Technical Guide for Analysing the Efficiency of Credit-Granting Non-Governmental Organisations

Publication Date: 1996
Published by: Saarbrucken, Germany: Verlag fur Entwicklungspolitic Saarbrucken GmbH
Document Type: Book

Why are NGOs increasingly involved in small business financing and are they efficient service providers?

This paper details that over the last decade, NGOs have come to play increasingly important roles as lenders to small and microenterprises. Reasons for this include the undeniable advantages NGOs possess in delivering financial services, to specific target groups, in the informal sectors of developing economies. NGOs often hold a monopolistic market positions since the majority of formal financial intermediaries consider entry into this market to be either too costly or too risky or both

However up until now many NGOs have not attached much significance to economic performance. They are able to do so because they are supported financially by donor organisations which are more interested in reaching certain target groups than ensuring that the performance of aggregate loan portfolios meet a specific standard

The papewr investigates criteria for measuring the efficiency of a credit granting NGO. Defines efficiency as "meeting the criteria of target group orientation as well as ..economic viability"

At the end the paper outlines specific criteria and demonstrates how these can be applied using data that can normally be obtained from an NGO.

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