By Zachary Katz, Robert F. Wagner School of Public Service, New York University
Korpu Kollie fled to Guinea in the heat of Liberia's civil war. "Going to another man's country - you go empty-handed. It was hard", she says of her time as a refugee. She longed to go home. The savings she accumulated at the Local Enterprise Assistance Programme (LEAP) before the war stayed in her mind and eventually provided an incentive for her return. She had been "making small market" as they say in Liberia, selling mostly peppers and dry goods.
Upon her repatriation in 1999, Ms. Kollie started borrowing to expand her business. Now, she willingly returns to Guinea every month to buy goods to sell at her market stall. She has been the president of her community bank since her return, and has committed herself to the improvement of both her family, through education, and her community, through the organization of a weekly rotating credit and savings association. Of LEAP, Ms. Kollie says "Through the programme I can send my children to school. Through the programme I have my own sleeping place."
It is a familiar microfinance success story. In Liberia however, it is a story all too unusual. The history of microfinance to a large extent mirrors the general history of the country. The 14-year civil war did much to hamper the development of the sector just as the overall development of the country suffered. Microfinance institutions (MFIs) collapsed, saw their operations minimized, or their clients flee.
Microfinance in Liberia
In 2004, the United Nations Capital Development Fund (UNCDF) described the Liberian microfinance sector as in a "nascent stage":[1] UNCDF estimates that only 10% of a potential 82,000 clients have access to microfinance.[2] With over three-quarters of Liberia living on less than US$1 a day, the population is desperate for interventions. "Liberians, we need microfinance," says Malinda B. Joss, the Executive Director of the Women and Children Development Association of Liberia (WOCDAL), a local organization with a little over 100 microfinance clients. Many women lost their husbands in the war and so are now the sole breadwinners of their families. Participation in microcredit programmes is often the only outside support they receive. Ms. Joss believes WODCAL helps "them to feel they are still a part of society."
While still immature, the sector has grown since the establishment of the United Nations Mission in Liberia and the security that mission has provided. Two relatively large MFIs backed by international NGOs - LEAP of World Relief and Liberty Finance of the American Refugee Committee - have reestablished themselves and are seeking to enlarge their client bases. Some local NGOs have also begun to either reestablish or start offering services. Others will hopefully follow, but there are a number of hurdles.
The United Nations Development Programme (UNDP) is seeking to rectify this situation with its programme, Launch of an Inclusive Financial Sector in Liberia.[3] In July 2005, a team including representatives of UNDP, MFIs, the Central Bank of Liberia, and the Ministry of Planning and Economic Affairs attended the Boulder Microfinance Training Programme in Italy. The UNDP programme also encouraged the establishment of the Microfinance Network of Liberia, which now has a temporary board and a number of members.
The other major hurdle is the lack of a current government strategy on microfinance in the country. While a microfinance task force was recently created, with the first elections since the end of the war on the horizon, microfinance issues have the opportunity to be either championed or forgotten in the midst of a new administration coming to power.
The Global Microentrepreneurship Awards
In this context, UNCDF, under the auspices of the International Year of Microcredit, has brought the Global Microentrepreneurship Awards (GMA) to the country at a very opportune moment in history.[4] Scheduled to take place just four weeks after the October 2005 elections, it is hoped that the GMA Ceremony will highlight microfinance for Liberia's new leaders.
"It will send out a message to others," says Joel K. Bimba, a student of United Methodist University in Monrovia and member of the GMA Student Committee. The local student participants have themselves benefited from training in microfinance principles and hope the GMA will help sensitise the government and the public to the difference microfinance can make in people's lives. Student commitment to the programme and newfound understanding of microfinance will be one of the legacies left in Liberia, a country with little existing capacity in the area.
As the GMA is a global programme, the Student Committee has worked to ensure that Liberia's GMA retains a distinctly Liberian air. Beyond the best entrepreneur category, they have chosen two special categories which highlight the situation in Liberia specifically. Awards will be given to the individual who is doing the most to rebuild their community with their increased wealth as well as to the returnee with the best business.
The November 4th Awards ceremony will take place on a Friday after a weeklong campaign of publicity about both the GMA and microfinance in general, and the Microfinance Network of Liberia will join this campaign. The MFIs of the country are already on board for the contest, and handed in applications at the end of August.
The GMA Student Committee will submit the top 15 applications in each category to the Awards Selection Committee, which is made up of members of the NGO and media community as well as representatives from the Central Bank of Liberia and the Ministry of Planning and Economic Affairs. The Awards Selection Committee will have the final decision on who takes the grand prizes. Winners will receive cash prizes, and every applicant will be awarded a small prize, such as a table umbrella to help them keep dry in the long rainy season.
Moving Forward
All agree that Liberia has enormous potential for microfinance. The informal economy is everywhere. It spills onto every street, where people press their wares to passing cars. Recognizing this group as an entrepreneurial class, UNDP Country Director Steven Ursino sees microfinance as a tool to develop both the individual and the nation. "Microfinance has a critical role," he says "to create an environment [for this group] to move from informal to formal".
Yet the war is still fresh in the minds of both the population and the development community. This has created an environment of caution, and MFIs are only now moving from an amble to a more vigorous pace. The poor state of infrastructure outside the capital has also proven to be a challenging obstacle to expansion of services to the interior of the country. Some of the counties hardest hit by the war are not benefiting from microfinance for the simple lack of access. Getting out into the counties and empowering women to help themselves is what Ms. Kollie believes is the most pressing issue microfinance can address. When asked what she meant by the word "empower", Ms. Kollie put a bullion cube from her stall into the hands of a visitor and asked that it be passed back to her. Upon receiving it she said, "Now you have empowered me to sell this. For me - for my family." She held up the cube and said. "Yeah, I thank God for LEAP."
Whatever the current constraints, Liberia has the potential to develop into a bastion of microfinance, and celebrating the Global Microentrepreneurship Awards, and the achievements of people like Ms. Kollie, is an important step in that process.
For more information on the Global Microentrepreneurship Awards and the International Year of Microcredit, please visit: http://www.yearofmicrocredit.org/pages/gma/gma_2005programme.asp
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