Example of using the framework for institutional analysis

Inclusive Economy01 Jan 2007The Broker

Access to micro-finance is a key issue in enabling small-scale producers to access markets. What questions should be asked during an institutional analysis of micro-finance?

Meaning: What are the general beliefs in government and society about the importance and value of micro-finance for the poor? What are the norms and values in a society or community about taking and paying back loans? What are the main theories, conceptual frameworks and bodies of knowledge being used to set policies and design micro-finance interventions? How much alignment or contradiction is there between different theories and between theory and cultural values and practices?

Association: Who are the main organized actors important for micro-finance (government agencies, banks, donors NGOs, CBOs)? What contractual, formal or information relationships exist between these different organizations?

Control: What is the national policy on micro-finance? How is micro-finance dealt with in poverty reduction strategies? What are the specific mandates of local banks (public and private) to provide micro-finance to small entrepreneurs? What are the rules and regulations governing micro-finance institutions? What are the private policies and strategies of banks in relation to servicing the poor? What are the informal rules governing informal lending within a community? What are the reasons behind these informal systems?

Action: As a result of the above, what micro-finance services are actually operating? Who is using them and what are the patterns of repayment? How significant is the informal lending sector and what key behaviours characterize it? How do staff in banks or micro-finance organizations behave with their clients? What type and degree of corrupt behaviour exists in the sector?