On Thursday, Kenya will host a one-day conference on microfinance in Africa. The gathering of local, regional, and international leaders hopes to benefit from the leadership role Kenya has played in fostering a favorable climate for grassroots entrepreneurs to create opportunities for starting up businesses that promote economic development and help alleviate poverty.
The Nairobi meeting will focus on a new study undertaken by two active groups, the Africa Microfinance Action Forum (AMAF) and Women’s World Banking (WWB), to boost opportunities and accessibility to financial products and services on the continent.
The president and chief executive officer of Women’s World Banking, Mary Ellen Iskenderian, heads a global network of 41 microfinance providers working in 29 countries to empower low-income entrepreneurs, particularly women. She says that the Nairobi meeting will bring a highly engaged group of African leaders and advisers to try to adopt strategies and policy suggestions that promote microfinance startups on the continent.
“The rationale behind the diagnostic we’ll be discussing down in Nairobi later this week is: an industry exists. Why has it not developed quite as robustly as it has in so many other places in the world? So it’s not a lack of institutions, but it’s institutions that have not necessarily flourished,” she observed.
Iskenderian says that the study under discussion at the conference will try to take advantage of the particular social characteristics and regulatory structures that distinguish African communities from those in Asia and other regions to help encourage microfinance in Africa to keep pace with its growth in other parts of the world.
“The thesis that this group came into this wanting to study -- growth rates of microfinance in Latin America, in south Asia, you know, 40, 70, and 90 percent per annum, compound annual growth, year in, year out -- and just not seeing that kind of growth in Africa. But there is microfinance in Africa, in just about every African country. What has kept it back from being that real engine of financial inclusion? And so the group AMAF really had a view that it wanted to explore going into this. And the diagnosis was: they identified what the disease was, so now they needed to diagnose what some of those contributors might have been and how we might be able to build a much healthier sector throughout Africa,” she concluded.
The effects of this year’s global economic slowdown have impacted more slowly on African financial institutions, which are less engaged in flows from international capital markets and mainstream banks than are other parts of the world. Compared with other areas, few of Africa’s relatively small number of microfinance institutions, have been directly hit by the world crisis. But Iskenderian explains that one area cited by her study group that is expected to feel the effects of the downturn is an expected drop in remittance income sent home by African workers employed overseas.
“One of the recommendations that comes out of this diagnostic report is quite explicitly the need for greater funding. Now the one impact that people keep waiting to see if it is going to be felt is the impact on remittances and to what extent the populations and the clients of microfinance institutions as recipients of remittance payments might be in some way affected,” she points out.
While praising Kenya for taking the lead among African regulatory bodies that have helped microfinance projects get off the ground, Iskenderian notes that the latest conference study, spearheaded by Women’s World Banking and the Africa Microfinance Action Forum reflects the thinking of an advocacy group of African leaders who are committed to developing a strong African approach to microfinance and its proliferation across the continent.
“This was a study that came out of several of our African network members and their belief that we really might benefit from a group of African experts taking a look at what had kept the sector from growing. We’re delighted that the Kenyan government has been so responsive. But we’re going to see regulators from lots of other countries as well, I think, recognizing the important role that they can play in the development of the sector, but in not playing too heavy-handed a role in regulating so that you shut down the innovation and the nimbleness of the microfinance sectors,” she said.
About 400 or 500 African practitioners of microfinance are expected to show up in Kenya’s capital for this week’s conference, which will also include participants from African regional and sub-regional organizations like the African Union, the African Development Bank, the New Partnership for Africa s Development (NEPAD), the Economic Commission for Africa, the United Nations Development Fund for Women (UNIFEM), and a host of other women’s organizations and NGO’s working to bring greater economic empowerment to women and the poor through the continued development of microfiance in Africa. Kenyan President Mwai Kibaki is also expected to address the conference.