Objectives of the Program:

• The general aim of the program is to eliminate poverty through continuously increasing the income of the weak groups in the rural and urban areas . This can be achieved by supporting productivity and agricultural production (fauna and flora), industrial production (small industries) artisan and other services activities generating income.
• The essential aim of the program is to promote effective efficient financial services which are responsive to the requirements of the poor group.

Special aims are:

• Extension of financial services to about 250.000 of the economically active poor through financial insight, institutional development, supply of finance to banks and capital contribution in specialized microfinance corporations associated with mobilization of savings, precaution control measures and financial and operational sustenance.
• Frame development of social banking through establishment of basic societies capable of owing and managing financial mediation corporations.
• Promoting the link between microfinance corporations and the banking system.
• Promoting the organization and supervision through building up capabilities of microfinance units in the Central bank of Sudan and the banks taking part in the program.

The Constituents of the Program

The program has four major constituents as follows:

1. Institutional development in branch microfinance sectors .
2. Improvement of organization and supervision of banks and microfinance corporations through strengthening the institutional capabilities of the Central Bank of the Sudan, microfinance banks and corporations and the network of smaller microfinance corporations.
3. To provide capital contributions to specialized microfinance banks and financing of specialized microfinance banks and corporations.
4. Coordination and management of the program.

Costs and Finance of the Program:

• The cost of the project is estimated at $ 30.000.000.
• The Government of the Sudan (the Central bank and Ministry of Finance) shall contribute $20.000.000.
• The Central bank of the Sudan shall contribute $13000.000 (43.3%) of the program cost.
• The Ministry of Finance & National Economy shall contribute $7.000.000 (23.3%) of the program cost.
• Donors shall contribute $10.000.000.

The Cost of the project as per the constituents:

Description	Cost in M. Dollars	%
1.Institutinal Development	5.1	17
2.Improvement of Organization & supervision	0.3	0.1
3. Capital contribution & finance	24	80
·         Capital contributions(4.000.000)
·         Finance( 20.000.000)(10% for guarantee of finance)	.03	.01
4.Coordination and management of the project	.03	.01
5. Contingencies
	30	100

Organization of the Program and the Executing Agencies:

The agencies responsible for the execution of the program are:

1. The Central Bank of Sudan
2. Ministry of Finance & National Economy
3. Sudanese banks
4. Network of microfinance corporations
5. Umbrella corporation

The Management and coordination of the Program:

The microfinance Unit of the Central Bank of Sudan shall be the main responsible body for the management of the capital contributions, finance and institutional development in coordination with microfinance providers and the overall coordination of the program activities.

Help can sought from committees to take part in policy and decision making in execution of the program. Such committees are:

1. The program management committee: the basic task of this committee is decision making and direction of executing the program in general.
2. A national ad-hoc committee for microfinance policies. This committee shall mainly take part in policy issues nationwide.

Suggested Financial Mediators to take part in the Program:

Type of Corporation	No. of corporations	No. of targeted clients	Allocated amount
Banks	7	87500	$10.000.000
Financial Corporations	3	45000	$5
Organizations	10	115000	$2.5
Credit Unions	5	2500	$0.5
Total	25	250000	18

Tasks of the Unit

• To set agreed standards for financial performance, reaching clients and practice of business as a measure for qualification to obtain different backup services which are responsive to setups and development stages of the participating corporations.
• To set a measuring system of financial performance and reaching for participating corporations and availing comparison and healthy competition between participating corporations and comparisons with the best local and international practices.
• To encourage exchange of experience and lessons among participating constitutions and others to buildup institutional capabilities and access.
• To provide whole finance, capital contribution, refinancing and institutional development through the use of joint agreements and comply with performance standards as abases for various backup services.
• To encourage mutual connections between commercial banks and international specialized mediators and between official and nonofficial financial corporations. This could be done through offering partial guarantees to finance in order to encourage commercial banks to provide microfinance sources by direct finance and opening lines for specialized finance mediators.
• To ensure the suitability of legal, organizational and supervision setups; to provide incentives for the growth of strong group of financial mediators which respond to the services of small producers and low income earners.

Criteria for Provision of Support:

The financial mediators which request support, capital contribution, institutional development and financing should meet a high standard of performance. They should have reasonable plans for sustained operations and finance which are important in size and sector. Also other standards should be met like a strong administrative setup, a privilege of refund and a profit margin regardless of the development or class of the corporation. As for other standards like efficient operation and finance cost limiting this could be achieved gradually and may be classified as criteria according to the following:

Financial Performance:

• Advantage of refund – arrears of less than 10% of the original finance and solvent debt of less than 10%.
• Reasonable profit margins and commissions enough to cover financial and operational expenses.
• Actual progress and reasonable plans to cover financial and operational expenses from internal revenues within a period from three to seven years of starting the operations.
• Variation of the fund in size and sector to distribute the risks
• Growth of the capital- which could be employed for making income from investment. Capital can be loaned or used for strengthening the effectiveness of link between the specialized microfinance corporations and banks.

Consequences:

• Penetration of the Market – wide coverage of the targeted persons.
• Mobilization of savings – directly or through other corporations.

Work Practices:

• Sound control, assignment of responsibilities and release from political intervention.
• Able personnel and responsive financing methods.
• Sound institutional operations, effective information management systems, financial liability and transparency.

Criteria of Supporting the Existing Financial Corporations:

• The beneficiary corporation should be working in the same area of activity for not less than years at least. This could be confirmed through completed financial reports.
• The beneficiary corporation should aim at financing 10.000 clients, minimum.
• The beneficiary corporation should ensure its mission of serving the poor through one of the following indicators:
  • Sound reputation in the field of microfinance.
  • Study of consequences.
  • Classification of debts.
  • Financial Remissions and a work plan of three years, minimum.
  • Assessment of the corporation by a third part (specialized classification agency or consulting firm).

Criteria of Capital Contribution:

• Offering capital support to banks or corporations which fulfill the performance criteria.
• Support shall be made in installments within a period ranging between three to five years according to the effectiveness of work plans and persistent adherence to performance criteria.
• Size of support should range between $ 500.000 to 2.000.000 to enable the financial mediator to prepare a fund of self debt.

Internal Procedures:

1. Assessment of the corporation with the criteria of minimum qualification.
   • Review of activity (focusing on poverty elimination)
   • Financial and operational performance.
   • The required documents:
     • Audited Annual financial reports for the last three years
     • Financial Remissions during the period of suggested financing
     • Operational plan during the period of suggested financing
     • A list of members of the Board of Directors, Executive management, along with a brief introductory note for each of them.
     • Details of the existing relationship between the corporation and the banks.
     • Legal documents (Contracts and Article of Association)
     • Talking or meeting with the bank or corporation.
2. Field assessment of the bank or corporation through making sure of the structural arrangements and writing of reports, focusing on risks and submitting recommendations according to the following methods:
   • Procedural risks: Guarantee structure and amount of finance.
   • Financial indicators: Efficiency of assets, effectiveness and operational performance.
   • Institutional and administrative risks: An administration team, institutional control and IT.
3. Levels of endorsement
   • Executive leadership
   • Program management committee
4. Implementation of agreements between the Unit , bank or corporation
5. Periodical control (monthly and / or quarterly) through a frame mechanism to ensure the following:
   • Abiding by the agreement
   • Current finance compatible with omissions.
   • Marinating the focus of activity on poverty.
   • Institutional development
     • The most important factor of institutional development of microfinance banks and corporations is the development of human capital through structural training programs and system development. The execution of this constituent includes the following activities:
       • With the technical help of the consultation body, a comprehensive training plan shall be prepared for the industry and shall include developing the institutional systems (bank units).
       • A microfinance unit shall, in cooperation with microfinance corporation network, arrange the training of trainers with the help of specialized international expertise.
       • Training of employees at lower levels shall be internally arranged by banks and microfinance corporations supported by local training institutions.
       • Training of employees at medium levels and higher scales including board directors shall be carried out by providers of local and foreign microfinance services like the Academy for Financial and Banking Sciences, universities, high institutes and CGAP or Grameen Foundation or any other party.
       • Upgrading of MIS shall be made by contract with of local and Foreign Service providers.
   • Microfinance corporation network
   • The microfinance Unit shall rely on the help of microfinance corporation network in the following field:
     • Identification and nomination of microfinance corporations, organizations and unions to obtain finance.
     • Carrying out normal and frequent field assessments.
     • Introduction of early alarm system to handle issues, financial trends which arise before they become serious problems.
     • Providing prompt solutions to problems through technical assistance.
     • Coordination to carry out joint activities.
     • Implementation of training programs.

Banks:

• Each of the Agricultural Bank, the Bank of Saving and Social Development, the Industrial Development Bank and the Farmers Commercial Bank shall present the microfinance policy.
• The policies of the banks and their request for finance shall be studies according to the standards of performance
• Conclusion of an agreement which each bank according to its conditions to take part in the program.
• Agreement has been made with Unicons to provide consultation services in the following fields:
  1. Downscaling of banks to provide effective microfinance
  2. A project to connect whole microfinance operations.
  3. Project of non-traditional accompanied guarantees.

Whereas the program of guarantees starts including downscaling of three commercial banks , this program shall be developed to cover the largest parts of the practical plan to implement the vision of developing microfinance sector in Sudan the execution of which shall be completed through other additional programs.