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IV Module I Key Principles for an African Model of Microfinance

Guest post by: United Nations Economic Commission for Africa

Article Overview: African microfinance is as diverse as the continent itself. An array of approaches have been used, ranging from traditional kinship networks and Revolving Savings and Credit Associations (ROSCAs) to NGOs and development projects, and funded by both the informal and formal financial sectors, as well as domestic and international and donors. Consequently, examples of African microfinance offer an array of lessons of what works and doesn't work.

IV Module I Key Principles for an African Model of Microfinance

African microfinance is as diverse as the continent itself. An array of approaches have
been used, ranging from traditional kinship networks and Revolving Savings and Credit
Associations (ROSCAs) to NGOs and development projects, and funded by both the informal
and formal financial sectors, as well as domestic and international and donors. Consequently,
examples of African microfinance offer an array of lessons of what works and doesn't work. This
section summarizes some of the key principles for microfinance institutions (MFIs) to become
more ideologically and institutionally sustainable, building their capacity to better serve the
poorest while becoming financially viable and self-reliant. It is understood that there is no
blueprint for microfinance initiatives; each initiative must adjust to the specific cultural, political,
and economic setting in which it operates. Allowing for such diversity, the following general
principles are highlighted:
• Pool together people's resources through group organizing
• Rely and build upon what people know – tradition
• Reinforce microfinance to empower the African private sector
• Strive for efficiency

Microfinance in Africa: Combining the Best
Practices of Traditional and Modern
Microfinance Approaches towards
Poverty Eradication

Related Articles
  II. How Can MicroFinance Succeed In Africa?
  IV. Introduction - MICROFINANCE IN AFRICA: THE MODEL
  III. BACKGROUND - Microfinance in Africa
  4.0 The Role of Governments: Microfinance in Africa - Experience and Lessons from Selected African Countries
  IV. Principle II: Prioritize Local Knowledge and Participatory Planning

Article Tags: array, best practices, blueprint, continent, credit associations, development projects, diversity, donors, efficiency, financial sectors, general principles, initiative, kinship networks, microfinance initiatives, microfinance institutions, ngos, pool, poverty eradication, private sector, sustainable building



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