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IV. Principle II: Prioritize Local Knowledge and Participatory Planning

Guest post by: United Nations Economic Commission for Africa

Article Overview: Key Principles for an African Model of Microfinance

IV. Principle II: Prioritize Local Knowledge and Participatory Planning

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.

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Article Tags: accountability, cameroon, esusu, financial decisions, ghana, group methodology, knowledge base, legitimacy, loan schemes, local community, local knowledge, microfinance initiatives, niger, nigeria, outreach, sanduk, savings and loan, sustainability, susu, traditional knowledge



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