Knowledge

Transparent performance reporting is a key requirement for effective resultsbased management of IFAD rural finance interventions. Better reporting, tracking and management have benefits throughout the entire IFAD project cycle, from design to implementation and learning from performance data, and for actors at different levels: partner financial service providers (FSPs); programme coordination units (PCUs); government policymakers; and IFAD decision makers and managers.

The goal of this initiative was to contribute to establishing an inclusive financial system that meets the needs of the rural poor by supporting the growth of healthy microfinance markets and microfinance service providers. Underpinning this goal is the notion that timely and credible information is critical to the functioning of markets.

The Netherlands, with its dynamic private sector and renowned research institutions, provides know-how, technology and financing to the partnership. IFAD contributes its wealth of experience in supporting development of small-scale agriculture and rural livelihoods, while acting as a catalyst for investment from other donors and governments. The strength of this partnership is demonstrated by the growing support provided by the Netherlands to IFAD-supported initiatives. It is underpinned by increasing alignment between Dutch development priorities and IFAD’s mandate.

At a time when world attention is seized with the crises of migration and forced displacement, conflict, environmental degradation and climate change, FAO and IFAD are keenly aware that development must treat the underlying causes of desperation, inequality, and unsustainable ways of living on the planet.
FAO and IFAD have a shared vision, backed by technical expertise, which looks to the structural, longer-term causes of the scourges the world now aims to eradicate. Together and independently, our practices are geared toward providing sustainable solutions to food insecurity and lasting exits from the poverty trap. Together we are reaching marginalized and forgotten people who have too often been overlooked in development efforts.

The purpose of this publication is to provide IFAD CPMs, MFIs, and all technical and financial partners with a methodological tool that will facilitate efficient implementation of the institutional transformation or regrouping processes of microfinance institutions, especially those that serve rural populations – processes that a priori are highly complex. 

Despite the progress made in the microfinance sector, its expansion has been hindered in large measure by institutional and financial impediments. This situation has led some institutions to embark on an institutionalization, institutional transformation, or regrouping process to overcome the obstacles in their path.

Microfinance institutions (MFI) take various forms these days, among them: projects, credit union or village banking networks, savings and credit cooperatives and mutual institutions, associations, capital companies, etc.

This HTDN provides guidance for project design teams on how to design a 4P component and how to support the implementation of 4Ps within IFAD-funded projects.

It builds on findings and lessons learned from previous IFAD-supported projects, as summarized in the 2013 report, IFAD and Public-Private Partnerships: Selected Project Experiences, and the Institute of Development Studies (IDS)/IFAD publication, Brokering Development: Enabling Factors for Public-Private-Producer Partnerships in Agricultural Value Chains.

This HTDN begins by defining the 4P and related concepts and then analyses the basic elements that need to be considered when designing and establishing a 4P followed by recommendations for the implementation of 4Ps.