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Community Based Micro-Finance

Community Based Micro-Finance. a well established alternative especially for rural clients it is here to stay, like it or not.. but it is full of risks and complexities as well SEEP AGM 2004. Different context – different approaches. World view behind the approach.

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Community Based Micro-Finance

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  1. Community Based Micro-Finance a well established alternative especially for rural clients it is here to stay, like it or not.. but it is full of risks and complexities as well SEEP AGM 2004

  2. Different context – different approaches

  3. World view behind the approach • Institutional approach have inherent barriers in reaching rural poor • There are social, Gender, Age exclusion. • Vulnerabilities due to conflict, HIV become important factors • Access to markets –financial and otherwise is fundamental for poor in modern economic world • There is more to it than micro-finance • Role of external institution V/s external capital!

  4. Principles of community based mF - CBmF • Built on traditional systems • Self-managed • Collectively managed and transparency • Savings based – self resourced • Assets based, reducing liabilities, financial insecurities • External institution V/s external capital • Multiple, flexible products and methodology • Client driven (as opposed to systems or products driven) • Complements institutional micro-finance • More than micro-finance

  5. Africa program profile and spread • Niger • Zimbabwe • Rwanda • Tanzania • Mali • Uganda • Malawi • Mozambique • Ghana • Angola • Eritrea • Ethiopia • Zambia • Kenya • Lesotho/ South Africa App. 400,000 poor, rural,women

  6. Clients and context variations • Women v/s mixed • General v/s targeted population • Deserts- Ag. Based – pastoral – non-farm • Rural – Urban • Post-conflict/ HIV affected/ Refugees/ Internally Displaced Population

  7. Products Variations • Fixed v/s flexible savings • Single v/s multiple savings products • Productive v/s consumptive loans • Social fund for grants • Savings alone V/s external loans • Insurance

  8. Methodology variations • Small V/s large groups • Weekly v/s monthly meetings • Annual break v/s long term continuation • Individual v/s group lending • Internal lending v/s external as well • Groups alone v/s cluster/ federation • Written records v/s verbal • Group’s leader v/s leader’s group • Cluster as support operation v/s financial intermediation

  9. Outreach/ management approach • Short term v/s extended training • Staff v/s community facilitators • Centralized v/s Decentralized MIS • Standardization/ facipulation v/s innovation/ facilitation • Interest rate • Products • Group management norms • Social inclusion v/s self selection

  10. Variation in approaches and goals • Microfinance stand-alone v/s multi-sector • Lead v/s sub focus HIV/ OVC/ Health/ Food security/ Women’s empowerment/ Ag. Marketing/ Reproductive health/ Governance/ Education…..

  11. Challenges of the future • Quality control and expansion • Post-conflict and HIV vulnerable context • Establish legitimacy • Collaboration with MFIs and Banks • No silver bullet - what about economic environment?

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