II. How Can MicroFinance Succeed In Africa?

African microfinance is as diverse as the continent itself. An array of approaches have been used, ranging from traditional group-based systems, to specialised lending by banks and funded by international nongovernmental organisations (NGO) financial intermediaries. Consequently, examples of African microfinance offer an array of lessons of what works and doesn’t work. Drawing from these lessons, and those from non-African examples, OSCAL developed a Microfinance model based on four principles:

i) Pooling together people’s resources ii) Relying and building upon what people know (tradition)

iii) Reinforcing microfinance to empower the African private sector iv) Striving for efficiency, which include maintenance of tools and better working habits.

The model needs to be field-tested. The Department of Economics, University of the Western Cape (UWC), South Africa, where the model was presented would like to incorporate it in its training program and also field test it. From November 2001,UNDP- Africa will support postgraduate students of the UWC to undertake research and field-test the model in South Africa for six months. Replicating the UNDP-type support, UNIFEM has offered to field-test the same model in a francophone country from January 2002.

Microfinance in Africa: Combining the Best Practices of Traditional and Modern Microfinance Approaches towards Poverty Eradication To learn more about this author, visit United Nations Economic Commission for Africa's Website.

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