>Posted by Stephanie Geake
There are a number of valuable governance initiatives going on in our sector. We count five at the practitioner level, four at the investor level and four more led by policy-makers. While these projects are coming out with interesting new insights and a range of practical tools that could be of use to other actors, they have limited dissemination channels for reaching those for whom their work is intended.
Enter the Governance Working Group (GWG), created by the World Microfinance Forum in Geneva in 2010 and housed within the Center for Financial Inclusion at Accion since April 2012, with CGAP as an active partner. The group is made up of experts in microfinance governance, many of whom are leading the initiatives mentioned above. They cover governance projects spanning a number of geographies, topics and players: one initiative is developing a governance rating methodology in a pilot project in Central America; another has produced a publication on current Board composition and structures across MFIs in several regions, yet another sub-group is testing peer-to-peer learning workshops in the field, where CEOs and Board Chairs share governance experiences amongst each other.
Recent work that has had input from the Governance Working Group includes:
1) Measuring Governance in Microfinance: Initial Findings from a Pilot Project – a paper produced by the World Microfinance Forum Geneva (WMFG) and MIX. This publication discusses a set of self-reporting governance indicators developed by WMFG with the help of Working Group members. The indicators were tested on 160 MFIs by MIX. On analysis of the results, we were pleased to see that the majority of MFIs work through a range of Board committees and that the practice of naming the same person Chair and CEO was uncommon. We also saw a strong presence of risk management functions across geographies. Whilst this initial data collection effort was not able to establish an empirical relationship between indicators of governance and indicators of social and financial performance, the pilot study yielded sufficiently strong results to allow some of the indicators to be included in MIX’s ongoing data collection.
2) CGAP’s most recent focus note, Voting the Double Bottom Line: Active Governance by Microfinance Equity Investors, argues that the microfinance industry is lagging in applying accepted good practices in governance. Author Kate McKee interviewed more than 100 microfinance insiders to reveal a widely-held perception that equity investors – including private microfinance funds and public international financial institutions – are not doing enough to govern actively and ensure strong oversight of MFIs, particularly when it comes to social performance. Governance Working Group members actively contributed in the interview process.
The Center for Financial Inclusion is very pleased to host the Governance Working Group it continues its important work. Click here to read more about plans over the next year!
Have you read?
How Good is Your Governance?
Governance: The Buck Has to Stop Somewhere
What are Board Members Being Paid in the Microfinance Industry
Center Releases “Weathering the Storm” White Paper