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Based on the experience of selected countries, this paper offers a critical presentation of the development of the microfinance sector in Africa. The paper supports the view that microfinance institutions, especially those engaged in full financial intermediation, complement effectively the banking sector in extending financial services and successfully draw on the rich experience of community-based development and preexisting informal methods of financial intermediation in Africa. Growing linkages between microfinance institutions and the banking system and the dissemination of good practices by nongovernment organizations contribute to the sound development of the sector, supported by regulation and supervision by local authorities.
The book, "Delivery by Non-Governmental Organizations and Alleviation of Rural Poverty in Southwestern Nigeria" is written based on a research conducted to investigate the effects of microcredit and saving facilities through microfinance Non-Governmental Organizations (MNGOs) on poverty alleviation among smallholders in rural Southwestern Nigeria. The study was carried out among clients and non-clients of two MNGOs viz: COWAN and FADU in the area. Multistage random sampling was used to select 200 samples from each of clients and non-clients of MNGOs. Primary data obtained were analyzed using descriptive and inferential statistics. The analysis was unique in that it made extensive use of difference of two means and deviation measures among others to discuss similarities and differences in socioeconomic characteristics of the groups in comparison. The study provided a conceptual framework that explained how micrifinance provision by NGOs can move clients away from poverty line. It analyzed the incidence, dept and severity of poverty as well as the determinants of poverty, savings, mcrocredit repayment among clients and non-clients of NGOs.
FinTech is a major force shaping the structure of the financial industry in sub-Saharan Africa. New technologies are being developed and implemented in sub-Saharan Africa with the potential to change the competitive landscape in the financial industry. While it raises concerns on the emergence of vulnerabilities, FinTech challenges traditional structures and creates efficiency gains by opening up the financial services value chain. Today, FinTech is emerging as a technological enabler in the region, improving financial inclusion and serving as a catalyst for the emergence of innovations in other sectors, such as agriculture and infrastructure.
The main focus of this book is to analyze the efficiency of MFIs operating in Sub-Saharan Africa. Data Envelopment Analysis was employed using both intermediation and production approaches. The results from the intermediation approach revealed that the mean technical efficiency, pure technical efficiency and scale efficiency of MFIs in Sub-Saharan Africa were found to be 20.9 per cent, 39.5 per cent and 52.4 per cent, respectively. The results from the production approach revealed that the mean technical efficiency, pure technical efficiency and scale efficiency of MFIs in Sub-Saharan Africa were found to be 23.2 per cent, 36.8 per cent and 69.6 per cent, respectively. The important constraints faced by MFIs in Sub-Saharan Africa were High Operational Costs followed by Lack of Availability of Services and Weaknesses of MFIs in management, governance and staffing. Hence, the sample MFIs opined that reinforcement of capacity and promotion of research, training and capacity building may be promoted to improve the overall efficiency of MFIs operating in Sub-Saharan Africa.
Africa is home to some of the poorest and vulnerable populations in the world. The ten poorest countries in the world are in Africa. Sub-Saharan Africa is the region with the highest incidence and greatest depth of poverty in the world. Fewer than one in five adults in Africa has access to the services of a formal or semi-formal financial institution. Microfinance in Africa is growing, though. A broad range of diverse institutions offer financial services to the poor and low-income clients in Africa. These include non-governmental organizations, non-banking financial institutions, cooperatives, credit unions, rural banks, Rotating Savings and Credit Associations (ROSCAs), postal financial institutions and an increasing number of commercial banks. Increasingly, technology is being used to expand microfinance outreach mobile phone banking is one such example. This book provides an overview of the microfinance sector in Africa, reviews the performance and impact of microfinance institutions in the region, and outlines some of the opportunities and challenges that African microfinance has on hand.
Drawing on its extensive experience in helping restructure and reform financial systems, the World Bank examines the state of African domestic financial systems in a global comparison. It identifies promising trends as well as pinpointing the major shortcomings that are observed across sub-Saharan Africa. Policy recommendations distinguish between those designed to make finance a more effective driver of economic growth and those designed to give low income, small-scale and other excluded groups better access to financial services.
The financial sector in rural areas, where most of the poor people in sub-Saharan Africa are found, has transformed massively in recent times, notably through the increased penetration of several types of rural financial intermediaries in addition to rural and community banks and microfinance institutions. Using recent household survey data, we ascertain the access of rural populations to various types of financial services, and the influence of rural financial intermediation on poverty reduction, in Ghana. By accounting for the potential endogeneity of access to financial services, we show that rural households with access to basic financial services are significantly more likely to be non-poor than those without such access. In order to more sustainably tackle the goal, highlighted in the Sustainable Development Goals, of eliminating global hunger or extreme poverty, the poor must be allowed to obtain meaningful access to financial services through the design of efficient pro-poor financial products.
The use of microfinance for poverty reduction and economic development in the developing world is growing. However, this concept needs to be expanded to ensure its successful application for achieving longer-term economic growth and sustainability in developing countries, particularly in parts of the world such as Africa. As such, further research into the relationship between microfinance and sustainable development in developing regions is required to fully understand the opportunities for effective use of microfinance for poverty reduction and economic development. Microfinance and Sustainable Development in Africa examines the complex relationship between receipt of microfinance, poverty reduction, economic growth, and microbusiness development, focusing on the provision of small credit facilities as a driver of sustainable development in Africa. Its coverage of topics such as microbusiness, social finance, and sustainable development make this book an ideal reference source for academicians, researchers, government officials, policymakers, organizations, managers, instructors, and students.
Financial sector development in sub-Saharan Africa continues to lag behind the rest of the world, despite some recent positive achievements. There is a growing consensus that financial development fosters economic growth, so why has more not been done to spur financial advancement in Africa? This book is one of the few that tackles the debate of financial development in Africa head on. It stems from the proceedings of a high-level conference organized by the IMF Institute with contributions by experts from official agencies in Africa, international financial institutions, the private sector, and academia. The book begins by presenting the reader with compelling theoretical perspectives on the determinants of financial growth, empirical analyses of the impediments to financial growth and overviews of developments in individual sectors. It discusses policy issues related to financial sector stability, regulation and supervision. The final part investigates how specific measures can create room for financial growth, even when the broader institutional framework remains weak. Case studies demonstrate how individual countries have tried to stimulate financial development, or how specific measures, such as the establishment of credit reporting systems, can generate a positive impact on financial growth. Everyone interested or involved in deepening finance in Africa will find information and inspiration in this insightfull collection of papers.
Sub-Saharan Africa comprises of countries with high poverty prevalence rate, deteriorating human welfare development and high population growth rate, where majority of the populace dwells in the rural areas not served by the formal financial institutions. Thus, necessitated the creation of grass-root banks in providing microcredit for enhancing human welfare at the rural end of the economy. There is plethora of studies in literature on microcredit and poverty alleviation, but the controversies of the precise transmission nexus between grass-root banking, microcredit and productivity still remained a puzzle. In an attempt to make significant contribution in providing conceptual, theoretical and empirical evidences and highlights on the controversial issue. The transmission channel has been identified to stem from grass-root banks composition of rural based commercial and merchant banks, cooperative society and microfinance institutions in making available microcredit for rural financial users. The accessibility and availability of microcredit in terms of low interest rate, zero collateral and adequacy is found dependent on the operating environment of the financial system.