Strategy for
Microfinance Introduction Strømme Foundation (SF) is a Norwegian development organisation with the vision of a world free from poverty and the mission to eradicate poverty through interventions in Education, Microfinance, Strengthening Civil Society and Social Protection. As articulated in SF’s Development Policy, “Enhanced access to sustainable income sources” is one of SF’s four Thematic Goals. SF believes that, together, the four Thematic Goals described in our Development Policy enhance the opportunities of the poor and vulnerable to significantly increase their chances of a better life, and thus they contribute toward our vision of a world free from poverty. The Microfinance interventions in SF are organised/run under a separate company; Strømme MicroFinance AS (SMF AS), a registered company limited by shares fully owned by SF. Accordingly, SMF AS shares SF’s vision and mission, as well as SF’s core values; Human dignity, Justice and Solidarity. SMF AS’ operations are led by the Microfinance Manager, who reports to the International Director of Strømme Foundation.
Approach The Microfinance Strategy is based on the Strømme Foundation Development Policy, which provides broader guidelines for SF’s engagement in development work. Accordingly, the Microfinance Strategy subscribes to the Rights-Based Approach with its emphasis on advocacy, capacity building and service delivery (or assets transfer) where deemed necessary. The strategy also subscribes to SF’s Cross-Cutting Issues (Gender, Environmental Sustainability, and Inclusion). In line with our Development Policy SMF AS acknowledges that poverty denies billions of poor people access to formal financial services. In the absence of access to formal financial services, the poor are left with no alternative but to rely on informal financial services which increase their risk of being trapped in an inescapable vicious circle of deep poverty and deprivation of rights. For example, loans can be acquired from moneylenders, saving can take place by putting money in the mattress, and remittances are done by physically carrying money from the urban areas back to the villages. SF therefore believes in the decisive role of an inclusive financial system in supporting our target group to fight poverty. We acknowledge that conventional microfinance as carried out through Microfinance Institutions (MFIs) play a crucial role in reaching the majority of poor people – especially in the rural areas – that are not connected to formal financial service providers. We also acknowledge the limitations of conventional microfinance in reaching the poorest of the poor due to the challenges of achieving and maintaining financial sustainability. Thus, the Microfinance Strategy distinguishes itself in its deliberate focus on the poor. Accordingly, SMF AS’ microfinance services will be provided through two main interventions, namely Institutional Microfinance and 1 Community Managed Microfinance (CMMF) .
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Community Managed Microfinance is an overarching term and covers the various community based microfinance interventions in Strømme Foundation, such as “Saving for Change” in West Africa, “Community Based Organisations” in Sri Lanka, “People’s Organisations” in Bangladesh, and “Community Managed Microfinance” in East Africa.
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