United Nations Capital Development Fund. The Role of Local Government in Rural Finance. Kadmiel Wekwete Director, Local Development Practice Area International Forum on the Eradication of Poverty United Nations | 15 November 2006.
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Local Government focus is on rules, regulation and control; sometimes viewed as negative to promoting rural finance.
Local Governments viewed as taxing authorities and undermining local business.
Rural Finance refers to the provision of financial services to a heterogeneous rural farm and non-farm population at all income levels.
Rural communities lack secure and accessible deposit facilities and savings are held in cash or assets which are hard to mobilize.
Connection is more evident in local economic development, seeking to transform the economic and social potential of places.
More specifically, LED provides a framework for linking LG and rural finance, through focus on enterprise development.
Devolution and improved public expenditure management
Enhanced Local Services Delivery
Financial Services Development
Local Economic Development
Local Development Framework
Access to borrower information impeded by lack of efficient transport, communications infrastructure and well functioning asset registries and databases
Poorly defined property and land use rights which undermine collateral for many of the rural households in the rural economy
Addressing Rural Finance Challenges
Provision of basic infrastructure and services and increasing “accessibility”
Organization of registry on land and land ownership with traditional authorities
Household Asset Registries for collateral purposes
The Role of Local Governments in Promoting Rural Finance
Building LG into accountable and measurable planners and implementators
Fiscal decentralization implemented
Focus on Local Economic Development
Transforming the Role of Local Government
Strengthen and empower LG; creating conditions for vibrant, pro-poor local economic development.
UNCDF Local Development Programmes
That to register these assets is the foundation for collateral;
Collateral is the key to accessing (even unconventional) micro-financing;
Micro-financing is the counterweight to public infrastructure/services provision.
Vibrant LED? The Role of LGs?
Combine traditional focus on infrastructure / service delivery with business development and rural financial development.
Local Development Programmes
The dynamic role of LG – embracing all sources of revenue (local; government; donors), to ensure success in its total performance.
The Bottom Line for UNCDF