EmpowerAID
Empowering African Individual
Development through
Microfinance
Lisa Brownstein
Peter Fleck
Reena Shetty
Janelle Sorensen
Veena Vadgama
What’s the difference between you
and her?
Every 30 seconds a child dies
of malaria
http://www.unmillenniumproject.org/documents/UNMP-FastFacts-E.pdf
4 out of 10 people do not even
have access to sufficient food
or clean water
http://www.un.org/waterforlifedecade/factsheet.html
http://www.unmillenniumproject.org/documents/UNMP-FastFacts-E.pdf
The region is rife with political
instability and violent conflict
Dire State of Sub-Saharan Africa
Proportion of children
completing primary school
Gender equity and empowerment
Economies at risk
Human Development Index
http://news.bbc.co.uk/1/shared/spl/hi/pop_ups/04/africa_africa___the_world0s_poorest_continent/html/4.stm
http://maps.grida.no/theme/poverty
Millennium Development Goals
• Developed in the year 2000
by the UN
• Eight Millennium
Development Goals (MDGs)
pledged by 189 world leaders
and member states
• MDGs range from halving
extreme poverty to halting the
spread of HIV/AIDS and
providing universal primary
education
• MDGs propose a target date
of 2015 to reach initial goals.
• Rigorous efforts and intent to
meet the needs of the world’s
poorest.
Current UN and World
Bank Policy Examples
• Comprehensive Development Framework - emphasizes
the interdependence of all elements of development
• Africa Action Plan - investing in better health and education,
supporting agriculture and private - sector development, closing the gap in
infrastructure and expanding access to power, water, and transportation
• Millennium Project - emphasizes coordinating aid, addressing
systemic problems, investing in technical assistance and aligning
development assistance with the MDGs.
www.worldbank.org/cdf/
www.worldbank.org/features/2007/africa-landing.htm
www.unmillenniumproject.org/
Recommendation Overview
• Maintain holistic work
• Increase MFI work
• Invest in Technology
• Re-evaluate and reallocate in 2015
EmpowerAID:
Empowering
African
Individual
Development
Why Microfinance?
•
•
•
•
•
Do you have a savings account?
Do you have a credit card?
Do you have insurance?
Have you taken out a student loan?
Do you have a home mortgage?
These tools we take for granted help a person move
forward and provide a safety net for hard times.
"Where once the poor were commonly
seen as passive victims, microfinance
recognizes that poor people are
remarkable reservoirs of energy and
knowledge.”
Kofi Annan, former Secretary General of UN
Microfinance Programs
• Micro-Savings - secures investments in
future
• Micro-Insurance - provides a safety net
for unexpected set backs
• Education Services - expands
customer’s capacity to benefit from
financial services
Microcredit
• What is Microcredit?
– Small loans to the
poor
– Microcredit lending
programs have
proved successful,
can be easy to
implement, and are
relatively low cost
Entrepreneur: Jeneba Kamara
Location: Kabala, Sierra Leone
Primary Activity: Fish Selling
Amount Repaid: $125 of $200
http://www.kiva.org/app.php?page=businesses&action=listJournals&pageID=16
Why Microcredit?
• It’s loans, not aid
• Strong and large
coalition
• Empowers
women
• Extremely high
repayment rates
• Currently in Africa…
• Upper/Middle Guinea
– ADRA has provided
technical assistance and
credit to ~7000 farmerhouseholds in Guinea
• FINCA Uganda
– Provided over 20K loans
to low-income women
– 96.7% on time repayment
http://www.yearofmicrocredit.org/
http://www.microcreditsummit.org/press/FINCA.htm
http://africastories.usaid.gov/search_details.cfm?storyID=323&countryID=9&sectorID=0&yearID=5
Implementing
Microcredit
Programs
Two distinct approaches:
• Government-Supported
Banks
– Advantages
• More capacity
• Larger range of services
– Disadvantages
• Harder to establish
• May not be an option in certain
countries
• Non-profit organizations
– Advantages
• Untapped pool of lenders
• Less restrictions
• Easier to setup
– Disadvantages
• Usually focused on a niche
Invest in core technology
• Track loan repayments
• Enable credit scoring
• Produce reliable reporting and data analysis
– Performance data and financial statements
• Anchor delivery services
– m-Banking
• Sustain growth
Banking with cell-phones
• One cell phone for every nine
Africans
– Three landlines per 100
• Preliminary research indicates
acceptance
• Necessary to craft supportive
regulations
• Support open standards
Stakeholder Snapshot
Power Interest
United Nations, World Bank, G8, Africa
Development Bank, African Union,
NEPAD, cell phone companies
Power Interest
Champions: Bill Clinton, Bill Gates, Bono,
Oprah Winfrey, George Soros, Jeffrey
Sachs
FINCA, KIVA, Grameen Foundation,
impoverished citizens, Thousands of
NGOs around the world working on
development issues
Power Interest
Corrupt African Government Leaders
Power Interest
Voters and General Public of developed
nations
Success Stories
Entrepreneur: Pendo Luisi
Location: Dar es Salaam, Tanzania
Primary Activity: General store
Loan Requested: $175 to pay back monthly
http://www.kiva.org/app.php?page=businesses&action=about&id=23303
Success Stories
Entrepreneur: Maria Admirada Paulo Molane
Location: Mahotas-Maputo, Mozambique
Primary Activity: Agriculture
Loan Requested: $400 to buy more material
http://www.kiva.org/app.php?page=businesses&action=listJournals&pageID=24
Success Stories
Entrepreneur: Maman Motuke
Location: Kinhasa, Zaire
Primary Activity: Selling Chikwangue
Amount Repaid: $100 of $100
http://www.microcreditsummit.org/stories/zaire1.htm
Conclusion
Whatever one’s motivation for attacking
the crisis of extreme poverty—human
rights, religious values, security, fiscal
prudence, ideology—
the solutions are the same.
All that is needed is action.
Jeffrey Sachs, economist and
Director of the UN Millennium Project
Thank you!
Go to EmpowerAID.org to learn more.
References
Slides 16 & 17
Grameen Foundation. (2007). IBM partners with Grameen Foundation to expand Mifos. Retrieved December 1, 2007, from
http://www.grameenfoundation.org/resource_center/newsroom/news_releases/~story=253
Ivatury, G. (2004). Harnessing technology to transform financial services for the poor. Small Enterprise Development, 15(4).
Ivatury, G., & Pickens, M. (2006). Mobile phone banking and low-income customers: Evidence from South Africa . Washington, D.C.:
Consultative Group to Assist the Poor/The World Bank and United Nations Foundation.
Massachusetts Institute of Technology. (2007). Why Africa? Retrieved November 17, 2007, from http://eprom.mit.edu/whyafrica.html
Mathison, S. (n.d.). Increasing the outreach and sustainability of microfinance through ICT innovation. Retrieved November 18, 2007, from
http://www.fdc.org.au/Electronic%20Banking%20with%20the%20Poor/1%20Mathison.pdf
Mifos. (2007). What is the Mifos Initiative? Retrieved December 1, 2007, from http://www.mifos.org/about
Porteous, D., & Wishart, N. (2006). m-banking: A knowledge map. Retrieved December 1, 2007, from
http://www.infodev.org/en/Publication.169.html
Rice, Xan. (March 4, 2006). Phone revolution makes Africa upwardly mobile. TimesOnline. Retrieved December 8, 2007, from
http://www.timesonline.co.uk/tol/news/world/article737130.ece
Schreiner, M. (2004). Credit scoring for microfinance: Can it work? Retrieved November 18, 2007, from
http://www.microfinance.com/English/Papers/Scoring_Can_It_Work.pdf