2.2 Formalizing Informal Methods of Financial Intermediation: Microfinance in Africa - Experience and Lessons from Selected African Countries
2.2 Formalizing Informal Methods of Financial Intermediation: Microfinance in Africa - Experience and Lessons from Selected African Countries
Traditional informal systems for the collection of savings and for lending have provided
substantial insight for the operations of licensed MFIs in African countries. The use of
informal traditional methodologies by licensed MFIs has been instrumental in mobilizing
savings from lower-income households and giving them access to financial services that are similar to those provided by the formally regulated financial system. In particular, licensed
MFIs have benefited from interacting with informal players in two ways:
• First, savings mobilization methods developed by informal savings collectors have
been widely replicated. One example is how the susu collector function was
expanded in Ghana by licensed MFIs with “Mobile Banking” services, with officers
visiting rural markets on specific days (Box 2).
• Second, informal institutions have been integrated into the saving and lending
operations of licensed MFIs. Informal savings collectors that place their deposits
with the larger MFIs, may be considered a part of the saving mobilization effort of
the latter; notably, they provide an additional layer in the structure of the
microfinance system. This is the case for example in Ghana, with licensed MFIs
working with Susu clubs (Box 2).
22 Formalizing Informal Methods of Financial Intermediation Microfinance in Africa Experience and Lessons from Selected African Countries - To learn more about this author, visit International Monetary Fund's Website.
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(IMF Working Paper, Prepared by Anupam Basu, Rodolphe Blavy, and Murat Yulek1, September 2004)
Traditional informal systems for the collection of savings and for lending have provided
substantial insight for the operations of licensed MFIs in African countries. The use of
informal traditional methodologies by licensed MFIs has been instrumental in mobilizing
savings from lower-income households and giving them access to financial services that are similar to those provided by the formally regulated financial system. In particular, licensed
MFIs have benefited from interacting with informal players in two ways:
• First, savings mobilization methods developed by informal savings collectors have
been widely replicated. One example is how the susu collector function was
expanded in Ghana by licensed MFIs with “Mobile Banking” services, with officers
visiting rural markets on specific days (Box 2).
• Second, informal institutions have been integrated into the saving and lending
operations of licensed MFIs. Informal savings collectors that place their deposits
with the larger MFIs, may be considered a part of the saving mobilization effort of
the latter; notably, they provide an additional layer in the structure of the
microfinance system. This is the case for example in Ghana, with licensed MFIs
working with Susu clubs (Box 2).
22 Formalizing Informal Methods of Financial Intermediation Microfinance in Africa Experience and Lessons from Selected African Countries - To learn more about this author, visit International Monetary Fund's Website.
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