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
