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Guest post by: United Nations Economic Commission for Africa Become an Author

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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

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