Format for Appraisal of Microfinance Institutions: A Handbook (Technical Tool Series No. 04)

Publication Date: Jul 1999
Published by: Consultative Group to Assist the Poor (CGAP)
Document Type: Toolkit

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A guide to appraise microfinance institutions

The Consultative Group to Assist the Poorest (CGAP) produced this guide to appraising microfinance institutions (MFIs) for the use of its staff and consultants. This guide outlines the process through which the appraisal should ideally be carried out.

According to the format, the institutions would be assessed on the basis of:

• Institutional factors through the analysis of:
  • Legal status;
  • History and the process of evolution of the MFI;
  • Ownership of the institution and the board profile;
  • Alliances, leadership and human resource management structure.
• Services offered, clientele and market by considering:
  • Financial and non financial services offered, and mode of delivery;
  • Outreach;
  • Identification of clients and systems of feedback from them.
• Strategic objectives emphasizing on:
  • Mission and objectives;
  • Objectives for near and medium term.
• Financial performance through the analysis of:
  • Income statement and balance sheet;
  • Adjustments for inflation and subsidies;
  • Profitability;
  • Efficiency;
  • Loan portfolio;
  • Liquidity management.