ADBI Working Paper 904
Y. Dosmagambet et al.
10
Independence of the fund and financial sustainability
:
The first principle of the
“Public CGS for SMEs”
12
that the World Bank developed states that the funds should be
established as an independent legal entity on the basis of a sound and clearly defined
legal and regulatory framework to support the effective implementation of the Fund’s
operations and the achievement of its policy objectives. The “Damu” Fund, on the other
hand, has evolved since 1997 into a complex organization devoted to supporting a wide
range of activities related to micro, small, and medium-sized enterprises, including
lending, educational, and training support. Therefore, it is difficult to expect further
development of CGSs with so many other programs eroding the attention of the “Damu”
Fund in terms of time and human capital resources. Political decisions should not disrupt
the Fund, which needs to be able to make its own financial decisions. Thus, it may be
necessary to establish a dedicated independent institution within or apart from the
“Damu” Fund both to evaluate the current conditions and to develop a more efficient
process for the CGS to ensure the availability of a wider range of financial tools for SMEs
to access in local financial markets.
