PlaNet Finance Case Study

Introduction
PlaNet Finance is an international non-governmental organization whose goal is to use the potential of the Internet for the development of microfinance. PlaNet Finance supports organizations offering financial services to the very poor or working towards the development and promotion of microfinance in developing countries through the activities of its specialized departments. These include PlaNet Rating, PlaNet Library, PlaNet University, PlaNet Systems, PlaNet Ring, PlaNet Research, PlaNet Institution Building, PlaNet Fund, and the international network. These will be discussed in a bit more detail later in the case. PlaNet Finance uses the Internet both as a platform on which to offer its services to Microfinance Institutions (MFIs), NGOs, and other actors involved in microfinance and as a working tool for its experts around the globe.

Services
PlaNet Finance offers its services to NGOs, MFIs, financial backers, and public authorities with the following objectives: 1) to evaluate and rate MFIs in order to improve their management and to facilitate their access to financial markets, 2) to expose MFIs and advising agencies to sector information such as best practices, case studies, and management tools, 3) to train practitioners in microcredit, 4) to connect MFIs to the rest of the world by leveraging technologies such as the Internet, and 5) to evaluate the impact of microfinance on poverty. International experts specializing in microfinance and microenterprise provide the services. A number of these experts work directly with clients in the field. Most have worked in organizations such as the UN, the Word Bank, Regional Development Banks, and micro finance institutions in the field.

Specialized Departments

• PlaNet Rating
  PlaNet Finance offers evaluation and rating services by experts from the PlaNet Rating department for financial institutions, microfinance institutions, and financial backers. The services are offered via four main products. First, the GIRAFE Evaluation Certification is an evaluation and rating instrument designed and developed by PlaNet Finance with a view toward evaluating and understanding the performance of MFIs. Its goal is to promote an international standard of quality that will gain the confidence of bankers and financial backers who decide whether or not to invest in an institution. Second, training and certification on the GIRAFE method is available from PlaNet Rating. Third, development of self-evaluation and self-scoring tools for MFIs, a self-scoring module that proposes analyses and solutions adapted to the particular problems of MFIs, are currently being developed. Finally, the Impact Knowledge Management Program is a new approach to assess the impact of the activities of MFIs on the very poor. Its objectives include 1) to assess the socio-economic impact and institutional performance of MFIs, 2) to improve the socio-economic impact and institutional performance of MFIs based on the information collected, and 3) to provide information to financial backers about the impact of MFIs. An IKM pilot project began in April 2000 in Benin and included three MFIs.
  
  
• PlaNet Library
  PlaNet Library is the forum for the exchange of knowledge and experience of microfinance within PlaNet Finance. It is based on the sharing of expertise of different actors of microfinance, as well as of all available information in the field. The use of the Internet as a platform for diffusion guarantees the greatest possible dissemination.
  
  
• PlaNet University
  PlaNet University is PlaNet Finance's center for training in microfinance and in the New Technologies of Information and Communication (NTIC). Its goal is large-scale training of those involved in microfinance, such as local training centers, political decision makers, financial backers, and private users. It aims to achieve this goal through the provision of three services: 1) PlaNet University on-line, which is an internet-based training center, which offers ten different training programs and is available in both French and English; 2) PlaNet University off-line, which has the objective of facilitating access to databases and other information support systems for microfinance by creating a CD-Rom of information and training materials which will be available in June of 2001;, and 3) PlaNet University in the field, which offers training seminars on location.
  
  
• PlaNet Institution-Building
  PlaNet Institution-Building is a new entity of PlaNet Finance that proposes assistance to governments to develop the microfinance sector where it does not meet local needs.
  
  
• PlaNet Research
  PlaNet Research is the research department of PlaNet Finance. It is made up of a permanent team of researchers specializing in the field of microfinance who are called upon for research themes developed by the department.
  
  
• PlaNet Systems
  Through PlaNet Systems, PlaNet Finance offers support in the installation and use of information technologies to institutions that are members of its network, especially intended for MFIs and NGOs developing micro finance programs. It offers assistance via computer equipment, Internet access, e-mail, domain name, web pages and publicity.
  
  
• PlaNet Ring
  PlaNet Ring is the virtual ring that makes possible the creation a set of virtual microfinance networks and informs financial backers by connecting MFIs via the web.
  
  
• PlaNet Fund
  PlaNet fund is an international project for refinancing MFIs that aims at assisting these institutions in their development. PlaNet Fund will serve as an intermediary between capital markets in developed countries and MFIs in developing countries.

The Need
India currently boasts a total of more than 500 microfinance institutions. In rural areas, 36% (210m people) do not have access to banks, and only 1m households have received access to microcredit from MFIs. Thus, there is a vast unmet demand for credit in both the urban and rural areas. Additionally, the current microfinance climate is characterized by a lack of information, lack of communication, and inefficient system of financing. Thus, microfinance in India desperately needs to be organized.

The Project: A National Database on Microfinance in India
The national database on microfinance in India would centralize all information and resources on microfinance and would create a cost effective means of communicating and sharing knowledge. Thus, it would create an efficient market by serving three specific functions: acting as a microfinance portal, a microfinance research center, and a business development tool.

Microfinance Portal
As a portal, the project would serve as an institution database and would contain statistics, events, research work, government policy, and information manuals. It would also provide links to other microfinance websites, such as MFIs, rural banks, NGOs, government, donors, and experts. Finally, it would also provide links to local business development services, such as microfinance training centers.

Microfinance Research Center
This center would provide research on a variety of topics, including the following: for NGOs, MFIs, rural banks, and self-help groups such areas as policies and practices, present and past sources of financing, and rating; for donors, financial statements, an overview of present and past projects financed, and criteria used for evaluation; for government agencies, regulatory policy, taxes and restrictions, incentives offered, and registration procedure; and for experts, areas of interest, past and present projects, and location they would be willing to work in.

Business Development Tool
The improved channels of communication will create: 1) a more efficient means of creating business linkages between banks, MFIs, SHGs, NGOs, and government agencies; 2) a cost-effective method for institutions to share and discuss best practices; 3) a more efficient means of organizing joint training courses; 4) a consensus on regulatory issues via opinion polls and forums; 5) comprehensive and up-to-date information for international and local investors; and 6) an efficient means of communication between microfinance practitioners and researchers.

Project Objectives
The project in the short-term aims to facilitate the practice of microfinance by providing in-depth and up-to-date information on the entire microfinance sector, develop an efficient method of creating business linkages among banks, MFIs, SHGs, NGOs, donors, and government agencies, create a fast and cost-effective channel of communication, track the progress of the microfinance sector, and bring all microfinance stakeholders together under one umbrella. It also plans on commencing efforts to create a road map for financial self-sustenance of the project's initiative and management.

In the long-term, it aims to develop the microfinance industry as a whole by facilitating the entry of new MFIs into the market, allowing existing MFIs to become sustainable faster, increasing the number of micro-entrepreneurs, playing a catalytic role to encourage a proactive donor and government policy, and building a linkage between microfinance and other poverty-fighting initiatives. It also aims to consolidate the road map for financial self-sustenance of the project's initiative and management.

Scalability
The project's scalability will be investigated carefully during the project's second year in operation.

Obstacles
The two largest existing obstacles are the lack of a revenue stream and finding the management necessary to guide such a project to successful completion.

For more Information Contact:
Shibani Sachdeva
Head India Operations, PlaNet Finance
Email: ssachdeva@planetfinance.org
Web: www.planetfinance.org