PREFACE  

It is widely recognized that a properly designed and implemented microfinancing scheme is central to alleviate poverty by providing support for lower-income groups to increase their income. In June 2002 Non-Aligned Movement Centre for South-South Technical Cooperation (NAM CSSTC) invited policy makers and practitioners in microcredit services from NAM member countries to participate in a workshop held in Jakarta. The workshop deliberated on key issues, technical aspects and policies, and produced a set of recommendations on how to enhance the sustainability of microfinance institution as well as people’s involvement in such particular financing scheme.

The workshop recommended that NAM CSSTC took further initiatives to increase cooperation in the field of microcredit comparative studies, training programme and technical assistance. The workshop also identified specific actions in promoting and mobilizing microcredit practices in NAM member countries. NAM member countries are encouraged to promote transparency in microcredit services by setting up standard performance, establishing rating agencies and promoting internal control.

NAM CSSTC subsequently decided to conduct regional trainings on technical aspects of microcredit. Three training programmes have been successfully conducted. The first one was held in Jakarta, Indonesia, in August 2002 for East Asia and the Pacific region, the second one was held in Pretoria, South Africa, in October 2002 for Southern Africa Region, and the third one was held in Dhaka, Bangladesh, in March 2003 for South and Central Asia Region. The trainings identified that each region has its own characteristics of microcredit practices, types, as well as problems faced by microfinance institutions. However, the trainings also learned that despite all the differences, there are also specific areas of common concerns throughout the regions.

On the basis of these differences and common areas, a basic guideline should be formulated for policy makers and microfinance practitioners in developing member countries, particularly the NAM member countries and members of the Organization of Islamic Conference (OIC). The expert meeting to formulate such basic guideline was successfully conducted on 8-12 March 2004 in Jakarta through a joint programme between NAM CSSTC and the Islamic Development Bank (IDB).

The participation of IDB in the meeting was in line with IDB mission in providing technical assistance and project financing for developing countries. Such joint programme conducted by NAM CSSTC and IDB was regarded as a positive cooperation among member countries of Non-Aligned Movement and OIC who share a common concern in advancing the development in the South.

During the meeting the experts have formulated the first Draft Guideline on Microfinance on the basis of their respective knowledge and practices. However, the Draft, which is included in the Proceedings, should be further completed and reviewed by the participating experts and other competent resource persons. Eventually, the final ‘Basic Guideline on Microfinance’ will be published as another document. NAM CSSTC welcomes any suggestion and further input to improve the draft contained in this report.

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