• Guidance and evaluation

Guidance and evaluation

This paper offers a critical presentation of the development of the microfinance sector in Africa, based on the experience of selected countries. The paper supports the view that microfinance institutions effectively complement the banking sector in extending financial services, and successfully draw on the rich experience of community-based development. It finds that growing linkages between microfinance institutions and the banking system and the dissemination of good practices by nongovernment organisations contribute to the sound development of the sector.

Conclusions of the paper are:

• in sub-Saharan Africa, there is ample evidence that the poor, particularly those in the rural sector, value both deposit and credit facilities
• there is some evidence in Africa that MFIs, which engage in both savings mobilisation and credit extension, have faired better financially than those specialising either in deposit collection or in lending
• growing linkages between MFIs and the banking system in Africa appear to be mutually beneficial. MFIs rely on banks for a variety of services, while for banks, the benefits are the opportunity to expand their client base through MFIs, and to expand their operations through the network of MFIs
• governments in sub-Saharan Africa play a key role in promoting the microfinance sector by putting in place the necessary laws, regulations, and institutions for the licensing, prudential regulation, and effective supervision of the sector

• Full text of document
• Publisher details
• Send to a friend