Regional Office for Asia and the Pacific

Hiroyuki Konuma

FAO Regional Representative for Asia-Pacific

He Changchui
Assistant Director-General and Rgional Representative for Asia and the Pacific
delivered at the

FAO-GTZ MicroBanking System Steering Committee Meeting

FAO, Regional Office, Bangkok
9 December 2004


It is my pleasure to welcome you to FAO RAP for the two days MBWin Steering Committee meeting.

I have been briefed on the FAO-GTZ MicroBanking software, and on the functions of your Steering Committee and I am happy that RAP can provide you necessary support to facilitate your tasks set for the next two days.

Rural and microfinance has the potential to play important role and contribute towards the achievement of the Millennium Development Goals (MDGs) and the target for halving the world hunger by 2015 set by World Food Summit and WFS.fyl. Access to financial services by all groups in a society, in particular the poor in the rural communities is a precondition for a healthy economic and social development of all sectors. This is why 2005 has been declared the United Nations Year of Microfinance.

Well-functioning rural financial institutions will contribute to food security at household level by increasing both farm income and non-farm income. This is not only through direct lending to the poorest, but also through lending to small and medium enterprises which, in turn, will create off-farm employment for the poorest. And increased food production, resulting from adequate access to services to finance investments and inputs will contribute to national level food security.

In Asia, a number of countries have adopted policies that no longer allow government intervention at the rural and microfinance retail level. Cambodia and the Philippines are two examples where private sector intermediaries are expected to deliver financial services to farmers and non-farmers alike, and where government intervention at the retail level is banned by law or regulation. In Bangladesh, the private and NGO sector are the de-facto retailers of credit and savings. In all these countries, the government has withdrawn from the retail operation of savings and credit services and concentrates on it’s role as wholesaler of funds and as regulator of the industry.

Other countries are currently in the process of reviewing and reformulating their national rural and microfinance policies. Vietnam and Laos are examples of countries that have adopted certain international best practices, e.g. the removal of interest controls, and that are about to allow private sector involvement and investment on a large scale.

These developments have resulted in the formation of many small private sector financial intermediaries, both as NGOs or as formally registered and supervised rural and microfinance institutions (MFIs) in Cambodia, the Philippines and Bangladesh. Countries such as Laos and Vietnam will follow that path in the near future.

However, for the hundreds of NGOs and MFIs to successfully deliver the financial services to the target groups, they themselves must first of all be strong and sustainable. The fast growth of the industry in the countries I mentioned, is causing a severe shortage of human skills and technical resources. As a result, the quality of administration, record keeping, accounting, reporting and monitoring often suffers, and with it the sustainability of the institutions and their capacity for further growth.

Therefore, capacity building should be a top priority for the entire industry, as well as for donors and for technical assistance providers.

The FAO-GTZ MicroBanking software is an important instrument in FAO’s toolkit for capacity building in rural financial institutions.

Firstly, the use of the system will enhance the capacity of the rural financial institution’s staff to provide quality services to a larger group of clients in a sustainable and cost effective manner.

Secondly, the MBWin system is itself a great training tool. I understand that in particular the new MBWin “Light” package will in future be used as a tool to teach super-efficient transaction processing for groups as well as individual clients.

It is clear that MBWin meets a growing demand. I understand that a significant share of the project funds is raised by the users themselves through license fees, through maintenance and support fees and through software customisation fees. This is very encouraging to see happening in our type of organization because it gives an automatic feedback about the satisfaction that our target group derives from our work.

Unfortunately, self-financing is also going to be an increasing necessity in view of our organization’s severe financial constraints. It is up to your committee and up to the group of MBWin experts based here in RAP, to design and implement strategies to further increase the level of self-financing of MBWin.

I hope and expect that you will make fruitful use of the next two days to give guidance to the team of technicians and experts based here in RAP. The MBWin project is an international project, and as such it is unique in our Regional Office, which normally accommodates only regional projects. The resources of our office are limited. But as I said before, I am happy to provide you all the support we can for the smooth completion of your work.

Thank you