Inflammation and stories on Microfinance

Essential Financial Tools for Small and Medium Scale Businesses
Businesses drive the economic and overall growth of a country, and strong and thriving businesses generate income, employment opportunities and support families. In fact, these groups constitute the core of a nation’s socio-economic development.

In a developing country, this valuable contribution is made predominantly by small and medium scale businesses. Experts agree there are two essential financial tools for small and medium scale businesses in a developing economy:

  1. Micro-loans
  2. Insurance

Together these two financial tools can bolster the steady growth of a business and insulate it against unforeseen circumstances such as bad weather and unfavorable market conditions.

Micro-Loans

Micro-loans are a fundamental tool for small and medium scale businesses. Micro-loans are small amounts of money borrowed from a bank or a financial institution which can be returned in minuscule monthly installments over a few years. Depending upon the borrower’s income, the installments can be as low as a few cents a month.

Often, there are no additional charges involved. “I’ve worked in microfinance long enough to know that late fees create a cycle of debt,” says Matt Flannery, founder and CEO of Branch, a mobile lending platform that remotely transfers money ranging from $2 to $500 to bank accounts of poor small-scale entrepreneurs in Kenya. Like Branch, many other startups in the developed world are contributing to the success of mushrooming small and medium scale enterprises in developing nations around the world.

The significance of these financial tools for small and medium scale businesses has been reinforced through various initiatives of the World Bank as well. In Turkey, a World Bank project helped expand the export capacity of small and medium scale businesses through micro-loans worth $1.7 billion in Export Finance Intermediation Loans. The project report showed that participating companies introduced new products, increased exports and benefitted sales and employment significantly.

Insurance

The second among the financial tools for small and medium scale businesses is insurance. Insurance creates a safety net for a businesses, and in case a business isn’t as successful as initially perceived, insurance can be used to pay off debt. Insurance thus provides an opportunity for the entrepreneur to avoid the vicious cycle of poverty, and is also proven to encourage risk-taking and improve business competitiveness.

A recent report published by the World Economic Forum stated that one in three people in Latin America lives in an area threatened by frequent floods and climate change. In countries like Mexico, Puerto Rico, Peru and Guatemala, insurance is the most effective financial tool for small and medium scale businesses.

Success vs. Failure

Public-private partnerships in many Caribbean countries provide risk cover against earthquakes, hurricanes and other natural disasters. Recently the World Bank issued sustainable development bonds to Chile, Columbia, Mexico and Peru to provide comprehensive insurance covers worth $1.36 billion against earthquakes.

These two financial tools can mean the difference between success and failure for many businesses. Increasing access to micro-loans and insurance in developing countries can help businesses grow and expand, resulting in many more people being lifted out of poverty.

– Himja Sethi
Photo: Flickr

credit access in the central African republicSince its independence from France in 1960, the Central African Republic (CAR) has faced adversity in growing its economy. While poverty plays a significant role in the region’s struggles to achieve food security, safe sanitation and shelter, a lack of credit access in the Central African Republic is another main contributor.

Obstacles to Credit Access in the Central African Republic

Making Finance Work for Africa (MFW4A) states that the weaknesses in the CAR’s financial sector have held back its economy, as it contributes only 17.6 percent to the country’s GDP. The inadequacy of services also makes it difficult for people to access loans or other banking services that could be helpful in their businesses or personal lives. To help the CAR’s citizens improve their quality of life, increased credit access in the Central African Republic is crucial.

CAR’s financial services have been relatively stable, but the sector is considered fragile due to deficient bank loan portfolios and inactive loans, known as non-performing loans (NPLs), which account for 30 percent of all loans in the CAR. The sector also has an above average percentage of loans to the public sector, making it vulnerable to losses due to government instability.

To help address these issues, the International Monetary Fund approved a disbursement of $40.2 million and an augmentation of $55.1 million to the CAR in 2017 as part of the Extended Credit Facility Arrangement. The funds will be used to support economic growth and develop the banking sector. According to Deputy Managing Director and Acting Chair Mitsuhiro Furusawa, the CAR’s program consists of “improving regional institutions, stricter monetary policies, removal of statutory advances, sound bank regulation and supervision, and firm controls over the extension of credit to banks.”

Bringing Credit to Individuals in the CAR

A more direct way of aiding impoverished families is through the Mercy Corps project Microfinance in the CAR, which launched in 2010. The project’s mission is to produce, educate and assist 169 Village Saving and Loan Associations (VSLA). The project was also created to assist in constructing supervision strategies, insurance funds and credit policies. The project’s answer to the CAR’s issues is to educate the VSLA groups to practice saving and credit strategies during the members’ first nine-month loan and savings cycle. Its long-term goal is to help 3,300 households by expanding the groups’ assets in developing and overseeing independent businesses to gross earnings.

In recent years, credit access in the CAR has been made possible through a microfinance program established by the U.N. Development Programme (UNDP) for entrepreneurs developing businesses. The UNDP opened a saving bank called Gogoro that gives users the opportunity to save money securely. Severin Saragourne, an entrepreneur and a user of Gogoro, said, “If you borrow wisely and respect the deadline for your program, you’ll have no problem paying the money back.” The micro-credit program has saved many people from poverty and starvation in the CAR. Through Gogoro, more than 49,000 people in underdeveloped nations have received access to credit, savings and other financial services to overcome poverty.

Another sign of progress in financial services is the UNDP’s project with the Leaders of the International Centre of Credit Unions, which made magnetic cards available for all transactions in 2011. Even with the obstacles the CAR has struggled with, the region shows promise in improving its financial sector and resolving the limitations of credit access in the Central African Republic.

– Christopher Shipman

Photo: Flickr

Credit Access in Iraq
There is a plethora of obstacles to overcome when examining the aspects of financial stability in the Middle East, and Iraq in particular. Iraq has an institution called CHF Vitas Iraq geared towards restoring the economy and producing monetary growth in the nation.

Forming a Solid Foundation

“In Iraq, for example, only 11 percent of adults hold an account at a formal financial institution.” CHF Vitas Iraq is doing a tremendous job of, “offering financial services to families and the owners of micro and small businesses, and by supporting homeowners in home improvement and restoration.”

This type of commitment can not only better the lives of the individuals receiving credit access in Iraq, but can also provide the groundwork for an ever-changing economy in the future.

The work CHF Vitas Iraq has invested into the community is incredible. The organization continues to promote and support small businesses as well as supply aid to the region. “They are a subsidiary of Global Communities, which is a non-profit development organization that partners with local stakeholders across a range of topic areas.”

Micro-financing Changing Iraq’s Landscape

In fact, “since its inception, CHF Vitas Iraq has become the largest microfinance institution in Iraq with the largest market share, disbursed more than $1 billion in loan capital, grown an outstanding portfolio of more than $74 million (as of August 2017) and maintained a 98 percent on-time repayment record.”

With the assistance provided by this group, citizens are becoming increasingly stable and proud of themselves as they now have both the purpose and ability to follow their dreams. Aid and assistance comes at a great time for Iraq since they have been experiencing much conflict over the past several years.

The Overseas Private Investment Corporation is working to issue relief in the areas of Iraq that are dealing with the most conflict.

Positive Results of Credit Access in Iraq

There was a survey implemented in the region that represented credit access in Iraq for the population, and “the survey revealed a significant gap between Iraqi citizens who borrowed formally (4 percent) and those who did so informally (65 percent).”

When one notices the impact credit has on people’s lives, it allows a better understanding of how difficult it is to live without access to such a resource. Many Middle Eastern countries do not have a well-developed financial system, so with the ability for these loan companies to provide credit access in Iraq for a majority of the citizens, there can only be positive results on the monetary factors of the economy.

There is still much that needs to be accomplished for this country to become more stable in an economic aspect as well as maintain strength to persevere during conflict. But, if ISIS can be controlled and micro-finance loans can continue to be distributed in a proper manner, then credit access in Iraq will produce many opportunities for the citizens and hopefully lead to a stronger economic system.

– Matthew McGee

Photo: Wikimedia Commons

Access to Credit in MadagascarAccessing one’s credit can be a difficult task when there is not much information provided on how to do so. Madagascar has a plethora of farmers due to its vast landscape, and agricultural production could be greatly altered in a positive way if the MFI, or Microfinance Institution, was able to offer accommodating microfinance loans.

According to a report from the University of Göttingen, “agricultural firms with flexible microfinance loans have significantly higher credit access probabilities than non-agricultural firms and agricultural firms with standard microfinance loans.” Access to credit in Madagascar can be greatly improved by supplying the population with particular loans that allow them to enhance their financial stabilities.

Access to microcredit has a profound impact on Malagasy people. As The Guardian writes, “Microfinance is seen as a vehicle to help Madagascar attain some of its millennium development goals, particularly on eradicating extreme poverty.” Approximately 85 percent of the nation’s population lives on less than $1.25 a day. Credit availability in Madagascar has been able to create severe advancements for small businesses and provide a higher income for the average Malagasy family.

Since most individuals are without access to credit in Madagascar due to their financial status, providing goods for the family and bringing in a steady income can be very difficult. Many rely on informal moneylenders who charge annual interest rates anywhere from 120 to 400 percent for unsecured loans.  These numbers are astronomical compared with the MFI’s average rate of 36 percent for the same period, equating to two to four percent a month.

Extremely high interest rates can be very dangerous for people who do not make enough money to continually make payments every month. Supplying the Malagasy citizens with microfinance loans would give them the opportunity to discontinue their relationships with informal moneylenders and ultimately save additional money for other necessary goods.

However, a country that mainly relies on farming can be slightly strenuous for the MFI. It can provide the people with loans to help supply their agricultural needs, but when the weather does not cooperate with the proper farming conditions, these loans can then be used for other purposes. This is what the institutions do not want to happen. According to Serge Rajaonarison, Chief Executive Officer of the Caisse d’Epargne et de Crédit Agricole Mutuels de Madagascar, by accurately determining the “areas and farmers affected by hailstorms, for example, we can subsequently compensate according to the losses caused.”

The prime concern for the MFI is for its loans to be paid back by the people of Madagascar. Even after the country is devastated by severe weather events, the MFI continues to obtain its money back from those who were given loans. Continued payments by the people and being able to provide a better life and workplace for the community will allow the MFI to implement a strategy that will give everyone access to credit in Madagascar.

– Matthew McGee

Photo: Flickr

Credit Access in Niger

In today’s economy, credit access is a necessity. Credit access in Niger, however, has been a struggle in recent years. Individuals and businesses need it to sustain themselves and use registered credit to increase buying power. Without it, people are often exposed to predatory lenders who will abuse the power of the loans. For low-income communities, credit access can provide hope in the economy by providing citizens the opportunity to build a credit history for themselves. 

Niger doesn’t offer sufficient credit access for its communities, forcing them to use personal savings to sustain businesses. This often means their only savings go back to the production of more profit to be used for maintaining their business, not to sustain their household. The cycle of earning just the minimum to sustain the small business forms and doesn’t allow for the businesses to grow. Additionally, the smaller the business, the less likely it is to apply for and receive a loan.

One of the biggest struggles for credit access in Niger is geography. The country’s population is low in density and there are large distances between communities, which hinders access to microfinance institutions. The distance and cost of transportation make it impossible for some individuals to gain credit access. Some can not even afford a viable way to get to the institution without spending a sufficient amount of their household income. The need for multiple visits doesn’t help the situation.

The correlation between distance and access to credit institutions in Niger can not go unnoticed. Of adults living in rural areas, only seven percent have access to a bank account. Less than two percent of Nigerians had taken out a loan as of 2014.

Niger’s rural areas, business types and economy also factor into its underdeveloped classification as a country. Credit access in Niger has been very timid for agriculture and other industries on the rise, such as technology and media. However, there have been recent initiatives to help the lack of credit access in Niger.

BAGRI, a public agricultural bank in Niger, and SOS Faim have been trying to implement certain experiments and programs to address the ongoing problem of credit access in Niger. SOS Faim led an experiment in 2015 where it analyzed four cases in Niamey. The experiment aimed to better understand credit management strategies of farmers, identify support requirements and come up with possible solutions. What is needed now is more research and economic evidence to start and find a real solution to a problem that has been affecting Niger’s economy on a higher level.

– Elisa Martinez Cancino

Photo: Flickr

Credit Access in Cambodia
In recent years, cooperation between financial institutions and the Credit Bureau of Cambodia (CBC) has made credit access in Cambodia easier. Currently, 49.9 percent of individuals in Cambodia have access to credit. Credit coverage in Cambodia covers 5,059,897 individuals, and in 2017, the country came in seventh in the World Bank’s “Ease of Doing Business” ranking under “Getting Credit,” a category which measures credit information sharing and legal rights of borrowers and lenders.

“We are very proud our activities have allowed Cambodia to improve its position in the World Bank’s ranking, particularly when it comes to securing credit,” stated Oeur Sothearoath, the CBC’s CEO. The CBC is Cambodia’s leading provider of credit information, analytical solutions and credit reporting services to banks, microfinance institutes, leasing companies, credit operators and consumers in Cambodia. It provides the tools needed to analyze and reduce credit risks and, even more so, increase transparency in providing credit.

The deputy governor of the National Bank of Cambodia (NBC), Neav Chanthana, has also agreed that the work of the CBC has allowed borrowers more extensive and faster access to credit, noting that the new World Bank rating has already been able to attract new investors into the country. She further applauded the CBC, stating how its achievements reflect the development of the country’s financial infrastructure, with improvements to the credit information system being vital for customers and the financial sector.

The NBC, along with the Association of Banks in Cambodia, the Cambodian Micro-finance Association and the International Finance Corporation, all have been strong supporters of the establishment of the CBC. The CBC, in response to the demands of the National Bank, plans to run a fair, transparent and well-managed credit market which would support economic growth in Cambodia.

Credit access in Cambodia has continued to improve since programs launched in 2010, making credit for agribusinesses more accessible. Cambodia’s agribusiness sector plays an essential role in aiding the country’s economic growth, poverty reduction and job creation. This financial program has been a collaborative effort between the Royal Government of Cambodia, the International Finance Corporation and the International Development Association.

By guaranteeing that 50 percent of the loans extended by participating banks and microfinance institutions extend to this sector, the program aims to mitigate the default risk banks face when lending to Cambodian agribusinesses. This improved access to finance for agribusinesses has provided strong support to the country’s economy, with agriculture accounting for one-third of the country’s GDP and employing around 70 percent of the population.

Further data is provided by the World Bank with its Credit Information Index which measures the scope, access and quality of credit information available through public registries and private bureaus. The index includes a variety of indicators whose values indicate the amount of credit information available.

The “strength of legal rights index,” on a scale from zero to 12, measures the degree to which collateral and bankruptcy laws protect borrower and lender rights, and “credit bureau coverage” indicates the number of individuals and firms listed by a private credit bureau with information on their borrowing history. The country scored 10 and 49.9 percent.

Credit access in Cambodia over the past few years has increased in strength and size. With continued improvements being made in credit access, positive changes should continue to be seen in Cambodia’s businesses.

– Ashley Quigley

Photo: Flickr

Digital Finance is Empowering Women in Bangladesh

Recent innovation in digital finance is empowering women in Bangladesh by meeting their unique financial needs and capabilities. While 90 percent of Monetary Financial Institutions’ 21 million clients are women and 35 percent of Bangladesh women hold a bank account, women make up only 18 percent of digital finance users in Bangladesh.

Some of the barriers that hinder the inclusion of women in digital finance are low mobility, cultural barriers in male-dominated markets and English illiteracy incompatible with English-language phone menus. Women in Bangladesh also face low financial literacy, so they require guidance and training in order to benefit from increasingly more prevalent mobile-based platforms.

In addition, members of a typical household in low-income countries share one mobile phone. So, it makes sense that more than just having a registered mobile money account in her name is necessary in order for a woman to be financially included in Bangladesh.

Most low-income women in Bangladesh currently turn to insecure and informal saving mechanisms like keeping emergency funds stashed at home, buying excess stock for their business, using clay money boxes  or working with neighborhood savings groups. This puts their savings at risk of loss due to natural disasters or theft. It is no wonder, then, that it is difficult for women to save money for their futures, to pay school fees, to attain loans and to afford healthcare and insurance.

Saving money is particularly important to women. In Bangladesh, since women are dependent on their male spouses to provide for their families, they lack a safety net if their husband dies or abandons them. This makes women more vulnerable to health risks and death than men.

One innovation through which digital finance is empowering women is the human-centered designs financial service providers have been developing that are more intuitive, easy-to-use and affordable. The Bangladesh Rural Advancement Committee, an organization devoted to alleviating poverty by empowering the poor, started a training program for women in remote areas to learn how to handle mobile money.

Some other efforts that address the digital inclusion gap are:

  • Dutch-Bangla Bank Limited’s signing with 245 garment factories to distribute salaries to garment workers (mostly women) with accounts through agents, ATMs and client-initiated mobile transactions.
  • The Asia Foundation’s new program that will assist women entrepreneurs in using digital financial services and in using e-commerce to reach new markets.
  • Swosti’s new “mobile credit card” for depositing money and withdrawing emergency loans.
  • Grameen Bank’s creation of the concept of microcredit to be used by low-income women.

Some potential improvements that have been suggested further demonstrate how digital finance is empowering women. Some of the propositions include promoting government transfers and increasing the access women have to registered accounts by changing identity requirements and allowing for one-to-one interactions with women agents and sales representatives to improve communication and prevent harassment.

Other suggestions include making additional banking services that improve financial security for women available such as loan payments, insurance and long-term savings. Digital savings accounts would enable women to save small amounts of money as frequently as they want. It has also been suggested to make use of various channels of accessing finances to simplify the interface of mobile finance platforms.

There are so many financial possibilities that digital finance can make possible for women in Bangladesh. By considering the barriers to financial inclusion, the country is well on its way to improving the lives of its women and their families.

– Connie Loo

Photo: Flickr

solutions to global poverty
Nearly half of the world’s population lives at or below the poverty line; out of the 2.2 billion children in the world, one billion of them live in poverty. Though this issue may not be as prevalent or visible in the U.S., it is an issue that affects everyone. Small steps can be taken to better this problem, leading to possible solutions to global poverty.

  1. Properly Identifying Issues
    One of the largest issues involving poverty is the inability to properly identify contributing factors at the micro and macro level. Many organizations assume that local aid alone will better the problem, but it is only with the combined efforts of local, state and national governments that poverty will lessen.
  1. Allocating Proper Time and Resources
    Preventable diseases such as pneumonia claim the lives of nearly two million children per year. Without proper planning, which includes allocating enough time, money and volunteer work, global poverty will continue to exist. Currently, the U.S. spends only about one percent of the federal budget on foreign aid. By creating detailed plans and projects aimed at helping other nations, global poverty will begin to lessen.
  1. Creating organizations and communities to work locally
    Enacting policy is not the only solution to global poverty, as policy often does not affect those suffering directly. As previously stated, efforts must come from both local and federal domains. Essentially, while policy is created to change legislation, local organizations enact the changes, directly helping those in need. On top of that, working with entire communities instead of specific individuals has been proven to be more effective.
  1. Creating Jobs
    Creating jobs in poverty-ridden communities allows individuals to pull themselves out of poverty. This solution to global poverty is arguably one of the most effective. Federal governments can achieve this by rebuilding their infrastructures, developing renewable energy sources, renovating abandoned housing and raising the minimum wage.
    By raising the minimum wage in existing jobs, companies would combat recent inflation in both developed and developing countries. This change in the states (in places such as Seattle and Washington) has been shown to reduce poverty.
  1. Providing Access to Healthcare
    Unpaid medical bills are the leading cause of bankruptcy. Having access to free or affordable healthcare would allow families to allocate the money they would normally spend on healthcare elsewhere.
  1. Empowering Women
    Female empowerment in developing countries often comes from organizations that work to reduce poverty by allowing them to take leadership positions and advance socially and economically.
  1. Microfinancing
    Microfinancing provides improvements to socioeconomic status by providing access to more, larger loans, providing better repayment rates for women, as they are less likely to default on their loans than men and extending education programs for loan-payers’ children. It can also improve health and welfare by providing access to clean water and better sanitation, create new jobs and teach developing countries to be more sustainable.
    Microfinancing continues to prove that even the smallest amounts of credit can be one of the many solutions to global poverty.
  1. Provide paid leave and paid sick days
    Paid maternal and paternal leave allows families to save money after childbirth, as having a child is a leading cause of economic hardship. Furthermore, giving workers paid sick days allows them to properly get over their illness without worrying about missing a paycheck or receiving a paycheck with fewer funds than normal.
  1. Supporting equal pay for men and women
    Closing the wage gap between men and women would reduce 50 percent of poverty experienced by women and their families. This would also add money to the nation’s gross domestic product.

Global poverty has proven to be an unruly, frustrating cycle, but eradicating it is within our means. These solutions to global poverty can and should be implemented to begin the end of poverty.

– Chylene Babb

Photo: Flickr

solidarity lendingFor too long, the plight of the urban poor had monopolized the concerns of those working to eradicate abject poverty. The millions of people in rural poverty have been forced to toil in silence, overshadowed by their urban counterparts and underrepresented by the advocates of economic development. Most are relegated to subsistence agriculture, making the best of what little they have. However, a renewed emphasis on the rural poor has facilitated new and innovative techniques to help, among them solidarity lending.

One such pioneer is SHARE Micro Finance Limited, which offers loans to rural women in India in an attempt to fund entrepreneurship among the rural poor. Recently, a number of studies have been conducted to assess the effectiveness of such programs, with some encouraging results. An article from the Stanford Graduate School of Business tells the story of Vinod Khosla, a venture capitalist from India. Khosla described solidarity lending as a “virtuous pyramid scheme” where groups of women are given modest loans from SHARE. This program differs from individual loans because “the group members are under strong social pressure not to default…and if one person does, the others have to make up for it”.

The program empowers women to invest the money in a stall at the local market or use it to invest in equipment which enables them to produce or transport their items more efficiently. To some, this may seem like only a marginal benefit, but Khosla reports that among nearly 200,000 clients, 77 percent saw reduced poverty.

To test the feasibility of such programs further, a study on solidarity lending was conducted in Mongolia, which compared the results to those of regular lending practices. Research showed that while repayment rates were similar, food consumption increased among group lenders, an encouraging sign to researchers.

Another study on group lending conducted by the African Growth Institute in Kenya revealed that “microcredit is an important entrepreneurial tool in alleviating poverty”. They also found that group lending was a way of achieving greater financial stability.

Because of innovative initiatives like solidarity lending, the rural poor are better equipped to prosper. By providing groups with much-needed access to financial capital, farmers from India to Mongolia to Kenya are no longer overlooked.

– Brendan Wade

Photo: Flickr

credit access in MaliFor many of the poor in developing nations, securing loans is often an unfeasible task. Reforms to credit access in Mali, however, are providing much-needed relief to smallholder farmers endeavoring to improve conditions for themselves and their families.

The Importance of Microfinance in Development

The practice of providing access to financial resources and small loans to those in developing nations, known as microfinance, has become the latest instrument in the effort to alleviate poverty. Too often, the world’s poor are denied access to loans, making it exceedingly difficult to start businesses or make capital investments that would enable them to improve productivity and elevate their incomes. Although microfinance across developing economies has yielded mixed results previously, the capacity remains for well-structured and pragmatically targeted initiatives to succeed.

Credit Access in Mali Denied

When these programs are successful, the implications can be powerful, especially for women and smallholder farmers. In developing economies, women reinvest 90 cents of each dollar they earn into “human resources” like healthcare, nutrition and education, according to a study conducted by the Harvard Business Review. This is substantially more than men and illustrates the impact small investment opportunities can have for the well-being of women and their families.

Despite this, securing loans is harder for women because most do not have property in their names to offer as collateral, typically make lending to them impractical. Furthermore, in Mali, 70 percent of loan applications sought by farmers are rejected because they are deemed risk-prohibitive. Because farmers’ incomes typically fluctuate with seasonal variance in agricultural output, banks are usually hesitant to provide financial backing.

Securing loans is also rare for farmers in Mali because banks focus primarily on commercial lending and often refuse the longer term loans many Malian farmers in the young mango, papaya and cashew nut industries need to get their businesses off the ground. Unstable political institutions in the country, like inconsistent enforcement of contracts, and poorly defined property rights further exacerbate these challenges.

Credit Where Credit is Due

An initiative which began in 2013 is addressing these issues and attempting to increase credit access in Mali. The Agricultural Competitiveness and Diversification Project by the World Bank seeks to “reduce the risk of investing in agricultural endeavors through technical assistance, new technology and greater knowledge of the supply chain and key actors,” according to World Bank Agribusiness Specialist Yeyande Kasse Sangho.

To provide loans, the program relies on the Innovation and Investment Fund (IIF) and the Guarantee Fund. The IIF offers a three-tiered lending system with each tier providing different levels of subsidies based on the size of the enterprise, with smaller enterprises receiving a greater subsidy. The Guarantee Fund, also financed by the World Bank, offers up to 50 percent of the loan guarantee, giving a needed cushion to the two commercial banks in Mali receiving the deposits.

In addition to this World Bank initiative, Mali sought in 2016 to improve access to credit by improving its credit information system regarding the regulations of credit bureaus in the West African Economic and Monetary Union. In 2017, it established another credit bureau, doubling-down on its resolve to ensure its citizens have access to capital.

With initiatives like these, Mali is demonstrating its commitment to making accessible credit the new normal for its people. Further improvement to credit access in Mali will only serve to assist in lifting more people out of poverty.

– Brendan Wade

Photo: Wikimedia Commons