Microfinance initiatives that recognize and build upon local knowledge and tradition are more culturally compatible and hence sustainable with the local community. People feel more familiar and comfortable with concepts that borrow from their own tradition; this, in turn, improves MFI acceptance and outreach. Microfinance approaches rooted in local culture are also more participatory because clients are more ready to identify with and thus participate in the financial decisions and actions shaping their lives. As a result people become more invested in and committed to the sustainability of the microfinance initiatives, assume ownership and responsibility for their development, and become more self-reliant (Box II).
As already noted, the group methodology is an important indigenous institution.
Traditional and informal African savings and loan schemes include, Ekub in Ethiopia, Tontines in Cameroon and Niger, Esusu in Nigeria, Susu in Ghana, Gameya in Egypt, and Sanduk in Tunisia. These schemes are based on traditional knowledge and values, and microfinance initiatives that build upon them can count on legitimacy, accountability, and self-enforcement.
Certainly, traditional methods need to adapt to the modern context, but while they can be rendered more efficient and benefit from modern innovation, they should not be replaced.
When people rely and build on traditional knowledge and values, it is easier for them to go further and learn more because their knowledge base builds on a secure foundation rooted in their own identities and society.
To learn more about this author, visit United Nations Economic Commission for Africa's Website.
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