On development
Over the past two decades, various development approaches have been devised by policymakers, international development agencies, nongovernmental organizations, and others aimed at poverty reduction in developing countries. One of these strategies, which have become increasingly popular since the early 1990s, involves microfinance schemes, which provide financial services in the form of savings and credit opportunities to the working poor. Small and micro enterprises(SME) are the backbone of many economies in Sub-Saharan Africa and hold the key to possible revival of economic growth and the elimination of poverty on a sustainable basis. Despite the substantial role of the SMEs in Sub-Saharan Africa’s economies, they are denied official support, particularly credit, from institutionalized financial service organizations that provide funds to businesses.
Perhaps that has changed. Recently, Barclays bank in Ghana started working with "susu collectors" to keep their money safe. According to The Economist (Sept 9th, 2006), there are about 5000 susu collectors operating in Ghana, each with an average of 400 clients. The interesting thing is that it is a $140m market that exist below the traditional banking radar. Barclays now offers "special bank accounts," training and lending to susu collectors, who in turn can provide credit to their clients. What we do not know yet is at what interest rate and what fees come with these loans?
The susu collecting business shows the sophistication and willingness of small businesses and traders without access to banking to save in the informal economy. But how do we expand on this creativity and entrepreneurship?
2 comments:
Microcredit as you rightly point out,seems to be the way to go. In India and many other developing countries it has shown great results. The beauty of the scheme is that it allows the working poor--who are best placed to determine their need and help themselves--to access the requisite capital to do so.
As with the example of Mr.Ken Ofori-Atta, who together with another Ghanaian US schooled man, Mr.Keli Gadzepko,founded the (then) innovative Databank Ghana;perhaps, a few of us (maybe from this group) can also take the concepts of microcredit and non-collateral based lending and adapt it to Ghana's development needs,particularly its informal and underground economy.
Well said. Actually, the idea of microcredit is not entirely new in Ghana because I know a number of banks apart from Barclays that offers such facilities, one of them being Ecobank Ghana limited that has a special product for those who save the susu way.
The problem with disbursment of the funds back to the people is that it does not sound financially prudent because the most of those who save this way operate small business individually. For example, I know of some farmers in Afife in the Volta Region who are producing lots of rice but are not able to access funds probably because of their organizational structure and their approach to the banks.
How do we solve this problem??? I think the best way out is to form co-operatives. Remember the old saying that when you take a single stick it breaks but when you take many it's difficult to break?? If these individuals will come together and form co-operative groups with a well defined status then I am sure the financial institutions will be more willing to help out with credit facilities. This is where the educated populace come in. There should be people who would go out and mobilise certain people who produce the same goods or services, streamline their activities and make them more organised, and then write proposals to access funds for them. I am afraid that unless we do this, the current trend of activities will continue.
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