The need to lay down a firm legal, regulatory, and supervisory foundation prior to embarking on promotion of financing institutions, such as SCCs. In this case, ADB attempted to establish the regulatory structure in parallel to project implementation, which did not work well. The two activities should have been better prepared, and sequenced as separate projects. The regulatory structure should have been supported by a comprehensive TA with adequate resources to prepare and promote the legal, regulatory, and supervisory framework, to have it passed by the legislature, and to ensure adequate institutional capacity to execute that framework. With the regulatory structure in place, the implementation should have proceeded with components for training, promotion, and institution development of SCCs. That approach would have had better prospects for success in establishing a sustainable rural finance system.
Rural Finance Project [Loan 1848-MON]