Selection Criteria

Identify the development goals which are in line with the focus of the millennium development initiatives and other international development guidelines. Specify financial indicators and social impact measurements which are proper and practical to monitor.  Dutch Microfund closely monitor progress and improve strategy and operation towards the identified development results.

Investment fund selection criteria

Politically independent to ensure the decisions are made on technical grounds

Balance shareholder’s interests and the fund’s objective

Investment vehicle should fit in the investor risk/return profile

Risks and should be well defined and minimized

Fund management teams should have sophisticated tracking record

Country/Region analysis is based on a realistic assessment of the local microfinance development

Loans to MFIs should be distributed based on the cash flow patterns and needs of MFIs

Monitors MFIs by well defined performance targets

Social return should be embed  in the fund’s development strategy

Investments should benefit the local community, both socially and environmentally

Regularly monitor and visit MFIs to see whether they are keeping improving the operation systems

Applying innovation approaches to expand the microfinance initiatives in a sustainable manner

Funding of MFIs based on clear selection criteria

Potential for outreach

The MFI should has strong potential and intention to achieve scale in frontier areas
Current quality of outreach (e.g. percentage of female borrowers)
Commitment to serve the hard to reach population
A clear business model that shows potential for financial sustainability

Management quality

Experienced management team and a well defined management structure
Clear operation procedures and responsibilities division
Active board on strategy formulation and planning
Development strategy should be in line with the local social & environmental

Portfolio quality

Fine designed products
Sustainable outreach
Healthy cash flow pattern
Effective client monitoring
Clients training and education
Regularly monitor the loan quality
Affordable price to address the critical needs