SOUTHERN AFRICA SUB REGIONAL WORKSHOP - WORKSHOP FINDINGS

1. Association Africaine de Crédit Rural et Agricole The African Rural and Agricultural Credit Association SOUTHERN AFRICA SUB REGIONAL WORKSHOP - WORKSHOP FINDINGS THEME: INTEGRATING FINANCIAL SERVICES INTO POVERTY REDUCTION STRATEGIES

2. OUTLINE • Macro-economic environment • Policy, legal and regulatory environment • Poverty Reduction Strategies • Provision of Financial Services • Challenges • Way Forward

3. INTRODUCTION The Southern Africa sub regional workshop took place in Maseru, Lesotho on the 11th – 13th October 2005 and was attended by 32 participants coming from South Africa, Zimbabwe, Mozambique, Mauritius, Mali, Senegal, Nigeria, Kenya and the hosting country Lesotho. With National presentation made by Zimbabwe, Mozambique, Mauritius, Kenya, South Africa and Lesotho on the Theme “Integrating Financial Services into Poverty Reduction Strategies”.

4. 1.Macro-economic environment The workshop proceedings are summarized as follows: • The GDP Growth ranges between 3.4% and 10% but Zimbabwe is experiencing difficulties to maintain its GDP growth. The GDP per capita in this sub region compared to other sub regions is ranging between US$200 and US$4562. Inflation rate is under control and ranges between 3% and 10% with the exception of Zimbabwe which currently is 265% which is not suitable for the development of poverty reduction strategies.

5. 1.Macro-economic environment(Cont’d…) • The population growth in the region ranges between 0.8% in Mauritius to 2.6% in Lesotho. • The Poverty level in the sub region is 63% • The HIV/AIDS pandemic has negative repercussions on Macroeconomic growth but drastic efforts are being undertaken to put it under control.

6. 2. Policy, Legal and Regulatory Environment • Most countries are reviewing their legal framework in order to achieve maximum outreach in both the rural and urban areas to low income people. • From the presentations, it was observed that there is a strong political will and commitment to promote rural finance services.

7.  2. Policy, Legal and Regulatory Environment (Cont’d …) Central Banks in all the countries have realised the importance of supervising and regulating rural finance providers for better results in poverty reduction. There are many NGOs that are directly involved in poverty alleviation programmes.

8. 3. Poverty Reduction Strategies All countries in the sub region have developed their poverty reduction strategies through various initiatives. These programmes focus on the strengthening of macroeconomic environment in the communities where the vulnerable groups exist such as free transport to students and senior citizens, free education, improved health care facilities etc.

9. Poverty Reduction Strategies (Cont’d…) Most countries are developing financial products targeting the low income people. Special programmes have been designed for women as they are the vulnerable section of the population that are mainly affected by poverty. Land reform issues were conceived to give access of land to the low income people for food security and poverty alleviation.

10. 4. Provision of Financial Services It was observed from the presentations that the spread between the deposit and the lending rates is too wide. The discrepancy between the deposit and lending rates at commercial banks does not encourage people to deposit money.

11. Provision of Financial Services (Cont’d…) Lack of infrastructure in the rural areas (roads, communications, IT) does not allow maximum outreach of financial services to the rural areas. The poor communities can be reached with financial services through linkage banking between financial institutions (banks, MFIs) with the use of NGOs as facilitators. The poor community can save if given the information and proper facilities. It was observed that Microfinance services are best suited products to reduce poverty in all the countries in the region.

12. Provision of Financial Services (Cont’d…) It was observed that there was a need for insurance services in agricultural crop and livestock sectors.

13. Challenges Alignment of donor funding to government programmes and priorities. Coordination between the government ministries and parastals. Development of infrastructure (roads, communication, information technology) to facilitate financial transactions. Creation of a credit rating bureau Institutional development through capacity building and best practices

14. Challenges (Cont’d…) Development of commercial courts to facilitate credit recovery Mainstreaming of the microfinance into the financial services sector HIV/AIDS pandemic Coordination of poverty reduction programmes

15. Recommendations The central banks in the region should have a regulatory environment that allows some financial institution offering microfinance services to emerge. Capacity building should be done by financial institutions and development partners.

16. Recommendations (Cont’d…) Promotion of best practice through information sharing by all stakeholders The workshop observed the fact that poverty eradication strategies cannot succeed in an environment of poor governance and unstable macroeconomic regime with high interest rates and high inflation. It is recommended that regional member states improve in this regard. The government should act as a facilitator in all poverty alleviation programmes.

17. Recommendations (Cont’d…) The financial services should be offered to the community to produce value added products (agriculture, crafts, social tourism etc.) in an effort to reduce poverty. Incentives such as tax reduction should be given to financial institutions to extend their outreach to the rural communities. Stakeholders involved in the rural finance should sensitise decision makers with respect to policies that address poverty reduction strategies in line with best practice.

18. Way Forward AFRACA should advocate for the promotion of financial services addressing the poverty alleviation. AFRACA should play the catalytic role of sensitizing different financial institutions and stakeholders on information services targeting low income clientele.

19. Way Forward (Cont’d…) AFRACA to promote information and database system to enable the member institutions to better serve their clientele AFRACA will emphasize on the training programmes for capacity building of the staff of the member institutions

20. THANK YOU!