Return to E-news Main Page
Return to Microcredit Summit Home
|
|
|
||
| Volume 3, Issue 1: April 2005 | ||||
|
||||
|
Return to E-news Main Page Return to Microcredit Summit Home |
||||
|
In This Issue Plenary Session: Creating National and Regional Autonomous Microcredit Funds Workshop Session: Transformation of Microfinance Operations from NGO to a Regulated MFI Register now for Latin America/Caribbean Microcredit Summit Meeting of Councils Archived Issues
Vol 3 Iss 1 April '05 E-News Information |
Plenary Session: Creating National and Regional Autonomous Microcredit FundsRemarks by Abdoul Anziz Said Attoumane
AFMIN is a Pan-African Microfinance Institution Network of Microfinance Institutions that operate in all of Africa with nineteen members. So, what would be our first question, what would be the rationale for creating autonomous national and regional microcredit funds in Africa and globally? Especially in the context that there are existing initiatives or schemes or programs that are also related to the development of regional banks, national banks, and other initiatives. I think that microcredit funds are worthwhile because they really contribute to an increase in access to microfinance services by the poor and the poorest. And this is actually the whole rationale for these kinds of funds. [A fund] also contributes to strengthening the financial capacity of MFIs that target the poor and the poorest in order to assist them to address their financial needs since it should be noted that a lot of MFIs are really not eligible to access funds from commercial banks. And the other thing is that a microcredit fund can really accompany the steady growth and extension of the microfinance sector in remote areas…. [I]t could also promote standards of performance in outreach and portfolio quality, efficiency and sustainability to make the microfinance sector more responsible, and more powerful …for poverty alleviation.
Then, we also think that it can reinforce accountability to reach the microcredit campaign objectives, as well as the Millennium Development Goals, by focusing the MFIs on the co-mission and targeting the ultimate clients for microfinance. But there is also the added advantage related to a microcredit fund of increasing the effectiveness of donors and public funds in relation to combating poverty and promoting broad-based economic growth. Sometimes donors and government funds are channeled to MFIs without controls to ensure that these funds are really benefiting the ultimate clients. So [through a fund] we can … make sure the capacity of the MFIs are strengthened, and also ensure it benefits the ultimate clients. We can also use microcredit funds to enhance the performance monitoring skills of MFIs and to provide appropriate technical assistance…. So, as a result, I think that microcredits compared to other instruments have some unique features that we would like to highlight here. First, is that microcredit funds are established by committed organizations be they donor, government or international agencies, with a special focus ….on reaching the poor and the poorest in a sustainable and cost effective manner…. They are also provided with a package of securing services that aim at increasing the performance and impact of the fund as well as institutions that manage the fund. And I think this is the key feature of microcredit funds compared to others…..Finally, microcredit funds are complimentary to existing instruments such as commercial banks, national banks, cooperative banks or regional banks. So, what will be the challenge if we have to develop such instruments in our African context? I think, first of all, there are some key factors that are very important in the conservation of microfinance. There is actually an increasing tendency for microfinance to commercialize and sometimes to stray from the mission of the institution by targeting the lower middle class, instead of the poor and the poorest. There is also some priority in the savings field coming from donors or the institutions themselves to try to mobilize these national funds to address the financial needs of the sector. There is also another issue related to the over liquidity of some institutions especially the saving and credit associations that have difficulty using the money that has been collected. Another issue is the lack of professionalism and capacity. Though there is an increased offer in terms of channeling funds, we observe that a lot of MFIs are not really capable of receiving these funds. So there is also the competition with our financial markets or donors and governments' instruments. And finally, I think that there is also the issue of organization at the country level and the regional microfinance networks that are now struggling to establish such a fund. The challenges, I think, are related to the setting up of the funds, in terms of organization, the government support, and the ownership; and the management as well as the resource pooling…. So to conclude, I would say that microcredit funds are complimentary to other existing instruments such as national banks, cooperatives and others. And there …should be a need to focus on how to capitalize on existing initiatives rather than creating ad-hoc structures. I think that organizations like AFMIN and the Microcredit Summit and other partners should strongly collaborate to review the creation and implementation of such instruments in Africa. |