GIF | Financial inclusion through governance

The GIF Project tool makes it possible to diagnose the quality status of governance and identify areas for improvement.

Due to the relevance of good governance and its direct effect on the performance of organizations, the GIF Project -financed by IDB / MIF and SDC- developed a cutting-edge tool that allows diagnosing the state of governance quality in the inclusive finance institutions and, additionally, promote areas for improvement identified through the toolbox. The tool is based on 6 pillars and 45 standards, which allow establishing prioritization and continuous improvement plans, supporting the achievement of social and financial objectives.

The governance (also known as corporate governance and cooperative government, among others) of an organization, is a system of processes and procedures defined in terms of two fundamental ideas: management and control [1], which must, as far as possible, act in a balanced and timely manner.

In recent years, governance has gained greater relevance as a consequence of the global economic crisis that began in 2007-2008, which highlighted the impact that deficiencies in governance can have on the economic valuation of different organizations. This is highlighted by the OECD [2]: “The financial crisis can be attributed to a significant extent, to failures and weaknesses in corporate governance.”

An investigation carried out by Inalde Business School in 2014, entitled “Corporate governance practices and their influence on the performance of family and non-family businesses in Colombia”, showed that the profitability of companies is directly related to their governance practices.

Due to the aforementioned, the importance of good governance and the application of good practices in inclusive finance institutions, which work with vulnerable and low-income people, is evident as a fundamental factor for them to achieve their social and financial objectives. achieve inclusive growth while reducing inequalities and expanding access to financial services.

To date, 23 inclusive financial institutions from six countries in Latin America and the Caribbean are implementing the tool. It is expected that -by March 2019- more than 50 institutions will benefit from the implementation of this methodology in their corporate processes and strategies to improve their profitability levels, achieve greater growth and expand their financial services in favor of the most vulnerable sectors. and low-income.

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