Completing the Kayin Project


Monday will be the culmination of a development project in Kayin State, Myanmar. A conference will showcase the results of the three-year project – a registered cooperative with savings and lending service as well as an e-money service, and an enterprise and agri-business enhancement component for the borrowing members.

In 2014, the project started six months late because of some administrative concerns as the government has to cope with the increase of development agencies flooding the country.  But the project team was able to catch up on the activities and reach the finish line on time.

The results of the project affirmed the tools and methods initially employed in other ASEAN countries and now used in Myanmar. These include savings mobilization techniques, cooperative formation, value chain analysis for agri-commodities and enterprise development.  The tools are now being marketed to other development agencies for replication.


Notes on the QSEM

The Qualitative Social and Economic Monitoring (QSEM) is a study conducted annually by Livelihoods and Food Security Trust Fund (LIFT), a multi-donor platform, to look at the changes resulting from the development interventions in various parts of Myanmar. The Round 4 of the QSEM conducted from March to May 2014 involving 1,474 respondents was recently released by LIFT and World Bank, highlighting the trends and transformation happening in the rural areas of the country. It covered 54 villages from the following states where LIFT has concentration of projects: Ayeyawardy, Chin, Magway, Mandalay, Rakhine and Shan.

Round 4 results have shown positive developments in the rural areas. The main findings were summarized as follows:

1. Villagers experienced better returns on their livelihoods than in previous years, though underlying structural constraints persisted;
2. Non-farm diversification and migration increased;
3. Certain poorer households were not able to benefit equally from such positive trends; there were risks of inequality; and,
4. There were small but important shifts in how people interacted with local government officials.

The results are important in a way that showed the effectiveness of the development efforts in Myanmar and the receptiveness of the people in the development efforts. Among the other noteworthy issues raised in the Round 4 report and discussed during the presentation last February 5, 2015 included the following:

1. Labor migration is increasing. As development is felt in key cities, people from the rural areas are moving to the cities particularly Yangon and Mandalay looking for more opportunities. Migration outside the country is also observed. Because of this, labor for agricultural production may be affected in the future although it is not yet felt at present. It was also observed in some areas that during peak seasons like planting and harvesting, there are no enough farm laborers to hire. Inversely, during non-peak season, there is no work for labourers, pushing them to find work in the cities.

2. Diversification of income source. The increasing number of non-farm activities rural people to move away from agricultural production. This may be an issue for food security if people stay away from agricultural production activities.

3. Increasing influence of village tract leaders. This is an additional layer in the bureaucracy. We not only deal with village heads and township officials but also with the village tract leaders. This may also be an opportunity in area where the village heads are uncooperative, with the village tract leaders may be an alternative source of support.

4. Social capital and institutional development. Most of the people’s organizations were formed for mobilization. There is a need now to transition these organizations to do economic activities and provide them with capacities and skills in managing not only organizations but enterprises as well.

5. Connectivity is promoted by cellphones. The use of cell phones for development initiatives has yet to be maximized. With apps for mobile money, market information and other updates, the community can benefit much from utilizing it as a tool for development work.

Sustainable Cooperatives: Alternative financial support systems for the poor

ImageAn emerging economic order

The ASEAN economic integration scheduled to be fully implemented in 2015 will have great impact on the people of the region. Designed to be a common production and marketing unit, goods and services will flow freely among its member-countries and will trigger a survival-of-the-fittest mode for businesses in the region. As competition provides lower prices and better products and services, benefiting the people, it will also weed out inefficient companies resulting in the laying-off of workers. Industries will consolidate leaving fewer surviving players to dominate the market. In this scenario, it is evident that the more developed member-countries of ASEAN will have a head start.

It is expected, but not assured, that the benefits of the economic integration will trickle-down to the marginalized sectors of the society. Definitely, a large number of people will be excluded in the process especially those coming from the less developed member countries. Growth rates may be observed, but it take some time before the poor will enjoy the benefits of the new economic arrangement. The poor will have to cope with these developments with minimal support. So far, there are no talks of safety nets for the poor, and it seems that everybody is thinking that there will be no massive economic dislocation as a result of this integration.

Left on their own, history shows that poor people coped during hard times by pooling their resources and sharing whatever they can to assist each other. These informal support systems still exist in poor communities and are evident in small self-help groups. It may be an informal collaboration at the start, but it can lead to a more formal and long-term arrangements like cooperatives. During the advent of the Industrial Age in Europe, people flocked to the cities in search of work but ended up being exploited as cheap labor. Poverty persisted and poor people were excluded, consigning them as commodities in the new economic order. The poor coped by forming self-help societies that later on became formal cooperatives. Raiffeisen cooperatives in Germany and the cooperative societies initiated by the Rochdale pioneers of England became models of cooperativism worldwide that has not only reduced poverty but have evolved to become major industry players globally.

Cooperatives as coping mechanism of the poor

What makes cooperatives successful? Basically it is the number of members. A big number of people pooling small amounts to generate a large working capital that will enable them to venture into enterprises which will not only serve the members but the whole community as a whole. Picture a scenario where thousands of poor people regularly deposit small cash amounts into a cooperative. The pooled deposits are then lent out to members some of whom are developing micro-enterprises. Those entrepreneurs will be able to expand their businesses and may even hire members who have no jobs. Income from interest payments of the borrowed funds will add to the growing fund of resources that will be available to other enterprising members. Financial services provide opportunities for members to venture into income-generating activities and contribute to job creation.

From the same scenario, the cooperative may venture into retail business of prime commodities. It can buy products in bulk and can offer lower prices to its members because of the savings generated from doing away with middle-men and avail of discount by buying in bulk. Invaribly members consume the products and services because they own the cooperative and it offers cost value. The sheer volume of small transactions will provide additional income for the cooperative.

The continuous and regular pooling of resources, the provision of financial services to members with entrepreneurial spirit and the establishment of basic services that responds to the needs of members builds up not only the financial resources but the institutional capacity of the cooperatives. As the cooperative becomes more efficient, it can assume more functions and businesses to serve its members and the public.

Cooperation does not only happen among individual persons because cooperation among cooperatives also takes place. It one of the basic principles of cooperativism – strength in numbers. This makes cooperatives one of the best mechanisms for economic inclusion. Giving the poor and the marginalized an opportunity to participate in the economic activities through cooperatives. Individually, the poor will have no say, but through a cooperative, they can be a player just as they are in other ASEAN countries with strong cooperative movements like Thailand, Indonesia and the Philippines.

Status of Myanmar Cooperative Sector

The growth of the Myanmar cooperative movement is attributed to the Ministry of Cooperatives, the government agency responsible for supervising and regulating cooperatives in this country. Its main objective can be summarized into two: first, to improve the socio-economic life of rural and urban people at grass-roots level; and second, to support with full strength by cooperative businesses for the development of the nation’s economy. Main activities of the ministry in promoting and developing cooperatives include cooperative development, small scale industry development, import-export enterprise development and the strengthening of the apex organization.

The Central Cooperative Society (CCS) is the apex organization composed of the all the primaries and syndicates in the region. As of 2013, the total number of registered cooperative primaries was at 20,658. It has total individual membership of 2,403,365. In terms of financial resources, total savings stands at 340Million kyats and loans outstanding at 1.1Billion Kyats. A large number of registered cooperatives are agricultural co-operatives in rural areas that are utilized as channels of support for agricultural producers. The rest are services cooperatives more prevalent in urban areas among the working class, providing savings and credit services.

The recent introduction of the Microfinance Law encouraged some cooperatives to register as microfinance service providers. In 2013, a total of 71 cooperatives were given licenses to function as MF (Microfinance) operators and is this is expected to increase as the regulatory framework for microfinance is being fine tuned. . The CCS was also allowed to operate microfinance operating units and set up branches to serve its members.

This is a good development as the presence of many cooperative microfinance service providers will promote financial inclusion and bring financial services to the doorstep of the members. It will allow people to enhance and increase their economic activities as working capital can be accessed from these institutions.

The challenges of sustainability

Cooperative development in Myanmar has a long history. With direct support from the government, it has survived domestic and regional economic crises. However, with the advent of free-trade arrangements and the gradual opening up of the country’s economy to the West it brings with it some challenges.

1. Increasing financial inclusion especially for those living in the rural areas

The total number of members in the cooperatives are but a small portion of the total population of the country. If we divide the total number of members with the number of registered cooperative primaries, it will give an average of 116 members in a cooperative. The urban cooperatives may have more than the average number, but rural cooperatives may have even less than the average number. Two challenges are evident: first, making these cooperatives bigger in number to generate more resources and transactions; and second, forming new and bigger cooperatives to cover areas that have no cooperatives.

2. Institutional development by enhancing skills of management teams

As the volume of members and transaction grows, there is a need to formalize and enhance governance and management systems. Volunteer work is not bad, but a fulltime and more professional workforce may have to man the cooperatives to make them more efficient and to meet the complexities of managing multiple services and ensuring membership care. An in-house training program that will ensure a pool of trained staff familiar with such operations should be coupled with management and executive training for the management team and policy-makers. The institutional capacity of the cooperatives has to be brought up to the same level of cooperatives operating in other ASEAN member-countries.

3. The need for matching funds

At the start, the pooled resources of the members may not be enough to provide for all the financial requirements of the members. As they gradually build-up their working capital out of the small savings and the incremental income for operations, there is a need to match these funds to hasten the development process. Matching funds, be it grants or soft loans, is ideal because it is founded on the concept that the cooperative has to first prove it can generate internal resources. The principle of cooperation among cooperatives will work best in this situation wherein inter-lending among cooperatives can be facilitated.

4. Social performance

Doing good is not enough, it should be ensured that there is no harm done to clients. Institutions providing financial services are doing good by providing opportunities to its clients, but they can also find themselves in a bind when they see clients mired in debt and still poor. Cooperatives and other institutions like microfinance that are founded on social services should have a built-in system for social performance management from the start. It should not wait until later or when mission drift is evident before corrective measures are installed.

Support to upgrade existing rural cooperatives and to organize new ones founded on a large base of membership, strong governance, skilled management and relevant products and services will provide the poor with a coping mechanism that will absorb the economic shock of ASEAN integration. It will also be the springboard for small and subsistence economic activities to develop into microenterprises and move towards small and medium enterprises (SME). Cooperatives are the most appropriate platform in developing a country’s agriculture and rural enterprises.

Published in Myanmar Insider, Vol. I, Issue 7, June 2014


Are the Prospects for Vietnam MFIs really bleak? Some Insights during a Strategic Planning Workshop


What would you do if there are signs showing that your industry is moving towards sunset?   It was met with mixed feelings by participants to the strategic planning workshop for microfinance institutions.  The Credit Support Fund (CSF), a wholesale lending facility under the Vietnam Women’s Union (VMU) organized a training-workshop on strategic planning as part of its support to capacity-building of microfinance institutions in Vietnam. It was attended by participants from 10 MFOs, where only one has an existing strategic plan, three are in the process of formulating, and the rest has yet to draft their own strategic plans. The training-workshop was aimed at helping microfinance institutions develop strategic thinking and position their institutions for the future.

The strategic planning process is generally divided into four main activities, which includes the following:

  •  Setting the vision and the mission of the institution. This requires defining the reason for being of the institution, the clients they want to reach and the methods on how they can provide their services;
  •  The environmental assessment follows which focuses on the political, social, economic and technological developments that affect the operation of the institution. This part also includes looking at the industry and details on how competitors are doing;
  •  The internal assessment focuses the present capacities and resources of the institution to move forward and the direction that would lead to the attainment of its vision;
  • Identifying the strategic choices and the detailed plan where the objectives and the indicators are identified, the schedule of the activities are set, the monitoring mechanism is determined, and the people or the units involved in each activity are designated.

 Going through the first step, setting the vision, was easy. Everybody wanted to be sustainable and be the leading institution in their respective areas of operation. The mission statements were also unanimous which is serving the poor women and providing access to financial services to enable them to uplift their standard of living.

However, working on the assessment of the external environment raised issues that made the participants think not only about their future but the whole microfinance industry in Vietnam in general. The following issues are therefore considered “risk assumptions” that may affect the continuous operations of microfinance institutions in the country:

  •    Vietnam experienced consistent economic growth in the past several years, and the growth was coupled with declining rate of poverty.  As the country continue in its growth pattern and the poverty reduction measures become more successful, microfinance may become irrelevant several years from now.
  • Government poverty reduction programs are primarily with two government banks: The Vietnam Bank for Agriculture and Rural Development (VBARD) and the Vietnam Bank for Social Policies (VBSP). These banks provide subsidized loans to the agriculture sector and the poor in general. VBSP is even listed in the MIX market as the biggest microfinance provider in the country. Microfinance institutions cannot compete with these two institutions.
  •   Recent development in the rice industry showed a substantial number of farmers shifting to other crops as the price of rice keep going low. Most of the clients of microfinance institutions are rice farming families.
  •   The regulatory environment is slow in creating an environment that supports the development of the microfinance industry.  Of the than 50 microfinance institutions, only 2 are registered.

 Poverty reduction is of course a welcome development, but the idea of microfinance becoming irrelevant with the reduction of the number of poor people kept the participants thinking hard. If ever the trend continues, the question will be, are the microfinance institutions ready for that eventuality?

Addressing increasing staff turnover


One of the criteria in social performance management (SPM) is the social responsibility of the microfinance institution to its staff.  MFIs cannot just be focusing on its social mandate without taking into consideration the plight of its staff.   The main assumptions are, on the one side, staff that enjoys working with an institution will have a tendency to work longer; and on the other side, the institution will try to keep the staffs who are effective in their work. These assumptions and the expectations of each side should match; otherwise, there will be conflict and tension in the workplace.

One of the indicators that reflect harmony in the workplace is the staff turnover rate. Among Cambodian MFIs, we can say it is manageable as data from annual reports showed the range of staff turnover rates. The table below shows the Number of Staff 2012 and Staff Turnover Rate which were directly quoted from the annual reports. From these data, the actual number of staff separated from the institution, for whatever reason,  was computed and placed in the column titled Number of Staff Separated.

 Table: Staff turnover rate of selected MFIs


Number of Staff 2012

Staff turnover rate

Number of staff separated





























Source:  MFI published 2012 annual reports

Separation may either be voluntary or involuntary.  Involuntary separation means termination of employment at the instance of the institution for reasons such as non-performance or violation of the provisions of the contract or internal code of ethics that requires penalty of dismissal. Voluntary separation is at the instance of the staff for whatever reason that does not violate his or her employment contract.

What would be the reasons for a staff to resign from an institution? The reasons can be considered as “guesses” as there are no studies yet on the issue. At best, what we get are anecdotal stories of people who left an institution or transferred to a new one. Among the personal reasons of staff in leaving their employment are the following:

  • Attraction of better working condition and remuneration package from other institution. This includes promotion from the present position of the staff;
  • Shift in another industry or another company in different line of business that is perceived to provide more benefits and professional satisfaction in the long run;
  • Realization of an entrepreneurial streak that led to the setting up of  own business, or if there is enough resources, own company;
  • Seeking personal enhancement by studying, taking graduate course or special courses; and
  • Simply resting from any kind of work.

Internal to the institution, the reasons boil down to staff performance.  Staffs resign, or if not, they are fired if their performance is below the expectations of the management.  Low performance can be traced to four main reasons:

  • First, the staff cannot do the work, which is a function of hiring. Even before the staff is hired, the officer responsible for hiring should have done its job of making sure that the staff is qualified, knows the position and work description.
  • Second, the staff does not know what to do, which can be attributed to   mismatched expectations. An institution may have expectation that the staff knows the whole gamut of his line of work, while the staff is specialized in only a part or a phase of his supposed work.
  • Third, the staff does not want to do the work, which results when there is no motivation for the staff to work.  Either there is no incentive for him to go beyond the normal output, or there is no leadership in the institution that provides inspiration for him to be motivated.
  • Finally, the staff does not know how to do the work, which is a function of skills. He knows the work theoretically but does not know how to do it properly. Here training and mentoring will address the need for enhanced skills.

So how do we address the issue of increasing staff turnover?  We should approach it from the point of view of social performance management where the institution takes good care of its staff as it is concerned with its clients. Your institution may be providing higher remuneration package and benefits, but it is also good to include the following staff-related actions:

  • Ask your staff.  Make sure that you get feedbacks from your staff using whatever means – satisfaction survey, small group talks, suggestion boxes, grievance mechanism and whatever means to get them to share what they think about how they feel about the institution.
  • Address their concerns. It is one thing to ask, and another thing to really resolve the issues raised. It does not mean that all the concerns raised will be dealt with in their favor, but there should be real efforts to understand and respond to the concerns. If the staff feels that the feedbacks are not even read, then say goodbye to staff satisfaction.
  • Give a clear career path. Merit-based promotion of the staff will motivate them to move upward.
  • Be transparent.  Share information about the institution. Some institutions provide regular updates to its staff on the latest developments either through a bulletin board or an electronic newsletter. Without updates, staff will be guessing and they will get their information from the grapevine, which in most cases are half-truths or may even be untrue.
  • Provide a mechanism for staff to be stakeholders. Most Cambodian MFIs have facility for the staff to buy equity shares of their institution. If it is possible to allow more shares to the staff, it would be one of the best means to make the staff develop loyalty.

These are but some actions points. Staffs are an investment, which is why we call them human resource.  If we have a continuing program to make our staff happy, turnover rates will further be lowered.

TYM Social Performance Assessment Completed


One of the main services of PFTAS is focused on the promotion of social performance management (SPM) as a tool for microfinance institutions. Part of these technical advisory services is the conduct of social performance assessment to determine if the institution has translated its social mission into operational policies and actual practices. In Vietnam, PFTAS has conducted a series of assessment to four microfinance institutions – Dien Bien Phu, Ha Thinh, Thanh Hoa, and World Vision MFU – as part of the Financial Inclusion project funded by EU and AFD which ended last January.

This year, PFTAS provided the assessment services to the TINH THUONG ONE MEMBER LIMITED LIABILITY (TYM) Microfinance Institution. TYM started as a project of the Vietnam Women’s Union (VWU) tracing its humble roots in 1992 in Minh Phu commune, Soc Son, Hanoi, where the first 20 women were provided with financial services. In 1998, it was made as an independent department of the VWU and an income-generating unit in 2006. Finally, it was registered and licensed as a microfinance institution in August 2010. At present, TYM is operating in several provinces with a loan portfolio of $23,244,130.00 serving 84,090 clients.  Average loan size remains low at $276.42, reflecting the low-income level of the borrowers. Being one of the only two licensed microfinance institution in Vietnam, it has the burden of covering more areas and reaching out to more clients and at the same time lead the way for the other emerging institutions in the country.


The CERISE Social Performance Indicators (SPI) was used in the TYM assessment. The tool focused on four main dimensions to evaluate the institution’s adherence to social performance practices. The dimensions are: targeting and outreach; product and services; benefits to clients; and social responsibility. The tool was administered to various levels within the institution, from the decision makers, the management team and to the field staff in the branches. Clients were also included in the diagnostic exercise. The results of the assessment will provide a picture of the institution and will be the basis for adjustments and realignment.

The results showed that the institution is clear with its mandate of serving the poor especially disadvantaged women. It has not veered away from their mission and has been consistent since its formation 21 years ago. Being the first to be licensed and the only one operating north of the country can be considered as one of the main strengths of the institution. The wide range of products and services and the big operational network that ensures outreach even to the remotest areas of the country contributes to its effectiveness as a financial services provider to the poor.

PFTAS advanced in SPM Technical Assistance to its partners


The Social Performance Task Force (SPTF) just released documents from the concluded annual meeting of the task force this year in Panama. Reviewing the issues raised and discussed at the meeting, we at PFTAS can claim that we are advanced in our approach in SPM mainstreaming. We not only shared the concepts of SPM but have addressed the issues raised in the annual meeting. We have conducted assessment, facilitated strategic planning to integrate SPM in the long-term plans and have assisted our partners in initiating the mainstreaming of changes that they have identified and prioritized. This forward looking stance is our comparative edge over other consulting firms.

I would like to reprint the message of the SPTF Secretariat verbatim on the main issues discussed during the annual meeting:

1. We need a new approach to strategic planning: To many people’s surprise given the prevalence of strategic planning, it turns out that this is still an area of weakness in our industry. Two key themes arise here. Firstly, the need to integrate SPM into the very fabric of strategic planning. SPM isn’t a line item in the strategic plan – it IS the strategic plan. Unless this happens, SPM will always exist in parallel with in the organization, and we’ll always be fighting to operationalize it. The second theme is this: death to the five-year plan. In the context of rapidly changing institutions and markets, the plan should not be set in stone for five years, but a living breathing document. To facilitate this, managers need to build in time on a regular basis to take a pause from day-to-day operations and focus instead on critical self-reflection and the strategic vision.

2. We need a new approach to change management: The Universal Standards for SPM set out WHAT we need to change within our institutions to achieve our social mission, but MFIs also need guidance on HOW to manage the organizational change process. This is a real skill gap among organizations (which also relates to the gap in strategic vision among leaders). Two key ideas emerged during the meeting: organizations need to consider whether an SPM Champion and an SPM Board Committee are appropriate to their individual context. While having these functions offers visibility and accountability to the SPM agenda, they also bring the risk of marginalizing or “silo”-ing” it.

3. We need to unpack the issue of balanced returns: A range of stakeholder interests come into play when talking about the interaction between prices and profits. Firstly, we need to focus at the role of investors in terms of driving expectations. Secondly, we need to understand client preferences and outcomes. Thirdly, we need to ensure that MFIs are deliberate and skilled in the challenge of setting prices – because evidence suggests that it is not an automatic trade-off.

4. Harmonization is key: In the coming years, the SPTF will be making a big push towards harmonizing data collection and reporting processes, and aligning them to the Universal Standards. Assessors and auditors have also worked to harmonize their tools to the Universal Standards. At an institutional level, the Universal Standards can and should be used to guide and shape the work of external technical support that MFIs receive, to ensure that efforts to strengthen institutional systems and processes support rather than hinder Universal Standards compliance.
Where SPM is fully integrated into the strategic planning process, this can be facilitated.

5. We need to understand the linkages between Universal Standards compliance and improved client outcomes: This issue came up in several sessions – notably the balancing returns discussion – which absolutely need to be grounded within an understanding of what’s happening at the client level.

6. MFIs need practical guidance each step of the way: Again, the need for practical guidance to how to implement the Universal Standards came up as a strong message from members. Important here to reiterate the commitment of the SPTF to delivering on this promise and highlight progress made to date.

PFTAS will continue to provide quality and relevant technical assistance to its partners consistent with industry and global standards.