NMI seeks to support Emerging MFIs and help them to grow and become sustainable by providing technical assistance through the NMI PA Facility. Because Emerging MFIs frequently need substantial institutional and human capacity building to become viable and sustainable institutions, the provision of targeted technical assistance is crucial.
As a general matter, the NMI PA Facility complements the investment activities of the NMI Frontier Fund. The principal objective of the Facility is to provide professional and technical assistance to Emerging MFIs in which the Frontier Fund invests directly. Under some circumstance, however, the Facility can also be utilized to provide technical support to Emerging MFIs through technical assistance facilities associated with Portfolio MIVs of the NMI Funds.
Technical assistance provided through the NMI PA Facility generally seeks to assure that Emerging MFIs and their management teams will be able to execute their business plans successfully, meet their growth and expansion targets, achieve their projected development impacts, and ultimately achieve financial and organizational sustainability. In this regard, the NMI PA Facility can be utilized to enhance Emerging MFI institutional and human capacities in the following Target Areas:
- Marketing and products
- Management information systems
- Improving operational efficiency
- Risk management
- Financial management and internal controls
- Human resources management
- Strategic planning and management of growth
- Legal and regulatory issues, including with respect to the transformation from NGO to private sector or regulated status
- Social performance management training and capacity building
- Capital markets and investor relations
Box 1 sets forth the Guiding Principles for managing the NMI PA Facility and Box 2 contains the Implementation Process for NMI PA Facility Projects.
The NMI PA Facility operates and is funded under a grant from NORAD (the Norwegian Development Agency) and is part of the activities conducted by NMI AS, the General Partner for the NMI Funds. NMI AS manages the Facility in conjunction with the NMI PA Facility Steering Committee (the "Steering Committee"). The Steering Committee is composed of representatives of NORAD, Norfund and the private sector investors in the NMI Funds. The Steering Committee met several times in 2010 and approved and adopted Policies and Guidelines for managing the NMI PA Facility. In addition, Finance in Motion, a consulting firm with specialized expertise and experience in managing technical assistance facilities in the microfinance industry, was retained to provide expert guidance and advice to NMI and the Steering Committee with respect to the establishment and initial operations of the Facility.
In October of 2010, the Steering Committee approved an Initial Project Proposal for a "Comprehensive Capacity Building" for Belstar Investment and Finance Private Limited ("Belstar"), an MFI in India in which the NMI Frontier Fund made a direct investment. This Project Proposal was prepared after a Needs Assessment consisting of a two day visit to Belstar. The Project will focus on building institutional and human capacities within Belstar in the areas of risk and asset-liability management, internal audit and controls, credit process re-engineering, Responsible Finance, and human resource management. The Project is expected to begin in mid-2011 and to last for about 18 months. The Project will be co-sponsored by NMI, the International Finance Corporation ("IFC"), and Swedfund (the Swedish Development Finance Institution). IFC and Swedfund are also investors in Belstar.
During December of 2010, NMI also visited Uganda Finance Trust and Kenya Women Finance Trust to conduct Needs Assessments for technical assistance projects. Three projects were under preparation for these MFIs at the end of 2010. It is expected that these projects will be presented to the NMI PA Facility Steering Committee and initiated in the first half of 2011.