Presentation on theme: "Western and Central Africa Rural finance WCA Strategy & Action Plan M. Manssouri, Country Program Manager Implementation Workshop, Bamako, 8-11 March 2005."— Presentation transcript:
Western and Central Africa Rural finance WCA Strategy & Action Plan M. Manssouri, Country Program Manager Implementation Workshop, Bamako, 8-11 March 2005
Regional Context Benin Burkina Faso Cape Verde Cameroon Central African Republic Chad Congo Democratic Republic of Congo Côte d'Ivoire Equatorial Guinea Gabon the Gambia Ghana Guinea Guinea-Bisseau Liberia Mali Mauritania Niger Nigeria Sao Tome and Principe Senegal Sierra Leone Togo Presently, IFAD has a loan portfolio of approximately USD 3.35 billion in 90 countries. The Western and Central Africa Division currently manages an active portfolio of 51 loan projects totalling about USD 610 million in 16 countries. About 1/3 of IFAD resources have historically been devoted to rural finance.
Rural finance in the Region: From Unsustainable Projects to Integrated Systems 1980s Centralized Systems (Top-down approach) Commercial Bank Development Bank Project 1990s Development of Decentralized Systems 2000s Integrated Systems Development MF I Viability Outreach Linkages Sustainability (participation, Interest Rate) Integration
Recurrently Insufficient Access to Rural finance in the region Informal savings & credit mechanisms Commercial Banks Exist but are insufficient Cannot adapt their financial products to the needs of poor and isolated clients Official agricultural credit institutions Problems of interference and low repayment rates is discouraging Integrated projects with credit component Disappointing results in terms of repayment, sustainability and impact Lack of access to capital (for income-generating activities, schooling, emergency situations, social obligations…)
Few MFIs have reached financial self-sufficiency. Only 40% of MFIs achieved operational self-sufficiency The need for capacity and institutional building far exceeds the need for capital Rural Finance in The Region : Insufficient Access in Rural Areas West Africa –272 MFIs reaching 2,351,800 clients –ECOWAS zone: 20% of households have access to MFI services. –MFIs have strong rural tradition (esp. in cash crops) Central Africa –1,034 MFIs reaching 414,000 clients –CEMAC zone: 8% of households have access to MFI services –MFIs are mainly urban MFI ResourcesWest AfricaCentral Africa Deposits64%69% Shareholder Capital20%11%
Credit provision within a project serious problems encountered when projects directly administer credit programmes Existing financial networks Using formal financial institutions as a channel for distribution of direct credit to poor rural populations is not always promising Support for self-sufficient sustainable MFIs: a long term effort Support for national rural finance systems through: –macro-economic stability –a regulatory and political environment that provides incentive for MFIs –Efficient Partnership among Government, MFIs/MFAs, funding agencies… Lessons learned: From unsustainable project to sustainable institutions
Future Challenges: Filling The Gap, Developing the Market, Serving the Rural Poor 10-20% Other appropriate forms of support 30-40% Extended micro- finance services 20%20%-30%Co-operative banks and specialized lending institutions Non-viable market Untapped market Cash crop zone population Urban population Dispersed, marginal populations Economically active populations & viable zones Forms of Support
The Rural Finance Strategy 1.To increase viability and outreach of rural finance 2.To strengthen implementation capacity at all levels for more effective rural finance interventions 3.To improve MFI monitoring & reporting and impact assessment of rural finance interventions
Operationalising the Strategy How to support quality rural financial institutions to reach the rural poor? How to build a conducive regulatory environment? How to meet the unmet needs (agriculture, poorest people…)? 1. Increase outreach and viability of rural finance 2. Strengthen Implementation capacity for more effective rural finance interventions How to further develop capacities at all levels? How to improve program implementation? 3. Improve M&E & Impact Assessment What is the Role of M&E in terms of increasing efficiency, learning, and policy dialogue ?