Increasing the Capacities of Microfinance Institutions
Begun in September 2006, the USAID-funded Small and Microfinance Assistance for Recovery and Transition (SMART) program was a two-year program. It was designed to preserve the microfinance institutional infrastructure in the West Bank and Gaza and help microfinance intermediaries develop and adopt effective growth and risk mitigation strategies, thereby laying the foundation for sustainable growth. ACDI/VOCA, as the main subpartner under the award to AED, supported SMART with technical assistance in microfinance development targeted at building effective linkages between agricultural and community-based business cooperatives and providers of financial services.
At the beginning of the program, SMART focused on facilitating urgent business turnaround for microfinance providers in the face of economic emergency while at the same time helping to build a stronger, more commercially oriented microfinance industry. SMART recognized that individual microfinance providers (MFPs) need customized support packages of loan capital, grants, and technical assistance to stop decapitalization, improve their capacity to manage risks, and develop innovative business strategies and products to cope and grow in the current challenging environment.
ACDI/VOCA under the SMART project provided the following:
- technical assistance to microfinance institutions (MFIs) to improve their risk management systems and processes and their capacity to develop products that are responsive to their clients while maintaining sound financial management to move toward sustainability even when affected by conflict
- direct assistance to MFIs that did not distort the market for these services
- assistance in assessing the potential for risk management products and the roles that these products could serve through microinsurance programs
Additionally, it was determined that there was a need in the West Bank to design, develop, and test new financial products and services adapted to the evolving economic environment that linked low-income smallholder farmers and agricultural enterprises to appropriate types of financing. ACDI/VOCA actively looked for ways to work with its Food Security Program in the West Bank to strengthen the agricultural value chain in the West Bank.
