Financial Sector

IDG brings experience in creating a sound and inclusive financial sector in which small and medium enterprises, farms, and families have access for start-up, expansion and working capital, and in which banks and non-banks contribute to financial stability and inclusion.  IDG teams have worked at the level of financial sector supervisors, banks, other finance providers, and companies, helping to improve supervision and stability, expand inclusion, and identify and develop bankable business concepts in order to source loan and lease financing to start and maintain local business growth.  IDG has conducted education and training programs for the financial community on small business lending, introduced and promoted lease financing, and assisted in the establishment of Equity Funds.  IDG has also conducted analysis of legal and regulatory environments for financial sectors, with recommendations for improvements.

 

IDG promotes the use of innovative technologies to expand financial inclusion. One example of this is the use of mobile money and mobile financial services, which can allow banks and non-banks to reach poor and rural populations, particularly in areas where it is not commercially viable to open bank branches. Another innovative solution is to collaborate with community-based knowledge workers trained in financial services, who can education local populations on how to access lending and other services and who also can facilitate the establishment and fulfillment of lending agreements and other financial transactions. While these innovative solutions traditionally have been utilized by micro-finance and other non-traditional organizations, commercial banks also can be taught how to make use of these innovations.

 

To improve financial stability and financial inclusion, IDG can advise central banks on strengthening supervision and regulation of the financial sector (banks and non-banks).  This can include developing a risk-based approach to supervision and then implementing it through new criteria, processes and procedures, and through reviewing various policies regarding loan loss provisions, anti-money laundering, and others, to ensure that they ensure the integrity of the financial system without needlessly impeding provision of financial services to poor, remote and vulnerable populations.

Project Experience

Tunisia EG ICT Competitiveness ProjectIn December 2012, the IDG Consortium carried out a two-day training in SME credit risk assessment for 12 mid-level managers at Banque Internationale Arabe de Tunisie (BIAT), Tunisia's largest privately owned bank. In addition, IDG completed one month of technical assistance for Banque de Financement des Petites et Moyennes Enterprises (BFPME), the SME finance bank, with a presentation of its strategy analysis and recommendations to the CEO and senior managers. 

 

Uganda Public and Private Sector Financial Engagement Project: IDG conducted an assessment and made recommendations for how the financial sector of Uganda could better serve and reach the poor and rural households. IDG explored ways that traditional banks could better reach the poor, including using community-based knowledge workers with financial sector training to provide education and facilitate financing transactions, and also the use of mobile money capabilities to support banking relationships and make loan repayments. The assessment also looked at potential loan guarantee programs, improvements in bank supervision, and better coordination among banks, non-banks, and equity providers.

 

Azerbaijan Competitiveness and Trade Project: IDG worked with bank supervisors, commercial banks, and agricultural value chains to support increased rural and SME financing. IDG assisted the Central Bank of Azerbaijan in improving risk-based enforcement including by developing its cutting-edge Risk Assessment System (RAS) model, and by the internal processes of resource management. IDG also worked with leading commercial banks to review their credit review criteria and lending processes to streamline them and to move away from collateral-based lending toward risk- and cash-flow based lending. 

 

Deepening Financial Development in Kenya Project: IDG advised on ways to increase debt and equity mobilization, particularly at the county level. This included revisions to the legal and regulatory framework, strengthening capacity for PPPs, and improving collaboration among debt and equity providers and other organizations with a mission of promoting SME development.

 

Georgia Enterprise Support Program: In Georgia, IDG managed a large team of accounting professionals that were contracted to provide training, financial management, and advice to several hundred MSME owners and managers.

 

Georgia Enterprise Accounting Reform ProjectOn another project in Georgia, IDG provided support to the Georgia Bank Training Institute in developing and delivering courses on international accounting and audit standards to preparing bank personnel for reviewing analyzing financial statements prepared to IAS.

 

Armenia Enterprise Accounting Reform ProjectIn Armenia, IDG assisted the newly created Association of Accountants and Auditors of Armenia (AAAA) in rolling out International Accounting Standards for the private sector across the country.  IDG worked closely with local financial professionals, the Armenian Ministry of Finance, and the Armenian Parliament to enact reforms that dramatically changed financial management and dialog practices in Armenia’s emerging market economy. Working with local financial professionals, IDG experts developed a comprehensive training, certification, and licensing program based on internationally recognized curriculum, which enabled these professionals to provide services to other businesses in need of learning the new standards. IDG also created a new self-regulatory organization, the Armenia Association of Accountants and Auditors (AAAA), to serve as a certification and regulatory body for Armenia financial professionals.

 

Reconstruction Finance Facility Project: IDG supported the revitalization of the Bosnian banking system and the private sector in this USAID SME financing initiative. Implemented with the Barents Group, this project strengthened local bank loan origination, credit analysis, and loan administration skills with the goal of improving SME access to credit in Bosnia. The large number of borrowers and difficult economic climate required creative approaches to managing arrears. The project incorporated unique environmental impact assessments to the loan appraisal process.

 

Franchise Finance ProjectIn Russia, IDG collaborated with NatWest Bank, designed and implemented a training program for bankers in Russia. The goal of the program was to assist Russian banks in better understanding financing options for small businesses, in particular financing for franchises. Bankers learned how to develop a department and product specifically to be able offer finance to franchise operators.

 

Support to the South Africa Office of Development Credit Assistance ProjectIn South Africa, the IDG Consortium assisted the USAID African Housing and Infrastructure Facility at all levels of the process of structuring potential transactions in support of investments. Issues addressed include: warehousing; tenor; securitization; mezzanine; junior or senior debt; general obligation bonds; revenue bonds and other credit enhancements. The IDG team appraises credit worthiness of borrowers and credit assessment capabilities of potential investors with whom USAID would work.