Roles of Civil Society

Improve the Local
Business/Investment Climate
Civil society sectors contribution to the
improvement of the local business
environment is multidimensional.
It accomplishes this through provision and
maintenance of crucial economic and social
infrastructure; advocacy for improved policy
and governance; investment promotion and
marketing and networking to improve flows of
information to enhance opportunities.
Access to services, infrastructure, research and
technology have a decisive influence on the
level and pattern of growth and private
investment.
Better infrastructure can lead to increased
production, technical change and strengthen
market linkages.
CSOs are playing an active role in the provision
and maintenance of services needed by
industrial units.
In particular, organizations engaged in
development work absorb a higher proportion
of CSOs workforce in developing and
transitional countries than in the developed
ones (Salamon, Sokolowski and Associates,
2004).
In practice, a range of practices have been
adopted by different major micro-finance
institutions (MFIs).
Most engage in retail lending, and in some
cases, like Grameen Bank, their clientele
exceeds 2 million.
Loan size are generally small, at less than US $
200, although there are notable exception.
Both individual and group lending contracts
are possible.
Most MFIs do not require physical collateral.
The common practice is to engage in progressive

lending, with successively larger loans as the
borrowers build up successful credit history
There are a number of advantages of micro-
finance. First, group based lending reduces the
transaction cost of credit delivery and mitigates
problems of adverse selection.
Also, peer monitoring within the group
reduces the risk of default and moral hazard.
For instance, in group lending it is not the
individual, but the community who is
responsible for repayment of the loan.
An incentive for all members to oblige is that if
a member defaults, the whole groups
creditworthiness is adversely affected.
Second, microcredit schemes enable
substitution of physical collateral.
Unlike conventional banks, physical collateral
is often substituted with social collateral or
pledge of a fixed proportion of the loans as
collateral to the organization.
Efforts to sustain economic development and
reduce poverty are unlikely to succeed in the
long run unless there is greater investment in
human capital, particularly of the poor.
Ample evidence exists that improvements in
education, health and nutrition not only
directly attack some of the most important
causes of poverty but is also ensure sustained
supply of productive labor an important
factor of production and contributor to
economic growth.
It may take a long time for some of the poor to
fully participate and benefit from policies like
those mentioned above and the old or disabled
may never be able to do so.
Even among those who benefit from the policies
and strategies, there will be some who remain
acutely vulnerable to adverse events.
Such groups of people can best be helped through
a system of social safety nets including income
transfers, food distribution, some form of income
insurances/relief or protection through short term
stress and calamities etc.
CSOs role in relief and habilitation is probably
the oldest and the most common one
particularly in developing countries. Providing
emergency services such as temporary shelter,
food, etc.
after disaster or conflict, community
organization for rehabilitation are the most
traditional
forms of activities undertaken by CSOs. CSOs
bring five main strengths to relief and
emergency work: early warning of disaster;
advocacy for international aid; speedy
response;
cooperation with indigenous organizations;
and, disaster preparedness
The increasing global trend toward
democratization has opened up the political
space for CSOs to play a more active policy
influencing role.
The promise of democracy becomes a reality
when peoples voices are heard by policy
makers and when groups (especially
marginalized sectors of society) begin to
participate in the marketplace of competing
interests.
According to a World Bank report (2002), CSOs
have become significant players in global
development finance, are increasingly influencing
the shape of global and national public policy...
The growing focus among policy makers and
citizens on the need for good governance and
greater transparency has also opened doors for
CSOs as players in the development business.
Parliamentarians, media and other opinion leaders
increasingly rely on CSOs for information and
policy advice.

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Improve the Local

The common practice is to engage in progressive

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