IFAD, CBG, SDF Organises National Microfinance Summit

The first Microfinance summit was organised in 2003, the second National Microfinance Summit jointly funded by the Central Bank of The Gambia (CBG) in collaboration with the International Fund for Agricultural Development (IFAD) funded project in The Gambia Rural Finance Project (RFP), and Social Development Fund (SDF) organised the

summit on the theme “Building a Sustainable Microfinance Subsector for Poverty Alleviation” 30^th October to 1 November, 2013 at the Kairaba Beach Hotel.

Her Excellency Dr. Ajaratou Isatou Njie-Saidy, Vice President and Minister of Women’s Affairs said, there is no iota of doubt in her mind that the use of Microfinance as a development tool has been at the forefront of many country strategies and the Gambia is no exception.

She adds: “there is mounting evidence that the availability of financial services to the poor and low income population which is critical to poverty alleviation can impact positively on the welfare of the people.”

It goes without saying that the impact of Microfinance goes beyond just business investments, agricultural loans or the provision of saving services, she added.

The Financial services are also used for health, education, management of household emergencies as well as a wide variety of other cash needs, she also said, adding that, it was  reported at the Microfinance Investor Round Table in 2006 that potentially there is 1.5 billion microfinance clients.

The Consultative Group to Assist the Poor (CGAP) and the International Finance Agency (IFC) estimated that if the count includes all those who do not have a savings or credit account in their name with a bank or other financial institution, there could potentially by 2.7 billion clients in Microfinance, she said further.

The Micro-credit Summit Campaign set global outreach targets for providing access to credit for 100 million poor  households by 2005 adding that a survey in 2009 showed that this goal reach of 175 million of the world’s poorest families, especially women of those families, to receive credit for self-employment and other financial and business services by the end of 2015.

Further to this, she said the summit is working to ensure that 100 million families rise above the US $1.25 a day threshold between 1990 and 2015 saying that in The Gambia, it is estimated that practitioners have reach over 250,000 beneficiaries with microfinance services.

This, she went on, represents less that 20 percent of the population but may be higher considering the services that have been captured by official statistics. It is for this reason that priority must be given to building capacity on both the supply and demand side of microfinance to ensure greater outreach and sustainability of financial services.

In this regard it is critical to align the development of microfinance and in general non-bank financial services with the development of the capacity of the requisite clientele including Micro, Small, and Medium Enterprises (MSMEs).

Representing Minister of Finance and Economic Affairs, Permanent Secretary, Abdoulie Jallow took the opportunity to thank all stakeholders in the microfinance industry for their collaboration to organize a summit that will serve as a forum to share experiences on the status of the country’s microfinance sub-sector with a view to identifying challenges and mapping out a viable strategy for the provision of sustainable financial services to the economically active poor segments of the society.

Minister of Agriculture, Solomon Owens says “you will agree with me that access to appropriate reliable and sustainable financial services in the rural areas and to farmers in particular continue to be a big challenge in this country,” he added, “ as majority of our population, typical of most developing countries, are poor and predominately engaged in primary production for their livelihood, it is apparent that the largest part of this productive sector does not have access to very basic financial services such as savings and credit.”

This lack of access to credit for this mass of small farmers and off-farm enterprises hinders sustainable rural development saying that the Gambia’s main agricultural objective for the coming years is to transform the rural areas of the country and to reduce poverty levels by achieving at least 8 percent growth in the agricultural sector.

Governor Central Bank of The Gambia, Amadou Colley said that the government continues to place great importance on microfinance as a brunt tool in the fight against poverty saying that this commitment is underline by the microfinance initiatives aimed at increasing access to financial services especially to the poor and vulnerable segments of the population.

Presenting a paper on behalf of Village Savings and Credit Associations Apex (VISACA Apex) General Manager, Fanding Darboe on governance and ownership, he said that the VISACAs are user-owned, user-managed and user-financed micro-finance institutions adding that the philosophy of VISACAs put emphasis on self-management, self –help and self-sustainability.

Although this self-management and ownership can be a source of strength for VISACAs, it has over the years resulted into few individuals hijacking the VISACAs.

The property rights of the VISACA are poorly specified noting that this poorly-specified property rights can threaten the sustainability of the VISACAs.

He said that the ownership of the VISACA belongs to the village and the village as an entity is poorly defined, widespread and diffused; although the management committees and cashiers are selected by the village general assembly and are accountable to them, we have seen how management committees have perpetuated themselves and are not reporting their performance to the village general assembly and the general assembly’s have not been very effective to make the management committees accountable to the village thereby increasing the threat of opportunistic behaviours.

On regulatory issues, Darboe said that the VISACAs are regulated by the Central Bank of The Gambia. However, the regulation is silent on the issue of governance and ownership with regards to VISACAs.

“Unless the regulation of the CBTG insists on minimum qualification for the management committees and cashiers and performance enforcement by the VISACA Apex, the VISACAs will continue to be affected by poor performance.”

The financial autonomy, he said is the life blood of the VISACAs is its loan portfolio adding that the quality of that portfolio and the threat it pose to VISACAs when it is bad cannot be over emphasised.