IEG Public Sector Evaluation, 2014, Project Performance, Assessment Report Ghana Rural Financial Services Project, Impact evaluation

2.1 ENABLING ENVIRONMENT

2.1.10. Improving linkages between formal and informal economy

Recommendation: 3. In designing programmes on the IE, pay attention to context, including country geographic, socio-cultural and economic differences. Actions on establishing linkages may work well in one context but not another. Innovations on linkages between formal and informal entities should be vetted through pilot and stakeholder consultations to ensure their suitability for the local context. Options should then be tested in a new context before scaling up. This is necessary to make public/private investments into strengthening the enabling environment more successful in the whole country.

References: Independent Evaluation Group - IEG Public Sector Evaluation, 2014, Project Performance, Assessment Report Ghana Rural Financial Services Project, Impact evaluation, World Bank, Washington DC.

Evidence sample: the evaluation noted that specific project design features (in this case its linkage program between the formal and informal economy) may work well in one context, but not in another.  Innovations should be vetted through pilot and stakeholder consultations to ensure their suitability for the local context.

Conducting a pilot for the formal/informal linkage program would have highlighted implementation challenges, which could then were addressed before scaling up. Due to its implementation challenges the component had to be revised at mid-term review to narrow its focus to a smaller number of rural commercial banks and to support them in developing business plans to help them form linkages as well as to rationalize the type of trainings, group selection criteria etc. This was costly and inefficient.

Creating linkages between formal and informal institutions was an innovative idea, inspired by a similar program in India. The evaluation stated, however, that according to the project this was included as an “afterthought” without testing its suitability for the local context through a pilot or through stakeholder consultations.

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2.3 Direct actions in communities

2.3.5 Micro finance

Recommendation: 2. Consider that different and adapted types of micro finance services may need to be designed in line with specific socio-cultural, political contexts. Verify the specific situation prior to planning new projects and avoid simple replication of methods used in other settings. Develop appropriate strategies for each situation in advance.

References: Independent Evaluation Group - IEG Public Sector Evaluation, 2014, Project Performance, Assessment Report Ghana Rural Financial Services Project, Impact evaluation, World Bank, Washington DC.

Evidence sample: The evaluation noted that widening financial intermediation by reaching new markets or sectors requires appropriate strategies or innovative products that address these markets. The project was expected to increase outreach to agriculture and the lagging rural regions but the design did not include any strategies for doing so either through innovative products or any region specific approaches that addressed the risks of serving/ developing these markets.

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2.3 Direct actions in communities

2.3.5 Micro finance

Recommendation: 3. When supporting the development of micro finance systems, verify if introduction of any of the services will compete for the same market segment as existing service providers. If this is the case, consider redesigning the project to take this into account.

References: Independent Evaluation Group - IEG Public Sector Evaluation, 2014, Project Performance, Assessment Report Ghana Rural Financial Services Project, Impact evaluation, World Bank, Washington DC.

Evidence sample: It was found in the evaluation that informal community based organisations and the formal Rural and Community Banks both competed for the same market segment and were not in complementary roles was not taken into consideration.

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2.3 Direct actions in communities

2.3.5 Micro finance

Recommendation: 12. Promote training on financial education of people dependent on the IE, including on accessing and using micro finance and other financial services to obtain the most economic benefits. Specifically this may include support the training of micro finance and other financial service providers to strengthen their capacities to provide effective services to people dependent on the IE. For example:

• Customer care
• Treasury and credit management
• Internal control
• Check clearing

References: Independent Evaluation Group - IEG Public Sector Evaluation, 2014, Project Performance, Assessment Report Ghana Rural Financial Services Project, Impact evaluation, World Bank, Washington DC.

Evidence sample: The evaluation found that strategic business plans were developed for 15 selected rural and community banks and three training manuals were developed. Ten rural and community banks reported putting their plans into action with a resultant increase in the number of micro-finance clients and size of micro-finance portfolios. All participating rural and community banks became operationally self-sufficient. Overall some 8,000 rural and community bank staff were provided training in customer care, treasury and credit management, anti-money laundering, internal controls and check clearing. Some 468 Micro-Finance Institutions received training, as compared to a target of 500, of which about 348 received training more than once. In addition, 17 good practice training manuals were developed that could be used by future generations of trainers.