Abstract:
Africa adopted different strategies and principles to make the microfinance programs truly successful. They made proper participatory plans to involve the local people in microfinance programs so that the local knowledge could be utilized. Africa tried to increase the operational efficiency of the microfinance institutions by mobilizing savings and by decentralizing the operations.Microfinance Africa offers an wide array of benefits to the people of Africa. Microfinance programs of Africa effectively address the problem of poverty through increased savings activities and financing activities.
In order to make the microfinance programs successful, Africa adopted some special principles or strategies.
Firstly, they emphasized on networking and prioritizing group information. It was understood that cooperation and collective support can be base of any strong microfinance program. These programs can be run both at national and regional level through different networking groups.
It was seen that the members of the networking groups were ready to form microfinance institutions to carry out savings and credit activities. These institutions performed extremely well in providing loans to poor people and also ensured repayment of loans. As these microfinance programs were carried out on the basis of mutual trust, participation ratio was quite high.
Secondly, Africa concentrated on utilizing local knowledge and did a participatory planning. It was understood that the microfinance programs that were carried out through participation of local people using local knowledge were highly probable to be successful. It was seen that people were voluntarily participating in taking financial decisions and in this way were ensuring the sustainability of the microfinance activities.
As a third strategy, Africa reinforced microfinance programs in order to raise the growth rate of the private sector. They tried to formalize the informal sector by empowering small entrepreneurs through providing small loans from Microfinance Institutions.
As the fourth strategy, Africa emphasized on increasing operational efficiency of the microfinance programs. In order to increase the efficiency of the microfinance institutions Africa undertook some measures. They carried out proper market research, developed monitoring and assessment tools to evaluate the operations of microfinance programs. They decentralized the operating system of the microfinance institutions and introduced loan interest rates that include operational costs. The microfinance institutions tried to avoid external dependency by utilizing volunteer staffs. Under the fourth strategy, the microfinance institutions of Africa targeted women and the poorest section of people as their prospective customers.
