Study of Microfinance Sector Capacity Building in Sierra Leone

The NGOs offer basic individual and/ or group loans, with group
guarantees backed by collateralised or “mandatory” savings. Community
banks have a number of loan and savings products. The loan products of
community banks are very similar in their features, making them variants
of the same product rather than distinct products. Delivery
methodologies are also quite limited, involving (in most cases) clients
coming to the MFI premises or other designated location to get the
services.
Overall, there needs to be significant efforts at product development and
innovation over the next five years. Potential areas of product
development are asset finance/ micro leasing, micro housing/ mortgage
loans, special purpose savings deposits, agricultural loans, energy
equipment finance (like end-use finance for photovoltaic equipment), and
longer term loans for agro processing/ agribusiness value chain.
3.5. Professionalism in managing MFIs
As can be inferred from table 1 above, some MFIs are very professionally
managed and others are in dire need. Generally, the NGOs are doing
better in adopting and adhering to sound practices. The community
banks generally have a longer way to go.
Professionalism of the industry in Sierra Leone has in the last four years
been facilitated and in a sense driven by MITAF. Although by design
MITAF had a well defined and limited mandate, the project has
undertaken activities which have helped the MFIs to become more
professional and improve their operations.
3.6. Level of awareness of key sound practices
The 10 MFIs working with MITAF are very aware of international sound
practices and have imbibed them to varying degrees. Their management,
staff, board members have also been trained on key areas of sound
practices. Other institutions offering microfinance and other stakeholders
have, however, not been exposed adequately.
3.7. Stage of growth
Microfinance sectors/ industries that have matured into integration
(where microfinance is an integral part of the financial sector) have
generally gone through the following broad stages:
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