Assessment of the performance and achievements of the Project Building Inclusive Financial Sector in Mozambique

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Evaluation Plan:
2010-2011, Mozambique
Evaluation Type:
Mid Term Project
Planned End Date:
06/2010
Completion Date:
12/2010
Status:
Completed
Management Response:
Yes
Evaluation Budget(US $):
35,000

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Title Assessment of the performance and achievements of the Project Building Inclusive Financial Sector in Mozambique
Atlas Project Number: 00054860
Evaluation Plan: 2010-2011, Mozambique
Evaluation Type: Mid Term Project
Status: Completed
Completion Date: 12/2010
Planned End Date: 06/2010
Management Response: Yes
Focus Area:
  • 1. Poverty and MDG
Corporate Outcome and Output (UNDP Strategic Plan 2014-2017)
  • 1. Capacities of national and local institutions enhanced to scale up proven MDG acceleration interventions and to plan, monitor, report and evaluate the MDG progress in the context of related national development priorities
Evaluation Budget(US $): 35,000
Source of Funding: 54860
Joint Programme: No
Joint Evaluation: No
Evaluation Team members:
Name Title Email Nationality
Gabriel Dava Team Leader
GEF Evaluation: No
Key Stakeholders: MPD, UNCDF, MF institutions
Countries: MOZAMBIQUE
Comments: Strategic Plan Areas - Poverty Reduction; Inclusive Growth;
Lessons
Findings
Recommendations
1 The project should commission a study on the implementation of the national strategy for microfinance. The main objective of this study is to develop a unique strategy based on the rural finance strategy and national microfinance strategy and propose an inclusive approach at national level. This study should also provide a clear action plan with clear steps, targets and indicators.
2 The evaluation recommends the creation of a National Microfinance Unit incorporated within the Bank of Mozambique. This is a coordination body whose mission is to insure the coordination of the Government?s general policy on microfinance, the monitoring of the activities and operations of stakeholders and the consistency and compliance of projects and programs according to the strategy.
3 Establishment of a Microfinance Development Fund
4 Concerning the financing of MFIs, the evaluation recommends increasing the capacity and speed for the loans. Seek the involvement of local banks in financing mechanisms. Monitor and control how MFIs pass on the favorable terms they receive to their customers.
5 Enlargement of scope of information and coverage of credit bureau
6 Strengthening non-banking Financial Services Providers
7 Strengthening the AMOMIF status
1. Recommendation: The project should commission a study on the implementation of the national strategy for microfinance. The main objective of this study is to develop a unique strategy based on the rural finance strategy and national microfinance strategy and propose an inclusive approach at national level. This study should also provide a clear action plan with clear steps, targets and indicators.
Management Response: [Added: 2011/05/24]

Fully agree. The first step to realise this activity will be the validation of the rural finance strategy by government during 2011. The national microfinance strategy may be implemented during the second phase of BIFSMO in 2012. Therefore, the revised AWP does not include this activity. Though a full study will not be commissioned, the review and validation of the national microfinance strategy document is integrated in the AWP for 2011.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
1.1 Review the national microfinance strategy document
[Added: 2011/05/24]
Poverty, UNCDF 2012/12 Overdue-Not Initiated
1.2 Validate by all stakeholders the national microfinance strategy document
[Added: 2011/05/24]
Poverty, UNCDF 2012/12 Overdue-Not Initiated
1.3 Validate the rural finance strategy
[Added: 2011/05/24]
BIFSMO/ DNPDR 2011/09 Overdue-Not Initiated
1.4 Formulate BIFSMO 2nd phase
[Added: 2011/05/24]
Poverty, UNCDF 2011/12 Overdue-Not Initiated
1.5 Validate the PRODOC by all Stakeholders
[Added: 2011/05/24]
Poverty, UNCDF/DNPDR 2011/12 Overdue-Not Initiated
2. Recommendation: The evaluation recommends the creation of a National Microfinance Unit incorporated within the Bank of Mozambique. This is a coordination body whose mission is to insure the coordination of the Government?s general policy on microfinance, the monitoring of the activities and operations of stakeholders and the consistency and compliance of projects and programs according to the strategy.
Management Response: [Added: 2011/05/24]

Agreed ? currently discussions/studies are taking place within the context of the new UNDAF, as well as the formulation of BIFSMO 2nd Phase in terms of the optimal macro level institutional framework for microfinance that is conducive for the implementation of inclusive finance principles. But this is a very sensitive issue. Coordination and agreement by major donors, the government, and banks will depend highly on the coherence and implementation of a national strategy, as well as strong leadership by a coordinating body within the government. Currently a study is being planned on a micro-insurance strategy, as well as a youth mapping exercise. It is possible that agreement could be reached within these 2 areas on a coordinated fund to support MFIs to provide micro-insurance and innovative products targeted to the youth segment, while awaiting the finalization and implementation of a national strategy within a sound institutional framework.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
2.1. Conduct survey, stock-taking, and discussions with the Bank of Mozambique during the BIFSMO 2nd phase formulation to establish a plan
[Added: 2011/05/24]
Poverty Unit/ UNCDF 2011/12 Overdue-Not Initiated
2.2. Validate an action plan on micro insurance provision by MFI institutions
[Added: 2011/05/24]
Poverty Unit/ UNCDF 2011/12 Overdue-Not Initiated
2.3. Complete the database for the monitoring of financial inclusion
[Added: 2011/05/24]
Poverty Unit/ UNCDF 2011/12 Overdue-Not Initiated
2.4. Elaborate the baseline study at the micro, meso and macro level including the youth segment on the microfinance Sector
[Added: 2011/05/24]
Poverty Unit/ UNCDF 2011/09 Overdue-Not Initiated
3. Recommendation: Establishment of a Microfinance Development Fund
Management Response: [Added: 2011/05/24]

Agreed. The MDF will be an issue to be discussed deeply during the formulation stage. Many areas such the institutional arrangement, possible partners, and government role should be assessed and checked first, while later working on the institutional model and the operationalization tools. In parallel, the project could continue to use the mechanisms that are in place (Investment committee) to support the financial services providers.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
3.1 Assess the need of funds and explore the interest of others donors to work with such a mechanism
[Added: 2011/05/24]
UNCDF/PovertyUnit 2011/12 Overdue-Not Initiated
3.2 Sign a memorandum of understanding with donors interested
[Added: 2011/05/24]
UNCDF/Poverty Unit 2012/12 Overdue-Not Initiated
3.3 Develop implementation tools
[Added: 2011/05/24]
UNCDF/Poverty Unit 2013/12 Overdue-Not Initiated
3.4 Launch the microfinance fund
[Added: 2011/05/24]
UNCDF/PovertyUnit 2013/12 Overdue-Not Initiated
4. Recommendation: Concerning the financing of MFIs, the evaluation recommends increasing the capacity and speed for the loans. Seek the involvement of local banks in financing mechanisms. Monitor and control how MFIs pass on the favorable terms they receive to their customers.
Management Response: [Added: 2011/05/24]

The linkage to the classical financial sector is part of the current monitoring process and one of the objectives of support. FSPs must be able to fill the need of funds. But that is the primarily responsibility of the FSPs. The project could be a facilitator when requested by partners and this after the final evaluation of the first round contract.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Evaluation of support provided to FSPs
[Added: 2011/05/24]
2013/12 Overdue-Not Initiated
Develop a strategy of linking FSPs to others financial institutions
[Added: 2011/05/24]
2013/12 Overdue-Not Initiated
5. Recommendation: Enlargement of scope of information and coverage of credit bureau
Management Response: [Added: 2011/05/24]

Agree. This action is vital to reduce the risk of over-indebtedness of clients and to improve the portfolio quality of FSPs ? it is also a part of the global agenda of responsive inclusive finance promotion. But there are a lot of prerequisites such as the strengthening of financial management capacities and tools for FSPs including MIS systems, credit bureau capacity, and central bank requirement before licensing FSPs. This is quite an ambitious agenda to be supported by the project resources alone.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Strengthen partner FSPs to improve portfolio management and financial tools
[Added: 2011/05/24]
2015/12 Overdue-Not Initiated
Negotiate an agreement with the central bank for all MFI inclusion
[Added: 2011/05/24]
2012/12 Overdue-Not Initiated
6. Recommendation: Strengthening non-banking Financial Services Providers
Management Response: [Added: 2011/05/24]

Agreed. This type of work is already being conducted within the UNDP poverty unit through the Growing Sustainable Business/Inclusive Market Development project. Greater synergies between this project and BIFSMO are needed to enhance impact. In addition the 2nd phase should include some keys actions with objectives to strengthen the entire technical infrastructure (meso).

Key Actions:

Key Action Responsible DueDate Status Comments Documents
6.1 Under overall framework of new UNDAF planning and BIFSMO Phase 2, conduct scoping exercise to formulate concrete areas of synergies with the work of GSB of market studies, business plans, and capacity support with clear linkages to microfinance. Q2 ? Q4 Poverty Unit/UNCDF
[Added: 2011/05/24]
Poverty Unit/UNCDF 2011/12 Overdue-Not Initiated
6.2 Design and support action plans for actors at the meso-level
[Added: 2011/05/24]
2015/12 Overdue-Not Initiated
7. Recommendation: Strengthening the AMOMIF status
Management Response: [Added: 2011/05/24]

Agreed. This is included in the AWP 2011 and will continue to be a priority

Key Actions:

Key Action Responsible DueDate Status Comments Documents
7.1 Develop a three-year training plan for financial service providers (FSPs) by segment
[Added: 2011/05/24]
Poverty Unit/UNCDF 2011/09 Overdue-Not Initiated
7.2 Implement the training plan for financial service providers
[Added: 2011/05/24]
Poverty Unit/UNCDF 2014/12 Overdue-Not Initiated

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