UNCDF | United Nations Capital Development Fund

FREETOWN - April 23, 2008

Sierra Leone: Rebuilding a Country, One Loan at a Time

UNCDF-supported Microfinance Programme Helps Sierra Leonean Businesses to Recover from the Crisis

Finance Salone helped Mojamah to rebuild her life when she returned home to Kenema, Sierra Leone from Guinea after the end of the civil war. She received a loan of US$100 and used this money to purchase a second sewing machine. Soon after, she was generating an income of US$15 to US$20 per week. This business is the main source of income for Mojamah and her family of six.

After more than a decade of civil war, Sierra Leoneans began returning to their country in 2001 in search of lost homes and businesses. That same year, the American Refugee Committee started providing loans to returning and host populations to restart their businesses and lives. Clients used the loans to purchase basic equipment or supplies to begin or expand small-scale trading, production, and service businesses, such as carpentry, market gardens, or street-side tabletop retail enterprises. Within the first year of operations, the programme served more than 3,000 clients through three local partners, developed systems for managing its portfolio and built local staff capacity to effectively disburse and monitor loans.

In the fall of 2002, with field operations in place, ARC and the microfinance staff turned towards making the programme sustainable. To focus energies and increase the chance of success, operations were consolidated under the banner of Finance Salone. In January 2005, Finance Salone became a registered company, and qualified for direct support in the form of funding, training and technical assistance from the Microfinance Investment and Technical Assistance Facility (MITAF), a five-year project funded by UNCDF, UNDP, KfW and CORDAID. Since 2006, Finance Salone has a received $700,000 in loans disbursed by UNCDF.

Finance Salone has the largest branch network among the MITAF MFI partners. As of December 2007 it had a total of nine branch offices and seven sub-branch offices, with 16,468 active clients and an outstanding loan portfolio of US$2,496,769.76. The portfolio at risk more than 30 days was 5.39 percent and the write off ratio was 0 percent. The operational self sufficiency rate was 108.98 percent, giving it a stream of capital growth for expansion. Finance Salone had a total of 80 employees.

Finance Salone offers five loan products including a solidarity group loan to low income entrepreneurs. Loans start at US $75 for seven months and increase to US $250 for 10 months for clients with on-time repayment. Finance Salone charges up-front fees and a 2.5% monthly flat interest rate. In order to serve clients whose needs have outgrown the group loan product, Finance Salone began to offer individual loans in 2006. These loans begin at US$350 with terms of up to one year. Finance Salone stared offering salary loans to salaried employees in 2007.

For more information on UNCDF's programmes in Sierra Leone, please visit the UNCDF Sierra Leone page.