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24th July 2001 - Practices in the United States
Meeting with Jo Woodfin - Associated program manager, Special Unit for Microfinance, United Nations Capital Development Fund - New York

Two departments provide microfinance in the United Nations :
- the UNCDF, United Nations Capital Development Fund : which has launched several microfinance programs over the last 30 years. Nowadays it is involved in 20 countries, mainly in Africa, with a portfolio of $43 millions.
- the UNDP, United Nations Develoment Program : among its various activities, it manages the microstart program and thus provides technical assistance and capital to Micro Finance Institutions (MFI) in creation. This program tries to meet the demand for microfinance by multiplying the number of existing MFIs, like it happened in Bolivia. In addition to microstart, the UNDP has launched the microsave program to promote micro savings.

Since 1997 the Special Unit for Microfinance (SUM) has been coordinating these UN programs, bringing technical support and regular assessment.

The first United Nations Programs were financing mainly guarantee or revolving funds within the banking sector to help MFIs finding the capital they needed. This approach, which missed the direct support to the MFIs, has been corected in 1996 after an evaluation directed by the Consultative Group to Assist the Poorest (CGAP in the World Bank). The main issue for the SUM is now to promote the "institutional development and the reinforcment of MFIs". It means : helping them improving their information system, their financial and human resources, their portfolio monitoring. Moreover, in opposition to what used to be done, the MFIs don't have to develop specific projects to receive the support of the United Nations. This new approach should prevent them from developing non sustainable activities.

Nowadays the UNCDF is mainly present in the subsharian Africa. It supports MFIs in poor rural areas that have a limited access to microfinance services. It looks for MFIs that should be able to reach their operational viability ( covering their operational costs but maybe not their financial costs). In counterpart the UNCDF tries to bring a usefull support, especially by respecting their priorities. The new UNCDF policy is based on :
- a better selection of the MFIs,
- a better accessment of their performances,
- a greater freedom given the the MFIs to define the appropriate strategy.

6 people are working for the SUM in New York, 3 in Africa with a special unit in Lomé, 1 in the middle East and 1 in Asia.

More and more some SUM services are not free any longer.

Answering our question about her point of view concerning the microcredit summit campain (managed by the world bank to reach 100 millions with microcredit), Jo Woodfin tells us it is an ambitious project and that the SUM prefer a niche strategy with a bottom up approach.
As for her, the microfinance is a tool but certainly not THE solution to the under development. Several MFIs, supported by the UNDP in the past, have failed because of a lack of infrastructures and a poor level of alphabetisation. It is complementary with other programs but with a specificity : to be successful, it needs to reach an operational viability.

For more information : the SUM website : www.uncdf.org/sum