‘Enhance financial inclusion’
Navin Anand, Resource Person and Moderator (Microfinance Community), Solution Exchange, United Nations, on knowledge sharing experiment

By Shubhdarshani Mitra
Solution Exchange is an initiative that provides a single unbiased platform to practitioners spread across the country and abroad to exchange knowledge and ideas. It operates mainly through e-mailing system wherein members of a particular community raise a query which is followed by advices, experiences or suggestions by other members of the community. Navin Anand, Resource Person and Moderator (Microfinance Community), Solution Exchange, United Nations, United Nations Development Programme, speaks more on the programme. Excerpts from an interview:

What exactly is solution exchange and what is the mechanism through which it is carried out?
Solution Exchange is a unique experiment of knowledge sharing initiated by United Nations in the year 2005. It provides an impartial platform for exchange of knowledge and ideas among development practitioners in key thematic areas under the framework of the Millennium Development Goals (MDGs). It connects development professionals in similar fields from diverse organisations ranging from Government, bilateral and multilateral development partners, and non-governmental organisations to academics, corporate, and the media. It develops ‘Communities of Practice’ for sharing knowledge and experience among practitioners. The UN serves as a catalyst and plays a facilitative role, offering a free, impartial space where all development professionals are welcome to participate. These Communities of Practice (CoP) are people who share similar concerns and interests, through electronic e-mail groups and face-to-face interactions, with the common objective of problem-solving. Instead of advocating any particular viewpoint, they foster familiarity and trust between development practitioners who share similar passions for their work. Each Community of Practice is moderated by a subject expert (Resource Person & Moderator) assisted by a researcher (Research Associate) to circulate questions posed by Community members. This team adds value to the replies received from Community members by summarising the responses, by providing comparative experiences from within and outside India, and by suggesting additional resources such as subject area experts and recent research or publications.

In the area of microfinance, how has solution exchange helped? What initiatives have been taken by the UN Solution Exchange in this regard?
Microfinance Community of Practice was launched in October 2006 and it is co-facilitated by UNDP and ILO. In terms of membership, the community is inclusive by virtue of having very senior members, middle level executives as well as grassroot practitioners. Now almost all the states are being represented well in the forum.

The Microfinance Community of Practice, Solution Exchange, working as a catalyst and promoter of MF development in India has been a unique player in the whole gamut since last three years. The Microfinance Community works to reduce poverty through microfinance initiatives and innovations leading to enhance financial inclusion; helping to develop appropriate technical, organisational, operational and policy environment to achieve MDGs relating to the eradication of extreme poverty and hunger and targets set out in Eleventh Five Year Plan.

The estimates of National Sample Survey organization (NSSO) reveals that out of 89.3 million farmer households, nearly 45.9 million households do not have access to any credit; this is over 50 per cent of such households. If we look at the institutional financing, we will find that only 27 per cent of people receive institutional financing. Finding microfinance, an important component for inclusion, Dr C Rangarajan’s Committee report on financial inclusion has focused on strategies, technologies and a delivery mechanism for reaching the poor and providing them timely, adequate and affordable financial services. This requires shifting from the ‘Supply led approach’ to a ‘Demand let approach’ by the MFIs and other players of microfinance sector.

Practically, MF comprises three different environments — internal (Micro), intermediary (Semi Macro) and external (Macro). Microfinance community of Practice strategically takes up issue related to all the three environments.

From a knowledge sharing platform, the community is becoming a strong ‘change agent’ by functioning as a bridge between the Practitioners and the Government, UN agencies as well as Regulatory bodies like RBI and NABARD. The community is now focusing on disseminating knowledge to the larger audience, synthesising the knowledge products around themes and utilising the same in taking up programme/policy
related issues.

How is it different from other methods of debate and discussion?
The method and debate is different from any other discussion in following terms: It is an internet base discussion in which a practitioner sitting in USA or north east contributes in a similar manner as per his/her convenience. Since physical presence is not required, people give their free and frank suggestions. The discussions are moderated and therefore it is not like any other list serve wherein there is no control on the direction of the discussion and final output.

The Resource Team does a lot of research to add value to the final products (Consolidate Reply). Therefore the gaps are filled in and a practitioner gets the summary as well as other relevant resources like information about relevant organisations, experts, websites, and experiences. Hence the final knowledge product is a ready-to-use document for a variety of practitioners.

Who are the beneficiaries of this initiative? What is the reach?
The direct beneficiaries of solution exchange are the members and Microfinance Practitioners. At present around 2,800 practitioners from all over the country and abroad are associated with Microfinance Community of Practice. These members are:

• Government officials and NGO field workers implementing development projects and programmes
  
• State, District and community level service delivery administrators
  
• Community leaders and activists
  
• Political authorities, planners and policymakers at all levels of government
  
• Entrepreneurs promoting economic opportunities for poor communities
  
• Donors and other sponsors of development initiatives
  
• Researchers and academics
  
• Other individuals involved with reducing poverty in India

Also, there is a plan to cover more field level practitioners through a ‘Bridge Model’. The microfinance Community of Practice is going to take up feasibility study to test the setting up a "Bridge Model" in at least one UN focused state. The efforts will not only help in disseminating the knowledge products to the SHG federations and other grassroots organisations but it will also provide inputs on the problems and bottlenecks being faced by the people functioning at the micro level.

What are development related issues within MF?
Following areas are identified as relevant for microfinance and financial inclusion by Microfinance Community of Practice Solution Exchange:
On Policy, Regulatory and Organisational issues/ Inclusion

• Microfinance Bill, review of cooperative societies Acts in context of microfinance and National Federation of SHGs
  
• Role of Primary Agriculture Cooperative Societies (PACS) and Post Offices as financial intermediaries for enhancing inclusion
  
• Money Lending Acts, Fair Trade practices in MF, transparency and pricing of MF products and regulations for ‘Health Mutuals’ and savings services
  
• Convergence of various initiatives for MF and Livelihood
  On Technology, Tools and Processes
  
• Social security payments through biometric smart cards, ICT based MIS and M&E in MFIs, technology for Credit Information Bureau and technology options for remittances and payments
  On Micro Finance Services for Livelihoods/ Products and Services /Social Security
  
• MF for different sub-sectors, micro leasing for disaster affected and vulnerable people
  
• MF for bonded laborers/Rag pickers, MF for higher education / skill development and Financial literacy of clients
  
• MF Products such as voluntary savings, Portfolio insurance, micro health insurance and challenges in coverage of micro pensions

How can MF help in skills development in the country?
MFIs can play facilitative role in the whole process of skills development by bridging the gap of financial requirements of demand as well as supply side. It is important to do segmentation of the client base in terms of their strengths and weaknesses, their economic level and requirements for skills development so that microfinance needs and repayment schedule can be ascertained.

MFIs could develop skills development — micro financing as a premium product for selected clients. Various models are possible for micro financing for skills development such as Public Private partnerships, Public Private Community Partnerships, community base micro financing for skills development, Kiosk model for financing as well as conducting skill development trainings from a single source. Hence it is important that NGOs, Government, private institutions, corporate bodies, technical/vocational training institutions, independent trainers and MFIs work collaboratively at various levels of the value chain to develop the skill of the workforce for improving the employment situation.

Please throw some light on National Rural Livelihood Mission and its relation to MF.
Recently the Ministry of Rural Development (MoRD) has decided to redesign the Swarnjayanti Gram Swarozgar Yojana (SGSY) to enlarge its scope significantly and make the programme more effective to alleviate rural poverty by 2015. In the Union Budget 2009-10, the Government announced the renaming of the programme as National Rural Livelihood Mission (NRLM). The Government has also proposed to enroll at least 50 percent of all rural women in India as members of Self-help groups (SHGs) over the next five years. Microfinance Community of Practice conducted a lively discussion on the issue of National Rural Livelihood Mission wherein 56 leading practitioners from India and abroad gave their suggestions. Ministry had some of the important suggestions:

• Developing multifaceted capacities of BPLs and other micro-entrepreneurs. Shift from "what one can produce" to "what one can sell with profitability and what is in demand in the market"
  
• More application of concepts of Clustering, Subcontracting and Ancillarisation
  
• Going beyond SHG and other Microfinance models to cover poorest and the most marginalised
  
• Applying cluster approach in tandem with the support systems
  
• Planning for self-sustaining system in the long-term based on Lessons of SHG Bank Linkage program
  
• Clear timeliness for clearing proposals along with accountability to the partner organisations
  
• Focus on Resource Mapping — Individual Households, Collective, Common Resources
  
• Application of 3M approach (micro planning, micro finance and micro-marketing)
  
• Do value chain analysis — group based and special activities based
  
• Introducing innovative concept of Micro leasing
  

The outputs of the discussion are being considered by MoRD to strengthen the note on NRLM. Hence, Solution Exchange played a role in informing around 2,800 microfinance practitioners of the country about NRLM and could get their views. In this way the people will have more ownership of NRLM and participation and support for the programme will be high.

Please give an overview about your consolidated publication on the Knowledge Products of Microfinance which many Microfinance Practitioners are talking about?
While the practitioners were appreciating the stand-alone Knowledge Products (Consolidated Replies or CRs), the community has brought out in the past few years. However, an urgent need for synthesising these CRs around common themes, and issuing the synthesis as separate value added knowledge product was felt by the members.

The Solution Exchange, United Nations and United Nations Development Programme (UNDP), India thought of jointly publishing — "Knowledge Products of Microfinance — A synthesis of consolidated Replies" in 2009. Around 50 knowledge products on various issues were classified into following five major themes which covers the whole microfinance sector:

• MF Products, Services and Delivery Mechanism
  
• MF for Livelihoods and its Sub sectors
  
• MF for Inclusion
  
• MF Technologies, Tools, Processes and Systems
  
• Enabling Policy and Institutional Environment for MF
  For each theme, based on the available knowledge products synthesis papers were included that provides a clear overview of the theme and the gaps existing in the particular area. For example the issue of micro financing for skills development was identified under the theme — Microfinance for livelihoods and its sub sectors.

Is there any other important publication you are going to release in near future?
We received a good response for our synthesis document from our members and therefore taken initiative of producing a Ready Reckoner on Microfinance for the benefit of the organisations and practitioners working on microfinance and poverty alleviation. It is an innovative idea to help NGOs/Microfinance institutions by providing a single source for all relevant information on Microfinance.

The Ready Reckoner will help UN Agencies, NGOs/MFIs, Banking institutions, Government, Research and Training institutions and independent practitioners to readily access information on organisations, documents, Microfinance experts, Portal and information bases, tool frameworks and technologies as well as innovative experiments on MF and livelihood promotion.

I feel that the utilisation of Ready Reckoner will result into fast tracking the process of collaborations and partnerships for enhancing financial inclusion. It will strengthen the knowledge base of the practitioners about various experiments in different areas of Microfinancing.

I look forward to this publication being used widely to work towards achieving financial and economic inclusion of the poorest and the disadvantaged sections of the country.

To read in print format subscribe to the magazine Download Subscription Form