BACKGROUND TO THE MICROFINANCE PROJECT
· In 2004, development partners (UNDP, UNCDF, KFW and Cord Aid) in collaboration with GoSL developed a Microfinance project named, ‘Development of Sustainable Pro-Poor Financial Sector in Sierra Leone 2004-2009’
· The goal of the project is to contribute to the achievement of the Millennium Development Goals by reducing poverty by half by 2015 through the provision of increased access to competitive and sustainable financial services to poor and low-income people for micro and small businesses
ACCOMPLISHMENTS OF THE PROJECT
· A total of 45,000 clients have been serviced by nine Microfinance Institutions (MFIs), with loans ranging from Le 300,00-Le 5,000,000
· Wide geographical coverage: Project is operating in nine district headquarter towns, including Freetown
· National Microfinance Policy has been implemented
· Capacity building through training of MFI and project personnel of UNDP
· Strategic partnerships with other donors and investors to mobilise additional resources
OBJECTIVE OF THE NATIONAL MICROFINANCE FORUM
To harmonize stakeholders concerns and build a national shared vision for the sector through discussion of critical project implementation issues so that the outcome forms the basis for redirecting the focus of the project.
KEY ISSUES DISCUSSED
1. Microfinance in Africa: Achievements, Challenges and Lessons learnt
Ø Sector development varies by country according to environment (political, economical, legal and regulatory frameworks), outreach and sustainability of the sector.
Ø Despite some important development during the last 10 years and some leading successful MFIs (Benin, Senegal, Kenya, Uganda), many African microfinance industries are still at ‘start-up to expansion’ phase.
Ø Micro and small-to-medium-sized enterprise (SME) development policies are positively impacting the market
Ø Implementing conducive legal and regulatory framework with more involvement of the Central Bank and the Ministry of Finance
Ø Donors supporting stand-alone microfinance programs and diverse financial intermediaries including the sustainability objective, internal capacities and inclusion of performance-based agreement
Ø Diversity of professional Technical Service Providers and competition
2. Overview of Sierra Leone Microfinance Sector and Evaluation of the Technical Service Provider (MITAF) as an institutional mechanism for achieving project output objectives
Ø High potential for financial services by the poor
Ø Improvement in capacity but limited number of MFIs delivering services
Ø Poor regulation and supervision
Ø Clarity of roles in terms of resource mobilisation, provision of direct technical services to MFIs and concentration on assessment and monitoring functions
Ø Increased capacity building for both Ministry of Development and Economic Planning (MODEP) and BSL
Ø Consistent and complementary monitoring and supervision requirements for community banks with that of the Banking Supervision Department
Ø Revision of Microfinance Investment and Technical Assistance Facility (MITAF) staffing structure to best meet future need
KEY RESULTS OF THE FORUM
Ø High level / professional participation in the sector
Ø Great success achieved in the sector as 45,000 clients serviced
Ø Shared vision amongst stakeholders with respect to outreach, sustainability, sound institutions and impact
Ø Revise implementation arrangements to promote national ownership
Ø Amendment of PRODOC and MOU
Ø Developing a national strategy for building a national shared vision with following elements:
§ Increased outreach between 100, 000-200,000 low income households and people in rural, peri-urban and capital city areas of the country
§ Provision of key products and services like credits, savings, remittances and money transfers
§ Services to be provided by specialized banks, MFI, NGOs, credit unions and cooperatives
§ Reduce income poverty by 25%
THE WAY FORWARD
Ø Achieve a developed microfinance industry with strong outreach, financial sustainability, sound institutions and high impact on poverty
Ø Intensify capacity building initiatives at both MFI and institutions dealing with project activities (training and technical assistance)
Ø Increased support of financing instruments (equity investment, etc)
Ø Expand networking with sub-regional and global actors (e.g. AFRACA, CGAP)
Ø Improved legal and regulatory framework
Ø Increased national ownership and smooth exit strategy of MITAF.
Photo: Mrs. Konah Koroma, one of the brains involved in the project.
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