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UNITED NATIONS CAPITAL DEVELOPMENT FUND Microfinance |
Issue 11 / April 2005 |
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Editor's Note
By all accounts, the conditions in sub-Saharan Africa are dire. The recent report to the UN Secretary General by the UN Millennium Project describes the region as the "epicenter of the crisis," reporting that sub-Saharan Africa has not met a single Millennium Development Goal (MDG), and is not on track to do so by 2015. The Commission for Africa was established to encourage stronger effort in a region whose plight it calls "the greatest tragedy of our time." While both groups call for massive increases in aid and are ultimately optimistic that their recommendations can be achieved, by promoting entrepreneurship, the Commission for Africa puts this success in the hands of the people who stand to benefit. Opportunities are hard to come by in countries like Zambia, where only 5% of the population has a bank account, or Tanzania, where 6% of the population has a savings account, and only 0.6% has taken out a loan.[1] Yet in spite of the enormity of this challenge, and in some cases, perhaps in spite of large international coalitions, many people on the ground are working to - and are achieving - change. This issue of Microfinance Matters is devoted to highlighting initiatives and progress in extending access to financial services to poor people in sub-Saharan Africa, one savings account at a time. Our Featured Guest is the pioneering African financial sector leader, BCEAO Governor Charles Konan Banny, who this month commemorated the International Year of Microcredit with a historic gathering of finance ministers, central bank governors, microfinance practitioners and the like to highlight the importance of microfinance in the region. The United Nations Capital Development Fund (UNCDF) is concentrating its efforts on a bold initiative to build inclusive financial sectors in Africa which takes a new approach to international cooperation by bringing all of the relevant participants together to maximum effectiveness, while IFC is focusing on building strong commercial institutions in such ravaged countries as Angola and the Democratic Republic of Congo. Exciting financial news comes from Faulu Kenya, which has gone to the capital markets with an incredibly successful bond issue - demonstrating both the potential of microfinance in Africa, as well as the success borne of innovation. Other local institutions are also responding to the tremendous possibilities represented by serving poor people, as traditional postal savings banks are reorienting themselves to provide microfinance services. Another success story which has emerged from most challenging circumstances is the Commercial Bank of Zimbabwe, which is demonstrating that microfinance means good business even in economic crisis, while our regular discussion feature, "Voices of Microfinance," elicited lively debate on the role of commercial banks in enterprise financing in the region. In order to understand the potential of the African market better, Great Britain's Department for International Development (DFID) is supporting a groundbreaking effort to collect data on microfinance, while the University of Cape Town's Financial Diaries project provides a rare glimpse into the daily household transactions of a real South African family. The International Year of Microcredit is also focused on the region. To date, twelve African countries have engaged in the Year, while three of the Year's Advisors, Princess Maxima of the Netherlands, Diederik Laman Trip, Chairman, ING Netherlands, and Marilou van Golstein Brouwers, Senior Fund Manager, Triodos Bank, visited microentrepreneurs and government officials in Kenya and Uganda to highlight the importance of microfinance in Africa. AIDS casts a long shadow over any talk of opportunity in Africa, but even here, the Rainbow model in Zambia is offering hope for a healthy and productive future through microcredit. In all, 2005 is a big year for development and for microfinance. Let's hope it's a big year for the people of Africa as well.
Vanessa Ward
(1) Report of the Commission for Africa, p. 434, note 173.
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