Summary

The Author contributes to the debate on the credit guarantee schemes (CGS) issue borrowing from his own experience and suggests remedies and alternatives.

Although different yardsticks bring to different conclusions, the author concludes that the problem of CGS doesn’t lay on the methodology to measure performance and impact, but on the product itself as a good answer to the market’s demand.

Wrong assumptions along with inappropriate scheme’s implementation emerge as a frequent factors affecting the performance of a CGS.

The behaviour of the actors involved is a very important element that affect scheme’s poor performance, which can be synthesized as follows:

- Lending partners’ negative response and/or insufficient interest in managing the change,
- Donors’ unsuitable intervention and late reaction to emerging & changing conditions
- Government’s weak commitment on providing enabling environment
- Management Unit’s lack of expertise to reconcile interests, objectives, demand and expectations of the actors and not management practice not always equal to the task
- Borrowers’ unviable requests for loans, bad repayment.

The remedies to the situation start well in advance of the field activities by
- Carry out a feasibility study more market oriented. Moreover,
- Investigate on the real availability/willingness of participating lenders to implement the job as agreed by the promoters.
- Treated CGS as a new product and as such it should go under the scrutiny usually applied under the circumstances.
- look for alternative avenues with the objective to investigate how and at which conditions alternative financial products could better meet the potential demand.
- Fund manager commitment to stay within both credit and lending policy. For the purpose key indicators should figured out and undersigned by the responsible person/body.

The alternative to a CGS should investigate for new products, innovative management tools and strategic alliances, which should be appreciated for their capability to meet the real demand from the potential borrowers.

An interesting and promising avenue could be the linkage of micro finance providers with the banking system, which in the Author view is a real alternative to a CGS.