(IMF Working Paper, Prepared by Anupam Basu, Rodolphe Blavy, and Murat Yulek1, September 2004)
Small enterprises and most of the poor population in sub-Saharan Africa have very limited access to deposit and credit facilities and other financial services provided by formal financial institutions. For example, in Ghana and Tanzania, only about 5–6 percent of the population has access to the banking sector. This lack of access to financial services from the formal financial system is quite striking, when one considers that in many African countries the poor represent the largest share of the population and that the informal sector is an important part of the economy.
To meet unsatisfied demand for financial services, a variety of microfinance institutions (MFIs) has emerged over time in Africa. Some of these institutions concentrate only on providing credit, others are engaged in providing both deposit and credit facilities, and some are involved only in deposit collection. Throughout the paper, the term “microfinance institutions” is used as commonly defined, that is, to designate financial institutions dedicated to assisting small enterprises, the poor, and households who have no access to the more institutionalized financial system, in mobilizing savings, and obtaining access to financial services. Institutions offering microfinance services are very diverse, including commercial banks, state-owned development banks, and postal offices.
This paper intends to identify a number of stylized facts and trends from the experience of four selected African countries: Benin, Ghana, Guinea, and Tanzania. While quantitative data is very limited, tentative conclusions are provided based on a qualitative assessment of recent developments in the surveyed countries, supported by background material and studies undertaken by the IMF and the World Bank. The main contribution of the paper is to compare experiences across Africa, and identify patterns that may guide public policy in the sector.
In Section II, we explore the main contributors to the expansion of MFIs in Africa. We focus particularly on the instruments used to overcome the obstacles that have prevented banks from expanding their outreach to the poor, the rural sector, and small and medium-sized enterprises. In Section III, we look at the extent to which the operations of MFIs can be viewed as complementary to those of banks, and how the existing links and the potential synergy between their operations benefit the economy. In Section IV, we review the roles that national governments have played in promoting microfinance and discuss policy issues relating to the licensing and prudential regulation of MFIs. Finally, in the concluding section we summarize the main conclusions.
To learn more about this author, visit International Monetary Fund's Website.
Like this article? Share it with your friends
|
|
International Monetary Fund
(Visit International's Website)
The IMF is an international organization
of 185 member countries. It was
established to promote international
monetary cooperation, exchange stability,
and orderly exchange arrangements; to
foster economic growth and high levels of
employment; and to provide temporary
financial assistance to countries to help
ease balance of payments adjustment.
Since the IMF was established its purposes
have remained unchanged but its
operations—which involve surveillance,
financial assistance, and technical
assistance—have developed to meet the
changing needs of its member countries in
an evolving world economy.
|
|
|
International Monetary Fund's
Complete
List Of
African-Accounts
Articles
|
|
If you enjoyed this article, get International Monetary Fund's Complete List of African-Accounts Articles For FREE!
|
|
|
|
![[Get Copyright Permissions]](http://license.icopyright.net/images/icopy-w.gif){kind=small}
