Grameen Dialogue -- a regular publication from Grameen Trust

Sub-Saharan Africa has long been characterized as a continent continuously beset by pervasive poverty, destabilizing political chaos, continued famine and general inadequacy of food and ethnic strife. Most recently, large parts of the continent have been overshadowed by the specter of the HIV/AIDS epidemic. Most of the countries in the region already have weak economies that are further bogged down by structural adjustment policies and external debt. The mobilization of funds for the support of structural adjustment policies has resulted in credit disbursements by banks. However, the money has been inequitably distributed, with most of it going to medium scale and larger domestic enterprises in an effort to stimulate economic growth. Thus, the need for financial institutions that cater to the poor at the grass roots level remains as strong as ever.

It is in this environment that micro-finance institutions (MFIs) have emerged in Africa, and are now struggling towards increased outreach, sustainability and a permanent place in the economic landscape. Many of these practice various forms of microcredit approaches through the operation of savings and credit unions/co-operatives and non-governmental organizations (NGOs) that provide microcredit.
These programs rely on soft loans, grants, subsidies, savings deposits, equity participation and, in rare cases, loans from formal financial institutions. However, these resources are scarce, and there are far too many MFIs vying for a slice of them. Studies show that a lack of access to funds both nationally and regionally, is a major problem. The legal infrastructure in these countries is also not the most conducive for the growth of MFIs, with many MFIs having to operate as credit and savings co-operatives due to governmental restrictions. There are relatively few large scale MFIs operating solely or mainly as microcredit programs. A lack of access to resources for the expansion of operation and of a suitable economic environment in which to operate, results in delaying or hindering many MFIs sustainability, also keeping them dependent on external technical assistance. It is a cyclical problem. Given the lack of sustainability and concrete policies towards financial and technical autonomy, many donors and commercial fund sources are unwilling to commit funds, thus perpetuating the problem.

Since the early nineties, Grameen Trust has supported Grameen replication projects in Nigeria, Senegal, Central African Republic, Egypt, Ethiopia, Kenya, Lesotho, Tanzania, Togo, Uganda, Cameroon, Mauritania, Zambia and Zimbabwe. In some countries, political instability, economic mismanagement, ethnic strife and even civil war have adversely affected the operations of GT’s partners. While the physical distance has made program monitoring by Grameen Trust challenging, many of the replication projects supported since the seed phase have grown steadily and are reaching large numbers of poor people. As of July 2003, Grameen Trust (GT) had disbursed a total amount of US $732,797 to 20 projects in 14 countries in Africa who have in turn disbursed. US $17,943,754 to 63,484 members. Group savings mobilized total US $ 1,697,459.

In order to strengthen the network of Grameen replicators in Africa, GT is organizing a workshop in Tanzania in August 2003 where all the GT partners in Africa can meet. It is an opportunity for African replicators to learn from their own experience and train together to improve the implementation of the credit programs within Africa. In this Africa focused edition, following are glimpses of some GT partners in Africa and their experiences.