European Microfinance Week 2015

PRESENTATIONS

Dominique LESAFFRE kicked off by introducing SIDI as a French solidarity investor, working through alliances and according to local agendas. He explained that even though much has been written and documented on microfinance, very little is written about the role of Apexes as local actors for the microfinance sector. What is the agenda to create an Apex body in a country? SIDI realised that it is important to define that role more clearly, and decided to publish a guidebook on the design, launching and management of an Apex, with the assistance of CERISE. The recommendations in this guidebook will be based on an analysis of selected Apexes in six countries according to five topics: legal status; governance; targets, products & services; economic model; and social performance management. Regions and countries included: East Africa Region (one Apex), Senegal, South Africa, Colombia, Guatemala and Peru.

Cécile LAPENU continued by explaining the early findings of the analyses. They used CGAP’s definition of an Apex. On the first topic, legal status, Lapenu mentioned many different forms, ranging from public, to private, to cooperative. She also mentioned that Apexes are not very much on the radar of local legislation, whereas this is considered relevant to assure access to financing and support in the local context. While some flexibility is important, it is crucial to provide more clarity on the structure and status of an Apex body, also in the light of funding it. On the topic of governance, Lapenu sees this as the key to drive an organisation, more than the legal status. Governance must be defined by the membership, sometimes involving the “clients”, i.e. the microfinance institutions. Moreover, the relation with the state or government entities needs to be clear, including mechanisms for collaboration and overview. On targets, products and services, it is important to highlight the specific functions and added value of the Apex, as well as the financing and re-financing of its operations, the role of international funders and actors vs. national networks, technical assistance to members, and views on sustainability aspects. 

The Apex must also clarify its fee structure and indicate how its (innovative) non-financial services will lead to improved professionalization. As for the economic model, there needs to be a clear idea about revenues and the competitive operating environment. Like for the previous topic, financing/re-financing of operations needs to be defined, focusing on innovative value chain models and targets (involving sometimes extended membership such as producer organisations or social businesses). This is often context specific and difficult to replicate, also depending on membership structure, the training model for actors and knowledge and capacity levels. Concerning social impacts and performance, it has to be realised that this is a valuable, but long process, and requires effort and investment in capacity building.

Subsequently, Alan MOORE shared experiences of the Irish League of Cooperative Unions Foundation (ILCUF) in working with Apex bodies (SACCOs). ILCUF’s mission comes down to “helping people to help themselves”. In his experience, SACCOs need some 10-15 years to develop a mature structure, as was also the case with the ILCU Foundation, which has been in existence since 1980. He showed the different roles and functions of an Apex from the perspective of the cooperative unions (CUs), members and the public. 

It is important to develop a long term perspective, with a clear legal structure and operations model. Regulation is crucial for service provision, which he showed with a slide on the core functions of Apex partners they work with. This can differ considerably from country to country.

Sustainability of the Apex is dependent on a number of factors, and requires more than a symbolic contribution from members. In general, it will take more than five years to become financially sustainable. He demonstrated this through an example of Ethiopia, where the SACCO structure is still quite basic for such a big country. He concluded his presentation with a number of characteristics of a CU Apex, such as on competition, ownership, monitoring, and leadership and innovation.

DISCUSSION

Lesaffre opened the discussion by asking about the innovative capacity of Apexes; are they in the lead to innovate or are they following development patterns? According to Moore, this will depend also on the membership structure and roles of the Apex, but he would expect SACCOs to lead in such processes. On the question whether ILCUF assessed the success of the Apexes it works with, and how this is measured, Moore answered they have only recently started to do so more intensively. They are now looking further into their sustainability and the added value they provide. Lesaffre added that it is important to define what success means. More research is needed to identify quantitative benchmarks on their strategic positioning within a country, in relation to other relevant actors. This will in turn require indicators for relationships with clients, and with the environment as a whole. According to Lapenu, this requires identifying buy-in from the members, the capacity of the Apex to evolve and adapt, as well as the monitoring of this development and the use of services by clients. Lesaffre subsequently mentioned that there are already tools for measuring success, but that the debate needs to be brought to the level of the Apexes involved. 

On the question whether the funding sources of Apexes are local investments or come from outside, Lesaffre answered that next to business models proper (design and structure), this is one of the key outcomes expected from the analysis in relation to sustainability. Lapenu added that this also involves defining criteria to assess value added. Moore responded that right governance is key to generate added value and access to funding.

Lesaffre continued the discussion by pointing out that we should avoid duplication of efforts. According to the audience, this can be countered by developing skills, structure and tools on the part of Apexes, in order to be able to effectively communicate in this respect. Lesaffre replied that this is also confirmed by the early findings of the research. Besides a strong manager, it will require appropriate internal rules and governance, transparency and communication, and hence reduced distance from the membership. The Guidebook on Apexes by SIDI and partners is expected to appear in February 2016.