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Control vs. Trust: What (else) is a strong board ? Tamar Lebanidze May 20, 2014

Control vs. Trust: What (else) is a strong board ? Tamar Lebanidze May 20, 2014. www.Bankconstanta.ge. Bank Constanta. The first Georgian microfinance NGO "Constanta Foundation" was established in 1997

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Control vs. Trust: What (else) is a strong board ? Tamar Lebanidze May 20, 2014

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  1. Control vs. Trust: What (else) is a strong board?Tamar LebanidzeMay 20, 2014

  2. www.Bankconstanta.ge Bank Constanta • The first Georgian microfinance NGO "Constanta Foundation" was established in 1997 • Save the Children USA, USAID, UNHCR, Care International, Mercy Corps, Shore Bank etc. were the partners/financiers of Constanta since its commencement. • In 2002 Constanta was recognized as one of the largest and most successful MFIs in Eastern and Central Europe and Post Soviet countries. • Constanta Foundation transformed to a JSC Constanta in 2007 and was the only MFI in Georgia that obtained banking license in 2008 • By the year 2014, JSC Bank Constanta is a leading MFI in Georgia with total assets of GEL 400 000 000 and loan portfolio of 320 000 000. It operates 53 branches, serves more then 100 000 clients, employees more then 1500 staff members.

  3. “The board is the ultimate arbiter of accountability” Important attributes for the proper functioning of the MFI board: • the knowledge and experience of the board members (financial skills, understanding of microfinance, knowledge of the local environment, understanding the mission etc.) • the size of the board (to incorporate key skills, to allow the active involvement of all members and the smooth functioning of meetings).

  4. MFI Board Non commercial Board size: large Board members: high-profile, well-respected individuals with good connections and stature in the local societies; representatives of international stakeholders Not active participation Commercial Board size: adequate to the company goals Board members: local and international experts. Active participation

  5. Control vs. TrustNon commercial MFI Board Less knowledge and experience in microfinance Lack of direct investment in the MFI General trust in management without challenging them Lack of control Active Involvement of international Stakeholders. Trainings of the board and management Management Better experience in microfinance Direct investments and knowledge of the organization Lack of accountability towards the board

  6. Control vs. TrustCommercial MFI Board High qualification in finances, banking, microfinance, legislation, etc. Direct investments in the MFI Active participation Active control Understanding of the social mission ? Efforts towards protecting and promoting the social mission Management High qualification and experience in microfinance Better understanding of the institution Accountability towards the board Understanding of social mission of the MFI

  7. The role of the Chair The chair’s role is absolutely critical. He/she is responsible for the smooth operation of the board, creates a proper working environment for active participation of all board members as well as key management, ensures that board works in line with the mission of the institution.

  8. Thank You!

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