CURRICULUM

FIPED consists of core lectures, applied cases, and practical exercises. FIPED’s pedagogy is tailored to its executive audience so that much of the learning that takes place is through the interaction of participants, who work in groups to complete and present a series of case studies illustrating new management and finance techniques applicable to the daily operations of financial institutions. Participants also undertake a structured series of intense negotiations via a set of role-playing scenarios. In addition, all participants operate the virtual financial institution SymBanc™ as they navigate system dynamics simulations of real policy and operational environments. Click here to try the free simulation, SymBanc™.

The curriculum covers:

Policy Framework and Environment

• Macroeconomic context of MSME finance
  
• Role and size of the informal economy
  
• Common misconceptions about lending to MSMEs
  
• Government and donor market distortions
  
• Politics of MSME finance
  
• Supervision and regulation of MSME financial institutions
  
• MSME impact evaluation

Institutional Models

• Alternative institutional models for MSME finance (regulated financial institutions, membership-based institutions, village banks, branchless banking, and NGOs)
  
• Transformation and commercialization of MSME financial institutions

Operations

• Design and pricing of savings and credit instruments
  
• Provision of transfer and payment services
  
• Provision of business development services
  
• Assessment of subsidies and the concept of smart subsidies
  
• Identification and mitigation of credit risks in loan portfolio management
  
• Identification and mitigation of financial risks in funds management
  
• Perpetration and detection of fraud
  
• Management information systems (MIS) and information technology (IT)
  
• Non-conventional financing of microfinance institutions
  
• Negotiating to create value, claim value, and maintain relationships

Forms of Finance

• Working capital loans
  
• Lending for seasonal or cyclical businesses
  
• Lending for business modernization and expansion
  
• Lending for investment in housing and education
  
• Financing start-up businesses
  
• Venture capital
  
• Trade finance

Financial Tools

• Loan assessment
  
• Financial statement analysis
  
• Evaluation and management of collateral
  
• Interest rate policies and calculations
  
• Breakeven calculations and sustainability analysis
  
• Financial performance ratios
  
• Credit scoring

View an example of what the program schedule will be like.

Examples of Case Studies used in the program:

The Growth of the Grameen Bank
This case tells the story of how Grameen Bank of Bangladesh grew from a small local experiment into a major force in Bangladesh serving more than 60,000 villages. It describes the stages of that growth—from a small organization staffed by volunteers to a sophisticated one with more than 17,000 employees. It tracks Grameen from its origins as a part of the state-owned bank system in Bangladesh to its role as a major financial organization, with special attention to the forms of financing which made its growth possible and management approaches employed to ensure that high quality customer service and reliable loan repayment continued as Grameen expanded its reach. Grameen Bank’s founder, Muhammad Yunus, became internationally-known for his management of the organization; Yunus became among the best-known of what is said to be a new breed of leader, a "social entrepreneur" who sought to combine sound financial practices and income generation with social objectives. In 2006, The Norwegian Nobel Committee awarded the Nobel Peace Prize divided into two equal parts, to Muhammad Yunus and Grameen Bank for their efforts to create economic and social development from below. Read about the award at http://nobelpeaceprize.org/eng_lau_announce2006.html.

Membership-Based Savings: Women's Thrift Coops in Andhra Pradesh
After more than 10 years of operation, the Women's Thrift Cooperatives (WTCs) in the impoverished Karimnagar and Warangal districts of Andhra Pradesh are an established part of the lives of their women members. As such they represent opportunities and challenges for the women and the non-governmental organization, the Cooperative Development Foundation (CDF), which planted the seed for their growth and has since supported them with technical assistance. The cooperatives are savings institutions that also lend money to their members and they rely solely on the spread between the interest they pay on the savings and the interest they earn on their loans to support their operations. In recent years the fund utilization of the thrifts has decreased, leading to some concern about their financial sustainability. The members and CDF are attempting to do something about this by starting a dairy cooperative to sell milk in the city of Warangal - the women will use the proceeds from loans from the thrifts to finance their milk purchases. There is also concern that the thrifts' accounting practices are disguising some loans in default, resulting in an overly rosy financial picture. CDF and the leadership of the cooperatives have to work out how to get the thrifts to recognize the losses that the defaults constitute without undermining their faith in the thrifts. And finally, there is pressure on the CDF from the leadership themselves to relax its rule, which the thrifts freely adopted, that prohibits leadership participation in electoral politics. The thrifts have provided a fertile training ground for women to become involved in the public life of the village, and they are now in demand as candidates for political office, given the early 1990s Indian constitutional amendments that set aside one-third of all local council seats for women. How the leadership goes forward on all these issues will determine the future of the thrifts as viable financial institutions and engines of economic development.

BlueOrchard Finance
Microfinance is a field that has received increasing attention over the years in the development community. It consists of the delivery of financial services to people excluded from traditional banking institutions. For many years, most work was done on issues like credit and saving methodologies. However, the emphasis has switched in recent years to institutional sustainability to maximize impact through the commercialization of microfinance. A key component of microfinance commercialization is the mobilization of funds from money and capital markets, to decrease dependency on donors and governments and to enhance the financial intermediation of microfinance institutions. One of the most innovative ways to mobilize funds for microfinance lending is through the establishment of microfinance funds that channel investments from capital markets to microfinance institutions either as loans, guarantees or – less often - equity. BlueOrchard Finance has been a major actor in this arena through the management of the Dexia Microcredit Fund (DMCF). This case traces the evolution of DMCF and highlights the many obstacles its managers have faced in trying to connect microfinance with capital markets. Perceptions and expectations of potential fund investors and borrowers, transaction costs, deals standardization, competition, foreign exchange risk, and market liquidity are issues that are tackled throughout the case in order to stress challenges in the further development of microfinance funds.

Mr. Nam's Dilemma
In 2000, Vietnam passed the Enterprise Law to spur private sector development and facilitate its transition from a centrally-planned to a market economy.  The Enterprise Law changed the paradigm for private business in Vietnam by making business registration a legal right, rather than a privilege. Between 2000-2005, the number of private enterprises increased by more than 100%, adding over 2.5 million jobs to Vietnam’s labor market. Despite this success, Vietnam’s private sector remained undercapitalized, having only 12 companies with over $33 million in total capital.  This case study follows Mr. Nam, a successful Vietnamese furniture manufacturer trying to identify sources of funding to expand his firm, which was established under the Enterprise Law. In the past, Mr. Nam managed to finance business expansion from retained earning and informal credit, however continued expansion required Mr. Nam to identify “arm’s length” financing.  In this search, Mr. Nam encountered two fundamental problems.  First, the banking sector, still under state influence, did not have b incentives to lend to the private sector. Second, private banks and other sources of capital require Mr. Nam to submit his business to an independent audit, which would certainly uncover many business practices which were technically illegal – and essential to competitiveness. This case study encourages the consideration of the social cost of weak regulatory environments, poorly designed economic laws, and the relationship between these conditions and the production of (undesirable) commercial norms.

MSME Institutional Models and Replication: Where Latin America Meets Brooklyn
ACCION International, well-known for its successful "microlending" to small entrepreneurs in Latin America, sets out to replicate is success among the poor in the United States. But when the major international non-profit organization sets up shop in Brooklyn, it finds it difficult to find customers. That difficulty does not appear to reflect a lack of interest in entrepreneurship. Illegal loan sharks, among others, are doing a brisk business among the populations which ACCION has targeted. This case focuses on marketing issues faced by non-profit managers, including the assessment of competition, attitudes of potential customers, and the challenges of replicating successful programs in new venues.