National Microfinance Study of Sri Lanka: Survey of Practices and ...

Cultures of Dependency in Microfinance
Most of the sector remains highly subsidised.
There is a widespread belief that poverty alleviation and financial viability are
incompatible.
The majority of INGOs practicing microfinance unintentionally create
strategic attitudes of dependence and artificially skew the financial landscape
by adopting relief based approaches to the management of fungible assets.
Most relief based micro finance interventions are conceptualised using
‘welfare-based’ approaches, and frequently fail to charge market related
interest rates for credit or manage fungible assets in a business like manner.
Microfinance is frequently used where grant in aid funding would be more
appropriate and sometimes this causes more harm than good.
Monitoring and Evaluation
Most monitoring and evaluation systems are not designed according to good
and best practice standards.
Within existing schemes most monitoring and evaluation places more
emphasis on the client reporting information than on the effective and
meaningful management of the information itself.
Most schemes do not use the recognised financial ratios, follow up reporting
systems and measurement of the loan portfolio at risk.
Sufficient levels of training is not provided.
The absence of effective monitoring and evaluation systems limits the ability
of the organisation to manage its funds and at worst it encourages lax
standards, mismanagement and corruption.
Impact Analysis
The use of impact analysis is virtually non-existent, baseline research is rarely
undertaken and the impact of schemes is mainly based on anecdotal
information.