Synthesis Documents

Synergies through Linkages: Who profits from linking micro-finance and BDS? Sievers and Vandenberg, 2007

    This article in World Development, posted with permission, takes a fresh look at how finance and BDS can be linked without jeopardizing the effectiveness of either service. The central hypothesis is that MSEs in developing countries can benefit from linking finance and BDS. It is recognized, however, that this will only happen if the providers of finance and BDS also benefit from the linkage. The paper considers, therefore, the costs and benefits of linking for three main groups of actors:

    · MSEs;
    · financial service providers; and
    · BDS providers.

    The paper reviews 25 examples of linked provision, and summarises the main costs and benefits for the actors involved. It finds that there can be major benefits, especially for those MSEs that gain access to additional services that are essential for their growth. In addition, a six-part typology of linked service provision is proposed, based on whether the linkage is voluntary or compulsory for the client and whether delivery is provided through one unified department of an organization, through parallel departments, or through separate partner organizations.

    The World Development Paper is a much-updated version of an ILO Working Paper published in 2004, which was posted here before (and which has been consistently among the most popular entries on this site, in terms of page views). That Paper was presented at the Annual PSD Seminar in 2003, and the presentation is also included on the right hand side. Similarly, a French-language synthesis of the 2004 Paper is also posted on the right hand side.

    Note that the Grameen Foundation has published a Paper with a similar theme, which you can download from here.

    Associated Activities and Documents
    »Linking BDS to Financial Services: The case of Financiera Solucion in Peru, de Ruijter de Wildt/ILO, 2004
    Synthesis Documents
    »Combining micro-finance and BDS, by Kathleen Stack, 2002
    »Microfinance and BDS in Europe: A Guide to Good Practices, 2007