AFIRMA Quarterly Report: Project Year 5, Quarter 2: January – March 2009

The project, implemented by Development Alternatives, Inc. (DAI), focuses on increasing access to a range of financial services and contributing to local economic development. AFIRMA's goal is to contribute to the development of a dynamic, effective microfinance sector in Mexico that provides sustainable financial services to under-served urban and rural market segments. In recent quarters, AFIRMA has focused on strategic sector-wide initiatives, initiatives with public sector institutions, and initiatives at the frontier of access to financial services, particularly in rural and agricultural markets. AFIRMA's microfinance institution (MFI) partners have seen significant growth, with over 1.4 million active borrowers and over 1 million savers. AFIRMA has also continued to support the redesign or development of financial products, including savings products, with six partners now offering savings accounts. AFIRMA has worked with 9 of Mexico's leading universities to build the cross-institutional working group on higher education in microfinance through Mexico's Microfinance University Network. The project has also continued work in rural and agricultural finance, developing new experience with agricultural microfinance in Mexico and a pilot value chain approach to expanding access to financial services. In addition, AFIRMA has begun analysis of value chains related to key productive activities in two biologically sensitive areas: the Upper Gulf of California and Marismas Nacionales. The analysis aims to identify constraints and opportunities to promote productive activities that mitigate previously identified biodiversity threats in these regions. AFIRMA is working in collaboration with the National Commission for Natural Protected Areas – CONANP – and local stakeholders in each region. AFIRMA has also continued collaboration with the Secretary of the Economy microfinance program PRONAFIM, as well as FIRA, to strengthen FIRA's approach to microfinance. Within FIRA, this has resulted in the establishment of a specialized microfinance unit that will have coordination with and representation from each of FIRA's areas. The AFIRMA Project's scope of work and year five work plan outline five distinct, interrelated tasks: strengthening the institutional capacity of MFIs, developing the local, commercially-based MFI support services industry, developing innovative products and technologies that expand access to rural financial services, strengthening the capacity of the CNBV and federation committees to supervise popular finance, and improving the enabling environment for the microfinance industry. Task 1 – Strengthen MFI Capacity – has wrapped up most technical assistance to individual MFIs, with a few initiatives continuing into 2009. AFIRMA will continue to provide limited support on strategic issues to these partners. The final initiatives under Task 1 are outlined in Table 1 – AFIRMA primary support of partner MFIs, Year 4. Overall, AFIRMA's efforts aim to contribute to the development of a dynamic, effective microfinance sector in Mexico that provides sustainable financial services to under-served urban and rural market segments, helping them manage risk and contribute to local economic growth.