Resultados comportamentales.

Project Microfinance Initiative for Sub-Saharan Africa (MIFSSA)

Project region Democratic Republic of the Congo, Ghana, Madagascar, Namibia, Nigeria, Senegal, Sierra Leone, Tanzania, Zambia

Project partner International Finance Corporation (IFC)

Project term Launched: 2007

Budget EUR 21.5 million (total)

Context

The business landscape in sub-Saharan Africa is primarily shaped by small and micro enterprises. Precisely these companies, however, have no access to the commercial banks of the formal sector because of their lack of security, their non-existent equity capital and their irregular income. There is a shortage of professional, sustainably operating microfinance institutions (MFIs) with any market coverage of note. As a rule, most small and micro enterprises are not able to exploit market opportunities or expand their businesses because they have no access to credit. Growth in this business segment is greatly impeded, as is the preservation and creation of jobs. This, in turn, adversely affects the employment situation and overall economic development in the countries of sub-Saharan Africa.

The German Government launched the Microfinance Initiative for Sub-Saharan Africa (MIFSSA) in order to enable the existing potentials and opportunities to be utilised. MIFSSA is an important part of German promo- tion for the financial sector in sub-Saharan Africa.

Project

MIFSSA encompasses the founding of a total of 11 MFIs in nine sub-Saharan countries. A rural MFI was set up in Senegal, and both a rural and an urban MFI were estab- lished in Ghana. In the other countries, the Democratic Republic of the Congo, Madagascar, Namibia, Nigeria, Sierra Leone, Tanzania and Zambia, all of the MFIs are urban.

MFIs enable the poor, economically active members of the population who often run small and micro enterprises to gain access to comprehensive financial services. In contrast with commercial banks, which as a rule do not consider such people creditworthy, these institutions offer them a range of services extending from savings, loans and insurance to money transfers. MFIs therefore close the gap in supply between commercial banks and what is often the only alternative for owners of small and micro enterprises, namely moneylenders. Because of the high interest rates they charge, the latter often drive small and micro enterprises further into poverty.

| Microfinance institutes give the poor, economically active section of the population access to comprehensive financial services

| Even small, often informal, businesses have access to credit through microfinance institutions Photos: KfW photo archives | photo agency: photothek.net

Germany entered into a strategic partnership with the World Bank Group’s International Finance Corporation or IFC in order to put MIFSSA into practice. The objective is to establish MFIs under private law that achieve profitability after three to four financial years on the

As at: June 2011 F A C T S H E E T : R E G I O N A L E C O N O M I C I N T E G R A T I O N Photos: KfW photo archives |

photo agency: photothek.net

basis of initial subsidies for personnel training during the setup and operational start-up phase. Subsequently, they are meant to continue operation on a sustainable basis without further subsidy. After issuing an invitation to tender, Germany together with the IFC selected eight investment proposals from international private sponsors to set up new MFIs in sub-Saharan Africa. The basis for the success of a MFI operating sustainably is a good understanding of small, often informal firms that do not run a balance sheet and are unable to provide securities in accordance with normal banking practices. An initial loan of perhaps USD 50 tests whether clients will honour their promise of repayment. If they meet the instalments reliably, they can then receive larger loans with longer durations. This is the foundation for a long-term business relationship that is beneficial to both sides. The clients are able to build a growing, income-generating asset base through dependable access to credit. The MFIs secure their long-term com- mercial viability with the aid of a good-quality loan portfolio and increasing refinancing through their clients’ savings deposits.

Results

Microloans enable small and micro enterprises firstly to start up new businesses and secondly to expand in order to meet demand, and in that way generate a regular income and build up assets. New prospects are opened up for women, too, who after all account for two thirds of the clientele of the microfinance institu- tions: access to loans enables them to set themselves up to secure their own livelihood. MFIs therefore also make a general contribution to securing and creating jobs in sub-Saharan Africa and hence to overall economic development in the region.

One impressive example of the impact of the MIFSSA microfinance institutions is the first of the new banks, Accès Banque Madagascar (ABM), which began opera- tions in 2007. Only six months after the bank was estab- lished, its 21 loan officers had extended more than 1,300 loans – with an average loan volume of EUR 725 – and had recorded almost no arrears. The repayment rate was 99%. In addition, over 1,600 savings accounts and even more current accounts had been opened.

Contact

Microfinance Initiative for Sub-Saharan Africa (MIFSSA) KfW Entwicklungsbank

Palmengartenstraße 5 - 9

60325 Frankfurt am Main | Germany Contact person Oliver Polleti T +49 69 7431 -3839 F +49 69 7431 -3559 E [email protected]

I www.kfw-entwicklungsbank.de | www.ifc.org

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