BACKGROUND INFORMATION

                     MICRO-FINANCE IN AFRICA

                       KENYA, 18TH – 29TH SEPTEMBER 2006


1.      Micro-finance is becoming the preferred weapon in reducing poverty, creating jobs
and developing income-generating activities by providing financial services (savings and
credit) adapted to poor low-income groups with little income that are usually excluded from
the traditional banking sector.

2.     Microfinance has attained unprecedented recognition as one of the most important
tools for economic development by governments, international organizations and
development agencies. Various organizations have contributed and continue to contribute to
a better understanding of rural and microfinance and its role in economic development
through research, seminars, workshops and publications.

3.       Governments are now developing legal frameworks for the operation of microfinance
institutions in a number of countries. Commercial banks and specialized regional
organizations are systematically incorporating rural and microfinance as a component of
their organization’s implementation strategy, or as an overall goal for reaching and
impacting on the lives of the poor.

4.      In fact, in Kenya, microfinance is now becoming not only a means of reaching the
poor with financial services, but also a business. Commercial banks, hitherto wary of the
poorer segments of the population are downscaling and providing loans to that type of
market, formerly patronized by NGOs and cooperative societies. Some NGOs, e.g. K-Rep
NGO up scaled to become microfinance bank and now competes favorably with other
commercial banks both in banking and microfinance business. NGOs on the other hand, are
re-engineering their operations in readiness for deposit taking as soon as Cooperative
societies are still the main providers of microfinance services in Kenya and are struggling to
maintain their market now being encroached by commercial banks and NGOs.

5.      Microfinance institutions themselves have continued to learn from their mistakes and
have realized that the way to make microfinance programmes survive is through being
efficient and offering demand driven products. As a result of the above, many changes
have continued to take place, though at different paces in different countries.

6.      There is therefore a need for development of programme for professionals from
micro-finance programs and institutions that responds to their needs for access to different
experience and practices in the field of micro-finance and helps advance discussion and
action in this field.

7.      In order to continue to contribute to the development of the financial sector and
poverty reduction in Sub Saharan Africa, The CTA (Technical centre for agricultural and
rural cooperation) and the African Rural and Agricultural Credit Association (AFRACA) are
organizing a study visit on micro-finance and micro-credit targeting women experts given
their specific role in the development of microfinance in Africa. This study visit will enable
the staff to be better equipped for improved dispensation of their duties hence improved
financial service provision in Africa. The Women executives will also get exposure to some
products and delivery methods which could be replicated in their home countries.


8.     The target participants in this study visit will be senior women officers in
member/non-member institutions either running rural and microfinance operations or units.
Such individuals should be technical persons senior enough to influence decision making in
microfinance activities and should be able to disseminate information regarding the
experiences gained from Kenyan institutions.

9.      Approximately twenty senior Officers will be selected from the following countries:
South Africa, Lesotho, Zambia, Uganda, Tanzania, Ethiopia, Zimbabwe, Senegal Mali,
Nigeria and Ghana, Sierra Leone, Mozambique, Burkina Faso, The Gambia. The selection
of the institutions below takes into consideration their achievement in rural and microfinance

Table 1: List of countries and institutions to be invited
South Africa:   Land Bank
Lesotho:        Bolibo Multipurpose
Zambia:         Cetzam
                Zambia National Savings and Credit
Zimbabwe:       Agribank Zimbabwe
Uganda:         Uganda Finance Trust
Tanzania:       Presidential Trust Fund
                Dar es Salaam Community Banks
Ethiopia :      Commercial Bank of Ethiopia
Sénégal:        Femme Développement Economique en Afrique (FDEA)
Mali:           Kafo Jiginew
Bénin :         Promotion et Appui au Développement des Micro Entreprises (PADME)
                Vital Finance
Nigeria         First Bank
                Union Bank
Sierra Leone    Bank of Sierra Leone
Mozambique      Central Bank of Mozambique
Burkina:        Banque Régionale de solidarité
                Promotion du Développement Industriel et Artisanal Agricole (PRODIA)
Ghana:          Anum Rural Bank
The Gambia:     Bank of The Gambia


10. The study visit will take place in Kenya from 18th – 29th September 2006.
Participants will visit various microfinance institutions and other institutions providing
microfinance services in Kenya. This is a suitable choice because the Microfinance industry
in Kenya has grown immensely and there are various lessons worth learning from.


11. The overall objective of the study visit is to contribute to promote rural finance and to
strengthen rural economies in rural areas of Africa. The specific objective of the visit is to
enhance the capacities of Women Executives from AFRACA member institutions to
implement and operate sustainable microfinance institutions especially those targeting the
rural poor or programmes for improved rural finance delivery and access.


12. The theme of the whole visit is “the role of women in the development of
microfinance in Africa” This theme will be addressed will include legal and regulatory
frameworks for rural and microfinance; successful methodologies in microfinance
operations; up-scaling by microfinance institutions; financial services for women; financial
services to farmers groups; the role of micro-finance to vulnerable groups, user-owned and
managed microfinance institutions; as well as some service providers such as Micro Save.

13. At the end of the study visit, there will be a two-day seminar to synthesize and collate
information received from the field, and relate conceptual issues in microfinance and field
level practices.


14. The activities planned can be placed in five main categories:

       (i)     Site visits to various micro-finance institutions in Kenya.

       (ii)    Meetings with the managers of the supervising structures of the Micro-finance
               institutions. For each institution whose principal site is visited a subsequent
               meeting will be organised with its management to place the information
               obtained in the larger context of the institution as a whole, and thus arrive at a
               general understanding of the situation.

       (iii)   Meetings to present the micro-finance institution of participants from outside
               Kenya. To avoid focusing solely on what Kenya institutions have to offer,
               participants from other countries will present their micro-finance institutions,
               thus providing a wider exchange of experiences.

       (iv)    Production of a documentary on the study visit. The documentary will be
               distributed to the participants and to other microfinance stakeholders.

       (v)      Reports will be produced every two days. These reports will be posted on
               CTA and AFRACA websites to keep interested parties abreast with study visit


15.      At the end of the study visit, it is expected that participants will:

       Have benefited from the sharing of experiences and knowledge among themselves
        and those from microfinance institutions in Kenya on various issues of microfinance
        including different microfinance methodologies, institutional structures and systems;
        regulation (microfinance bill) performance levels and best practices in microfinance;
       Have gathered information to enable them improve their operational systems,
        service delivery methodologies, products offered, and outreach mechanisms;
       Be able to disseminate to other members of their organizations, best practices and
        innovations learnt from the exchange visit.


16. The first day of the study visit will be devoted to the presentation of the micro-finance
activities of the participating institutions. Site visits will begin on the second day and
continue until the ninth day. They will be followed by two days sessions to summarise the
lessons learned, make conclusions on the visit and discuss activities to spread the impact
on the visit to participating institutions and countries.

17. The study visit will involve visiting/discussing with officers of several microfinance
institutions, SACCOs, Banks and other Service Providers to get a feel of the microfinance
sector. These institutions will include the Association of Microfinance Institutions of Kenya
(AMFI), the Central Bank of Kenya (Microfinance Division), Savings and Credit Co-
operatives with front office services, Financial Service Associations, Microfinance
Institutions using Grameen Lending Methodology; K-Rep Bank (a microfinance bank),
Kenya Women Finance Trust (KWFT) and some commercial banks involved in Microfinance
(Cooperative Bank of Kenya and Equity Bank). Although the study visit will be mainly to
institutions around Nairobi, institutions in other towns may be visited for diversity


18. Dissemination of information after the study visit – participants is expected to share
information obtained with other personnel once they return to their institutions. They are
further expected to discuss and implement innovations they must have observed. The
comparison of practices in home institutions and those observed at sites in the hosting
country (Kenya) will be a source of learning staff of home institutions; it will enrich the

diversity of strategies, methods and management tools used to facilitate the development of


Please contact:
Mr. André Vugayabagabo                                  Mr. Rasmane Ouedraogo
Senior Programme Coordinator                            Secretary General
Communication Channels & Services Department            African Rural and Agricultural
Technical Centre for Agricultural                       Credit Association
And Rural Co-operation (CTA)                            P O Box 41378 - 00100
Postbus 380, 6700 AJ Wageningen                         Nairobi
NETHERLANDS                                             Kenya
Tel: +31 317 467 158                                    Tel: 254 20 2717911/2715991
Fax: +31 317 460 067                                    Fax: 254 20 2710082
Email: Vuga@cta.int                                     Email: afraca@africaonline.co.ke


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