Apex study of the Asociacion de Grupos Solidarios de Colombia

Established in 1985, AGS coordinates the activities of 17 private voluntary organizations (PVO"s) that implement microenterprise development programs in Colombia, using the ACCION methodology. AGS has led its members toward an expansive, entrepreneurial approach to achieve program sustainability, with significant impacts on poverty. AGS services have concentrated on developing an efficient credit methodology, strengthening managerial capacity, and providing financial resources for programs. The network has been very successful in reaching large numbers of beneficiaries rapidly and at a very low cost. In 7 years of operations, it has reached 40,000 microentrepreneurs and disbursed 185,000 loans with a total value of U.S. $28 million; the average loan size is $150. Repayment rates for the programs are kept above 90%, while the cost per dollar loaned is kept below $0.05. The success of AGS demonstrates that an apex organization can be an excellent vehicle for institutional strengthening of development organizations, program expansion, and channeling of financial resources. It also demonstrates that an apex can play an instrumental role in accelerating the learning process in microenterprise development and in giving direction, visibility, and legitimacy to the work of its members. The experience of AGS offers useful lessons for replicability -- among them, the need for specialization. An apex organization can best serve and realize economies of scale when created around organizations that share common objectives, programs, and methodologies. Serving a multiplicity of programs and priorities only disperses the efforts, resources, and effectiveness of an apex organization. Also, to be effective, an apex organization should limit the number of members to those with the highest potential, and avoid a multiplicity of partners that do not cumulate into a cohesive program with wide scope. Well-defined eligibility criteria are mandatory; commitment to self- sufficiency and scale-up (i.e., expansion) are key among these criteria. When the implementing organizations are inexperienced in managing credit programs, administratively weak, or when the methodologies being introduced are new, the apex organization must initially concentrate its efforts on strengthening the management capacity of the implementing organizations. Scaling-up cannot be achieved without solid administrative structures in the implementing organizations. (Author abstract)