Why Capacity Building?

Borrowing from an age old adage, “Give a man a fish; you have fed him for today. Teach a man to fish; and you have fed him for a lifetime." This is exactly what Small Business Corporation intends to do as it embarks on its capacity building programs for its various stakeholders in mSME development.
Capacity building is part of SBC’s new set of mandates as a result of the passage of the new Magna Carta for mSMEs or R.A 9501. Already, it has embarked on a two-pronged strategy to capacity building. First, is directed towards mSMEs addressing its various needs to improve the way it conducts business and how it keeps and share information. Second is directed towards Financial Institutions with the end view of providing a new mindset in SME lending that will result to mSMEs having greater access to financing and for the FIs to have the ability to expand their SME portfolio with a higher level of confidence because they are able to manage the risks involve in SME lending.
There are many definitions of capacity building suggested by practitioners who work with both profit and non-profit organizations. Given their differences, most have several elements in common----- they emphasize strengthening the institution and achieving sustainability; enabling institutions to achieve their mission is usually mentioned, along with increasing organizational effectiveness. They also identify specific areas of organizational capacity that should be addressed. The following definition from the Create the Future website captures the strengths of many definitions:

"Capacity building" refers to intentional, coordinated and mission-driven efforts aimed at strengthening the management and governance of institutions to improve their performance and impact. This occurs through organization development activities, such as leadership development, strategic planning, program design and evaluation, board development, financial planning and management and others.
Given this definition of capacity building, it becomes easier to understand the rationale behind the inclusion of capacity building in SBC’s mandate. It is a component in the mandate that ensures the continuity and endurance of SBC’s contribution to the development of mSMEs.
Areas of capacity building that SBC sees itself to be actively doing are: SME and microfinance lending technologies (such as risk-based lending); anti-fraud and anti-corruption practices; good governance and internal controls; and environmental management systems. These, it will deliver through TA-consultancies, trainings, coaching and policy advocacies.
A greater appreciation of capacity building will come from an understanding of its conceptual framework (refer to fig.1) in which we see the overriding significance of leadership and governance to the institution’s delivery of its products and services. The framework shows how and where capacity building can take place and make a difference. First is in the strategic plan ---its vision, mission, and objectives, then in the various spheres of doing business to deliver its services and make an impact on its stakeholders. Capacity building can enhance strategic relationships, its development of resources both human and material, and its ability to manage these resources and operate in a sustainable way.
Sans capacity building, and after many years of development work and the amount of financing and resources that went to mSMEs, the success rate remains low and the age-old problems continue to persist. It is in this context that capacity building was included and meant to address the perennial problems of mSMEs.

With capacity building, the mSMEs, or the Financial Institutions, or the other stakeholders, acquire capabilities that will enable them to work skillfully, adjust to challenges with a fresh mindset, create structures and systems that will improve efficiency and integrity of business processes, and imbibe the values that will instill the perseverance, diligence, and the courage needed to rise from setbacks, or worse, from the ashes of failed projects to start again and fulfill their mission.
Capacity building imparts to the stakeholders the capabilities and values that will not be lost in instances of business reversals and crises. It becomes part of the human or institutional psyche that will always be there from which people and institutions can draw their strength and inspiration to continue on, despite all the difficulties and hardships, and see success on the horizon.
It is somewhat sentimental, or worse, mushy, writing about capacity building in this way. But come to think of it, when all is lost; the money and the material resources gone ---- what’s left is what’s inside the person’s being, or for that matter, the institution’s consciousness.
Capacity building provides something that cannot be bought or taken away and serves as the key to making people and institutions sustainable.