IFC initiative boosts corporate governance at microfinance lenders

Dozens of board members and senior executives from Vietnamese microfinance institutions gathered in the Mekong Delta city of Can Tho for a two-day workshop to address common governance challenges.

Globally, regulators and investors have been supporting company efforts to demonstrate better governance, such as having a robust board, accountable senior management, and effective internal control and risk management practices.

Microfinance lenders play a critical role in providing financial services to the low-income population

“IFC believes supporting Vietnamese microfinance institutions in strengthening their corporate governance practices will boost their capacity to provide better financial services and expand lending,” said Kyle Kelhofer, IFC country manager for Vietnam, Cambodia, and Lao People’s Democratic Republic. “This will ensure sustainable growth for the institutions and benefit their key clients—millions of micro-entrepreneurs, primarily women and low-income households—contributing to poverty reduction in the country.”

In Vietnam, only one in five adults have access to formal financial services and only 8 per cent of them have savings in formal institutions. Microfinance lenders play a critical role in providing financial services to the low-income population, serving an estimated 10 million people, many of whom are women, according to IFC studies.

The workshop, which ends today, helps participants examine their institutions’ key governance functions, such as the board, compliance, and internal audit, and develop an action plan for improvements. The workshop is conducted by IFC in partnership with Citi Foundation and Vietnam Microfinance Working Group, a leading industry forum for microfinance practitioners to share knowledge and strengthen the sector’s voice in policymaking. More than 30 of its members are microfinance institutions offering financial services.

“The Vietnamese microfinance sector is evolving with many small, non-profit operators hoping to transition into bigger, commercial-oriented entities,” said Nguyen Thi Tuyet Mai, managing director of Vietnam Microfinance Working Group. “Implementing corporate governance reforms to enhance efficiency, transparency, and risk management will be paramount to their successful transitions.”

This initiative is part of IFC’s Vietnam Microfinance Programme and is supported by the State Secretariat for Economic Affairs of Switzerland with the aim of strengthening industrial capacity and transparency as well as boosting microfinance institutions’ ability to increase sustainable and responsible financial access.

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