Study of Microfinance Sector Capacity Building in Sierra Leone

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1.4. Possible Limitations and Challenges The following are the possible limitations and challenges to the smooth realization of this strategy: Assignment looked at the microfinance industry, which is heavily affected by developments external to it. Although recommendations have been made on some of these, events and circumstances outside of the industry could affect the success of the strategy At the time of completion of this assignment, there doesn’t seem to be an obvious, strong and effective institution to champion the implementation of the strategy after the PPFSD project ends. MFP-NaCSA, the requestor of the assignment, has since been significantly weakened by way of reduced professional staff, continued absence of operational funds and inadequate logistics There are considerable fundamental differences among stakeholders 8 that unless resolved are likely to affect the implementation of this strategy. 8 On their strategic thinking on key aspects of the industry page 6
2. THE MICROFINANCE SECTOR IN OTHER ACP COUNTRIES This subsection briefly presents the wider context and dynamics of microfinance in other ACP countries, putting the specific case of Uganda that shares a lot with Sierra Leone. The ToR required consultants to look into this wider context so as to complement the local lessons learnt in developing a suitable industry sector strategy for Sierra Leone. Microfinance as an industry has risen from incognito to worldwide recognition in less than 20 years. In many poor and middle income countries, it has played a key role in providing financial services for the poor, marginalized or remote rural people that the banking sector previously found “unbankable”. Among the ACP countries, the microfinance industry is at various stages of maturity – ranging from the very mature ones at the financial sector integration stage like Bolivia, Bangladesh and Uganda to those at the growth stage like Sierra Leone and to those at start-up stage like Liberia. In many ACP countries, especially in Africa, the formal banks have for long had limited interest in serving the low income people. The banks have tended to concentrate around urban and peri-urban centres to the relative neglect of rural areas where in most cases the masses live. Microfinance institutions are making headway in providing financial services for such people, although a lot still needs to be done. 9 Institutions offering microfinance services in ACP countries now range from some commercial banks to prudentially regulated MFIs in special tiers, non-regulated microfinance institutions, village banks, community banks, savings and credit cooperative organizations (SACCOs) and small, local community based organizations. Whereas the industry structure differs from one country to another, all these various institutional categories or their equivalents exist in most ACP countries that have a microfinance industry. Of the ACP countries that have developed a mature microfinance industry, Uganda has the closest similarities to Sierra Leone and thus offers the closest parallels (location in Africa, emergence from civil conflict in 1986 to establish economic structures to induce growth, and predominance of subsistence farming as the source of livelihood, large informal sector). In the work plan, the consultants agreed with the client to review the microfinance industry of one other ACP country and to get some lessons there from. The growth of microfinance in Uganda has shown that adaptation of international sound practices, active government support in creating a suitable environment, focus on sustainability, industry cohesion and a holistic approach to capacity building all play vital roles in promoting development of the industry. Appendix 4 to this report gives some details on the growth of Uganda’s microfinance. 9 In areas such as developing suitable products, more affordable pricing, broadening and deepening outreach page 7
Page 1: Study of Microfinance Sector Capaci
Page 5 and 6: Table of Contents LIST OF ACRONYMS
Page 7 and 8: LIST OF ACRONYMS Short ACP ADE AfDB
Page 9 and 10: EXECUTIVE SUMMARY This report artic
Page 11 and 12: PART I: OVERVIEW OF THE SECTOR ASSE
Page 13: The political will, national policy
Page 17 and 18: High level of illiteracy; overall,
Page 19 and 20: Profitability/ sustainability Asset
Page 21 and 22: Figure 1: Stages of Microfinance in
Page 23: 4. ACCESS TO FINANCIAL SERVICES IN
Page 26 and 27: purposeful assistance needs to be g
Page 28 and 29: TABLE 3: INDUSTRY STRENGTHS AND WEA
Page 30 and 31: 7.2. Opportunities and Threats TABL
Page 32 and 33: PART II. FIVE YEAR STRATEGY [2010-2
Page 34 and 35: Objective 4: Industry cohesion and
Page 36 and 37: The proposed structure of SMART-Cap
Page 38 and 39: 1.3.2. Establishment of SLAMFI For
Page 40 and 41: 1.4. Continuity Strategy of SMART-C
Page 43: APPENDICES page 35
Page 46 and 47: Strategic objective Outputs/ Indica
Page 48 and 49: Strategic objective Outputs/ Indica
Page 50 and 51: ACTIVITY RESP’ 2009 2010 2011 201
Page 52 and 53: ACTIVITY RESP’ 2009 2010 2011 201
Page 54 and 55: ACTIVITY Solicit donor funding for
Page 56 and 57: programmes grew fairly fast in numb
Page 58 and 59: Because of significant commercialis
Page 60 and 61: APPENDIX 4: ASSESSMENT OF NSOs 1. M
Page 62 and 63: - Challenging institutional context
Page 64 and 65:
B. Objectives and Institutional Cap
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- Developing and administering indu
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3. MICROFINANCE INVESTMENT AND TECH
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Output 4: Microfinance sound princi
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Financial endowment Poverty/ rural
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positive and negative lessons learn
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- Improve the human resource compet
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MININSTRY OF FINANCE, DEVELOPMENT A
Page 80 and 81:
The concept trains the people to be
Page 82 and 83:
CLAUSE ISSUE/ PROPOSAL 5 (4) BoSL t
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CLAUSE ISSUE/ PROPOSAL 2 Requiremen
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Government microfinance programs 65
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delegated institution could suffice
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H. LIST OF DOCUMENTS REVIEWED i) Th
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17 MFIs nb. of clients During missi
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APPENDIX 7: LIST OF PERSONS INTERVI
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24 Yoni Chiefdom 25 MatMCB 26 Jong
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APPENDIX 8: MFI PERFORMANCE SUMMARI
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Study of Microfinance Sector Capacity Building in Sierra Leone

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