBJECTIVES

Making Microfinance Work (MMW)

Making Microfinance Work; Managing for Improved Performance

INTENDED AUDIENCE

This course is intended to help microfinance

managers, new and old, to better understand their jobs

and to obtain additional resources for strengthening

the performance of their unit, branch or institution. It

is designed for any of the following staff involved in

microfinance operations:

• Senior managers

• Department managers

• Internal auditors

• Regional managers

• Branch managers

• “Managers-in-training”

OBJECTIVES

• To broaden understanding of the various functions

that contribute to successful MFI performance.

• To supply a portfolio of tools that can assist managers

to strengthen the performance of their unit, branch or

institution.

• To stimulate the sharing of experiences and strategies

for meeting current challenges.

• To expose managers to microfinance experiences from

other parts of the world and inspire more innovative

thinking about what might be possible the local

environment.

the client. MFIs will not be

OVERVIEW OF THE COURSE CURRICULUM

This book contains 24 modules organized into five

parts:

I. Introduction to Microfinance Management.

The first section covers four topics that essentially

address different aspects of the course title,

Making Microfinance Work: Managing for

Improved Performance. Module 1 describes the

manager’s mandate, including the four functions

of management, different management styles

and the characteristics of effective managers.

Module 2 tackles the microfinance thread, briefly

introducing the range of financial services that are

relevant to the low-income market. The rest of the

section sets the stage and context for improving

performance. Module 3 considers the formal,

semi-formal and informal institutional options

through which microfinance can be delivered. It

highlights that managers can choose to transition

from one institutional type to another, or partner

with other types to accomplish goals and overcome

environmental challenges. Module 4 considers the

MFI’s strategic direction, including the critical

issues of vision, mission, values and objectives that

collectively define the performance that managers

should seek to achieve.

II. Markets and marketing. With the second set of

modules, the course begins to introduce tools

and strategies that managers can use to improve

performance. Microfinance begins and ends with

able to meet their goals without understanding

their target market (Module 5), and developing

and delivering products to meet the market’s

needs (Module 6). Module 7 helps managers

communicate the value embodied in their products

and services. To further promote a customer

orientation, Module 8 offers practical guidance for

providing outstanding customer service and Module

9 guides course participants to the ultimate

objective: customer loyalty.

III. Managing risks. While delivering valuable products

that stimulate loyalty, managers need to ensure

that they are enduring a tolerable level of risk.

Module 10 introduces a risk framework to

holistically evaluate the risks to which MFIs might

be vulnerable, as well as a system for managing

those risks. Module 11 discusses strategies to

prevent delinquency from occurring and, if it does

occur, to rectify the situation. Using a similar

prevention and detection approach, Module 12

provides guidance on managing staff fraud and

security risks. Module 13, the last in this section,

introduces strategies for managing external risks

that an MFI cannot control, but for which it needs

to prepare.

IV. Organizational architecture. A microfinance

institution needs to be built in the same way an

architect designs and constructs a building. It

needs a plan for organizing and supporting the

people who work to achieve its vision, mission

and objectives. This course uses the metaphor of

an organization’s architecture to describe three

issues that should be addressed collectively when

striving to improve performance: how to enhance

human resource management (Module 14); how

to proactively shape the institutional culture

(Module 15); and how to design an effective

organizational structure (Module 16). Tying these

three topics together, Module 17 explores the use

of organizational architecture to manage growth.

V. Towards greater efficiency and productivity.

The last section of the course introduces various

strategies for enhancing efficiency and productivity

in an effort to minimize the trade-offs that MFIs

invariably face as they try to provide valuable

financial services over the long-term. After

introducing the concepts and measurements

of efficiency and productivity (Module 18),

this section examines performance incentives

(Module 19), new technologies (Module 20),

TIMETABLE – FIRST WEEK

Monday

Tuesday

Wednesday

Thursday

Friday

Opening Session

3. Institutional

Options

4. Strategic Direction

II. Markets and

Marketing

5. Market Research

6. Production

Development

7. Communicating

Value

8. Customer Service

9. Customer Loyalty

III. Managing Risks

10. Introduction to

Risk Management

11. Credit Risk

12. Fraud and Security

Risk

13. External Risks

I. Introduction to MF management

1. The Manager’s Mandate

2. Financial Services and the Poor

HOMEWORK

TIMETABLE – SECOND WEEK

Monday

Tuesday

Wednesday

Thursday

Friday

III. Organizational Architecture

14. Human Resource Management

15. Institutional

Culture

16. Organizational

Structure

17. Using

Organisational

Architecture to

Manage Growth

IV. Toward Greater

Efficiency and

Productivity

18. Understanding

Efficiency and

Productivity

19. Performance

Incentives

20. New Technologies

21. Managing Change

22. Costing and

Pricing

23. Plans,

Budget and Reports

24. Managing

Performance

HOMEWORK

change management (Module 21), costing and

pricing (Module 22), and plans, budgets and

reports (Module 23) as strategies for improving

performance. Module 24 revisits the manager’s

mandate presented in the first module, considers

the challenges that managers might experience

as they endeavour to fulfil that mandate, and

summarizes the tools presented in the course that

can help them to overcome those challenges.

DELIVERY

This two-week intensive management training course

is designed to be delivered locally by accredited

trainers who adapt its materials to their environment.

Using adult learning principles, it relies on activities,

exercises and case studies to help participants apply

the concepts that they are learning. The course’s

Action Plan approach focuses on identifying practical

steps that managers can implement when they return

to their organization to improve performance.

The course can be delivered with the following formats:

• Standard 2 week/10 day course

• 2 weeks over a period of 3-6 months

• Executive (weekend) courses (5-24 weeks)

• Content specific course (2-3 days)

– Strategic track

– Client-focused track

– Human Resource Management track

– Financial Management track

– Risk Management tack

Making Microfinance Work (MMW)

Making Microfinance Work; Managing product diversification

INTENDED AUDIENCE:

The Making Microfinance Work: Managing Product

Diversification training curriculum is designed for

middle and senior managers in microfinance

institutions. It is relevant for institutions that have

already diversified and are looking for ways to

manage their diversification more effectively, as well

as institutions that have not yet diversified and are

looking for guidance on where and how to begin. This

course is also useful to funding agencies and technical

assistance providers that are trying to support MFI

diversification efforts.

OBJECTIVES

• To raise awareness of the opportunities and risks

that product diversification presents.

• To explore options for improving MFI outreach

through product diversification.

• To provide tools and strategies for managing

product diversification successfully.

• To encourage a more proactive management of MFI

product portfolios over time.

OVERVIEW OF THE COURSE CURRICULUM

This course contains 24 modules divided into four

sections:

I. Preparing for Diversification. This introductory

section helps managers understand diversification,

the opportunities and risks it poses, and how MFIs

can prepare themselves to diversify successfully.

Module 1 defines product diversification and the

concept of a strategic product mix. It explores

the many reasons for which MFIs might want to

develop new products and markets, but it also

raises awareness of the damage diversification

can cause. Module 2 then explores how to manage

product development, in particular, how to manage

the risks inherent in the process. Module 3 focuses

on new market development. It explores how

managers can use market segmentation to better

understand and serve new types of customers.

II. Product Options. MFIs that wish to diversify will

find they have many options to choose from.

Modules 4 through 13 discuss ten different

types of products that MFIs could introduce to

expand their outreach. Each module explores the

characteristics and requirements of one type of

product using examples from MFIs around the

world to illustrate variations in the way the product

can be delivered. The main challenges and risks

associated with each product type are discussed

together with examples of the strategies MFIs have

used to manage them.

III. Market Segments. Modules 14 through 21 examine

eight market segments with significant potential

for MFI expansion. Each module explores why a

particular segment can be challenging and

discusses the products and product adaptations

that can help institutions serve the segment more

effectively. This section also contains a module on

targeted microfinance which considers the more

general challenge of serving relatively small or

marginalized market segments, such as people with

disabilities and individuals living with HIV/AIDS.

IV. Diversifying Successfully. After exploring numerous

combinations of products and services that MFIs

could offer to better meet the needs of specific

market segments, this fourth and final section

returns to the management agenda. Module 22

looks at the important role of partnerships in

helping MFIs of various types to diversify efficiently

and effectively. Module 23 focuses on the

challenges of delivering a diverse product portfolio.

It raises awareness of the issues that need to be

dealt with and provides specific suggestions for

adapting the institutional culture, redistributing

responsibilities, empowering staff, communicating

with clients, reengineering systems and managing

change. Finally, Module 24 examines the product

portfolio management function and the activities

through which MFIs can not only create but also

maintain a strategic product portfolio over time.

COURSE SCHEDULE

Day1

Day 2

Day 3

Day 4

Day 5

Morning

Opening Session

I. Preparing for

Diversification

1. Understanding

Product

Diversification

II. Product Options

(1-6 sessions)

4. Savings

5. Long-term Savings

and Micropensions

6. Microenterprise

Loans

7. Housing Loans

8. Emergency and

Consumption

Loans

9. Leasing

10. Money Transfers

11. Insurance

12. Non-financial

Services

13. Grants

3. Developing New

Markets

III. Serving Specific

Market Segments

(1-6 sessions)

14. Targeted

Microfinance

15. Pre-Microfinance

for the Poorest

16. Microfinance for

Youth

17. Microfinance for

Women

18. Post-Crisis

Microfinance

19. Islamic

Microfinance

20. Rural Microfinance

21. Sme Finance

III. Serving Specific

Market Segments

(continued)

IV. Diversifying

Successfully

22. Building and

Managing

Partnerships

23. Delivering a

Diverse Product

Portfolio (cont.)

24. Product Portfolio

Management

Afternoon 2. Managing Product

Development

23. Delivering a

Diverse Product

Portfolio

Action Planning

Closing Session

DELIVERY

The modules in Sections I and IV of the course are

standard, core content, but the modules in Sections II and

III are adapted to the needs of each audience. As part of

the registration process, participants choose up to 7 of the

18 modules in Sections II and III to be delivered on Days 2,

3 and 4. The participant’s manual contains content for all

24 modules.

In addition to the standard one-week training, content-

specific executive courses can be organized with the

following delivery formats:

• Half-day courses that focus on a specific product or

market segment

• 1 day courses that focus on improving the performance

of an already diversified product portfolio

• 2-3 day courses that explore the portfolio products that

can meet the needs of a particular market segment

The prerequisite for attending Executive Courses is to

have previously attended a training that included the core

content in sections I and IV.

The Making Microfinance Work Program Outreach

Action plans

developed by

more than 1700

trained managers

Implemented in

47 countries

More than 100

certified trainer

8 working languages

“The course was an eye opener.”

Uganda

“The topics were well selected and well presented with many practical examples.”

Serbia

“It provides state of the art tools and techniques that managers

need to run their institutions better against all odds.” ”

Zimbabwe

ILO and ITC-ILO

The International Labour Organization is a specialized agency of the

United Nations that promotes social justice and internationally recognized

human and labor rights. The ILO has a tripartite structure, with workers

and employers participating as equal partners with governments in its

governance.

The International Training Centre of the ILO provides training and related

services that develop human resources and institutional capabilities. We

thereby contribute to achieving the ILO’s goal of decent work for women

and men. In addition to the activities that the Centre’s training units run,

the ITC ILO also offers training and learning opportunities concerning

cross-cutting issues.

The ILO Turin Centre’s facilities

Located in an attractive park on the banks of the River Po, the Centre’s

campus provides a congenial environment in which to live and study.It

contains 21 pavilions with fully equipped modern classrooms, conference

halls and meeting rooms fitted out for multilingual simultaneous

interpretation, a computer laboratory, and a computerized documentation

centre linked to various data banks.

The campus has 287 study/bedrooms, all with private bathrooms,

telephones and cable television.

It also has: a reception desk open 24 hours a day; a restaurant, a self-

service canteen and a coffee lounge, all catering for international dietary

needs; a bank; a travel agency; a laundry service; a post office; an internet

point; a recreation room; facilities for outdoor and indoor sports; an

infirmary.

Social events are regularly held both on and off campus, so that

participants from different cultural backgrounds can make the most of the

stimulating international climate.

For further information, please contact International Training Center of the ILO

Viale Maestri del Lavoro, 10 - 10127 Turin, Italy

Phone: +39 011 6936111 - Fax: +39 011 6638842

http://www.itcilo.org

http://mmw.itcilo.org/en/home/home-page

Contact person:

Margarita Lalayan: m.lalayan@itcilo.org

Design: Luca Fiore – Printed by the International Training Centre of the ILO, Turin, Italy

Made of paper awarded the European Union Eco-label, reg.nr FR/011/002, supplied by International Paper.