governments and their development partners to
in RMCs. The focus on the financial sustainability of
prioritize larger scale enterprises thus undermin-
microfinance excludes this segment of the popula-
ing the potential of small businesses that could
tion and negatively affects women entrepreneurship.
gain from microfinance.
In cases where the Bank has used microfinance as an instrument to financially include the poor-
5. Microfinance development perspective. Micro-
est—those who have no access to existing financial
finance institutions need to be categorized to bet-
services-- high interest rates (as high as 40% in
ter target the poor. In addition, the Bank’s strategy
some cases) have limited the achievement of the
should take into account the context of recent
expected outcomes. Participants suggested that the
crises (financial crises, climate change) that have
Bank subsidize endogenous microfinance entities
had a negative impact on the poor. Low capacity
to reduce transaction costs and ensure provision of
issues in MFIs should be addressed by opting to
microcredit to rural populations, who are excluded
subsidize these entities, thus reducing the high
from traditional financial services. Applying this to
transaction costs and high interest rates associated
agribusiness, where there is a great deal of economic
with the services they provide. With respect to
potential, would positively impact the achievement
the Bank’s interventions, its contribution through
of development outcomes. The development out-
microfinance is not likely to improve the living
come additionality would thus be stressed against
conditions of the poorest unless it changes how
the profitability of the microfinance investment.
it does business in microfinance. These different perspectives underscore the need 6. Economic growth perspective. Microfinance
for the Bank to explore alternative options for
does not have a significant impact on economic
implementing microfinance in RMCs. Participants
growth and job creation. This is because it is used
pointed to the benefit for the Bank to strengthen
primarily to finance non-tradable services with
its use of microfinance as a tool for achieving its
low value-added (small business). Therefore, there
longer-term development goal, which is inclusive
is a need to be proactive and to shift microfinance
growth for poverty reduction. Participants suggested
interventions in favor of sectors such as agricul-
that the Bank, as the premier financial institution in
ture, which offer a lot of potential to benefit the
Africa, should (i) allocate more resources (human
poorest in terms of generating employment and
and financial) and implement more microfinance
also contributing to inclusive growth.
interventions and thus increase its presence in rural areas; (ii) contribute to the improvement of microfi-
Synthesis of main challenges for the Bank’s inter-
nance regulation in RMCs; and (iii) enhance its own
ventions in microfinance: the problem lies in how
risk assessment capacity, in order to better contrib-
to reach the poorest in order to impact development
ute to the development of microfinance in Africa.
Experts who participated in the discussion: Mohamed Kalif, Division Manager, private sector perspective; Etienne Porgo, Lead Human Development Specialist; Ferdinand Bakoup, Lead Economist; Yeshiareg Dejene Chief Gender Expert; Gisela Geisler, Principal Gender Expert; Jeanne Nzeyimana , Principal Microfinance Expert; Lilian Wanjiru Macharia , Private sector perspective ; Zeneb Toure, Principal Civil Society Engagement Officer; Ali Eyeghe, Principal Social Protection Specialist; Hailu Makonnen, Consultant (OPEV).
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eVALUatiOn Matters