The microfinance sector faces many challenges in the lack of availability of professional training for the staff of the microfinance institutions (MFIs) across the country. In response to this need, the Association of Microfinance Institution in Timor-Leste (AMFITIL) organized a series of capacity building workshops with the help of USAID funding. Trainings aim to build and improve the professional skills of the microfinance managers in AMFITIL’s umbrella group. AMFITIL contracted Consultative Group to Assist the Poor (CGAP) certified EDA Rural Systems to deliver these workshops.

The first workshop was held in June and was attended by 25 microfinance managers who learned how to assess the causes and costs of default and how to improve their microfinance practices and strive for 100% recovery of loans. The second workshop taught 15 managers and finance officers how to calculate sustainable interest rates from their MFI’s cost of delivering credit. The third workshop in August examined how to manage risk factors in the maintenance of a successful microfinance institution. It emphasized strong internal controls and internal audits as well as the use of effective information systems. AMFITIL members believe that training on the use of “best practices” will help microfinance organizations in Timor-Leste become sustainable financial institutions that can reach the poorer segments of society. “Moris Rasik (a local MFI) sent four senior managers to the workshop on delinquency management. As a result we have developed a better reporting format for tracking defaults and better loan loss provisioning in our financial statements,” said Helen Todd, Director of Moris Rasik, one of the microfinance institutions that started in 2000 and has expanded its services to seven of 13 districts across the country.

Microfinance institutions play critical roles in providing loans and savings services to the Timorese who are unable to access such services from a formal bank. Recent data from AMFITIL members reports 26,626 savers and 19,187 borrowers at the end of 2004. The loan portfolio of all members totals $2,361,332 and client savings amount to $1,277,432.

USAID has awarded three grants totaling $112,372 to support technical assistance and training for the microfinance institutions under the auspices of AMFITIL.