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Opening Markets Through Strategic Partnerships: An Analysis of the Alliance Between FIE and ProMujer

In response to the Bolivian debt crisis of 2001, innovative regulations allowed regulated finance companies or banks to form alliances with unregulated MFIs. This report describes the first alliance formed under this new regulation, created between one of Bolivia’s largest regulated private financial funds, Fomento a Initiativas Economicas (FIE) and the second largest NGO MFI in Bolivia, Programa para la Mujer (ProMujer).

Under the four year agreement FIE set up and staffed a separate teller window in the offices of ProMujer, offering services only for deposit, transfer, and bill payment. In order to manage the risk for each entity, the agreement stipulated that FIE would not offer loans at these windows and provided an exit strategy in the event that the venture did not prove commercially sustainable for FIE. Also all of the start-up costs for the plan (building teller windows, paying consultants, etc) were funded by donors.

The motivation behind the alliance for ProMujer was the vision of creating a more comprehensive service for its clients by giving them safe and convenient savings deposit and bill payment services at the same locations where they received their loans. At the same time FIE was interested in the alliance because of its potential to expand the client base of FIE and provide a low-cost source of funds to capitalize FIE’s loan portfolio.

External factors that made this alliance possible include:

A supportive legal framework
An intensely competitive microfinance environment that drives MFIs to innovate
Clear client demands for better products and services
Donor willingness to fund the start-up costs of the alliance

Internal factors that made this alliance possible include:

The commitment of senior management
Good communication between senior managers
A substantial existing deposit base among ProMujer clients
Solid institutional reputations in the market

The major findings of the report are:

A detailed contract and business plan that outline roles and responsibilities are essential
Management commitment and trust between partners are imperative
Training and internal marketing are critical for the buy-in of the staff
Both institutions should be directly invested in the alliance and share responsibility its design and implementation
A regulatory framework must exist that permits (or does not prohibit) such an alliance

This report offers insight into the types of partners best suited for an alliance, the importance of establishing a clear but flexible structure for an alliance, the key role of communications in forming and implementing an alliance, the positive and negative influences of donor involvement, and the dynamic nature of alliances themselves. The primary conclusion of this report is that under the right conditions, alliances such as the one between FIE and ProMujer can be replicated in a sustainable way.