MICROFINANCE, AN INSTRUMENT TO DYNAMISE LOCAL ECONOMIES IN AFRICA

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MICROFINANCE, AN INSTRUMENT TO DYNAMISE LOCAL
ECONOMIES IN AFRICA

• Ousmane SY
• Executive Director of CEPIA
• Coordinator of the Alliance to reestablish
  governance in Africa

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Africa evolves,

• Pluralist democracies are taking place
• The Rule of Law appears progressively
• A civil society structures itself and plays an
  increasingly important role
• Public freedom, including the freedom of the
  press is increasingly respected
• Economies are liberalising
• The administrative, economic and political
  management get decentralised

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But poverty spreads out and despair settles.

• Populations suffer from hunger
• The basic needs, despite some progress, are far
  from being fulfilled (availability and
  accessibility)
• Unemployment and underemployment worsen among a
  young population increasingly urbanised.
• Human and material resources decrease, giving
  rise to long lasting fight for scarce resources
• Natural resources and Environment depredate.
• Despair settles, and the exodus outside the
  continent seems like the only possible solution.

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Rethink development from local players is an
alternative.

• Through
• Set up of local institutions and promotion of
  public policies of proximity
• Alignment of the national strategies to the local
  initiatives, in an objective of mutual
  consistency
• Boosting local economies, through partnership
  building between institutional and local economic
  players
• Decentralising public spending and the national
  financial system to make them reachable by local
  players.
• Building up a better link between local, national
  and regional level towards countrys integration.

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Microfinance is a leverage to face this challenge

• An answer to the difficulties of development
  banks to reach the local economic agents (cost of
  credit and collaterals)
• An alternative to the expansion of practices and
  informal financing channels bearing great risks
• Set up of a decentralised financial system
• Adapted to the savings capacity and to the
  financing needs of the so-called informal sector
  occupying now the most people and redistributing
  the most revenues.
• A formal tool that mobilises local resources to
  finance local initiatives, under the control of
  the local players.

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The advantages of Microfinance

• Complementarities with the classical financial
  system
• Proximity to the beneficiaries, thus more adapted
  to their profile and to their needs
• The form of collateral used are based on
  immaterial guarantees, like the social capital
  (trust, solidarity, responsibility)
• The amounts of the transactions (loans and
  deposits) are adapted to the needs of the local
  players, the women in particular
• Participates to the reinforcement of the
  capacities of the local players
• An excellent tool for local resources
  mobilisation and for the financing of the local
  development (inside and outside)

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Microfinance in UEMOA (2005)

• Benin, Burkina-Faso, Ivory Coast, Guinea-Bissau,
  Mali, Niger, Senegal, Togo
• 80 millions inhabitants
• 680 microfinance institutions
• 6 millions of beneficiaries (15 active
  population)
• 3500 points of sales
• 396.946.565 savings collected (18.320.610 in
  1993)
• 381.679.389 loans granted (25.954.198 in
  1993)
• Reimbursement rate 95

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The challenges of Microfinance

• Go beyond poverty fighting and consider financing
  the development of local economies
• Extend the outreach of resources mobilisation
• Adapt to the evolution of the needs of the local
  economic agents
• Finance small businesses and basic
  infrastructures
• Supply other financial services supporting and
  promoting local economies.

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Thank you for your attention