Financial sector linkages

Why may microfinance institutions need "strategic alliances" with formal financial institutions? How can such alliances be made and managed? MFIs have always been most concerned, quite rightly, with their links 'down' to their clients. Should they work through groups or individuals, what kinds of groups, what kinds of NGOs or community institutions should they work through, and how; these are the main questions that have preoccupied their management.

More recently, however, as MFIs have matured and started to look beyond their original funders, and to offer new products in addition to micro-credit, they have started to look 'up' to more formal financial institutions (FFI), such as commercial banks, insurance companies, and many others, and to forge new alliances, for new purposes. And many of these formal institutions are themselves starting for the first time to look 'down' to the microfinance market, and to examine the potential of MFI as intermediaries through which they can deliver their services to the growing market of 'the poor'.

This set of session guides is designed to assist trainers who want to help MFI and FFI staff to identify and manage such strategic alliances more effectively, for the ultimate benefit of their clients. They are suitable for a two day workshop.

It is assumed that participants have a basic understanding of finance. They should know the difference between debt and equity and they should understand the concept of gearing. If they do not, the instructor must fill the gap.