July 18 -20, 2005

Dakar, Senegal

Topic: Micro Finance in

Promoting Export and
Entrepreneurship
By Vivian H. M. Attah (Mrs.)
Gha_vattah@gdln.org

Training Coordinator
GIMPA DLC
July 18, 2005
Dakar, Senegal

Introduction
Micro Finance
Micro financial support refers to small financial
transactions to small and medium scale
enterprises
Micro-enterprise is also referred to as, small
scale businesses that are operated by
individuals and groups
Despite their size and limited market, microenterprises are the fastest growing part of the private
sector
Has immense importance to the economies of Africa

Sources of Micro Finance

Formal institutions (commercial and
development banks, non-bank
financial institutions, financial PLC),
Semi-formal institutions (credit unions
and NGOs) and
Informal sources (traditional systems,
moneylenders)

FOCUS
Providing micro financial support to
promising small and medium scale
entrepreneurs to setup, expand and
sustain micro-enterprises in Sub
Sahara Africa
Beneficiaries are individuals or
groups

Strengths of Topic Is Based On

Fact That:
Micro financing enhances economic
development
Emphasizes need for financial aid to small
scale entrepreneurs as well as prospective
enterprises in the low income bracket
Has real potential of improving product
quality, quantity and promoting export and
entrepreneurship

Strengths of Topic Is Based On

Fact That: (cont.)
Address unemployment and wealth creation
Has the potential to provide social mediation
services
Group formation
Development of self confidence
Literacy training (e.g. financial literacy and
management capabilities)
Health care
Skills training
Marketing
Etc.

Policy implication of micro financing

Micro Finance Services Available to

Entrepreneurs

Savings
Credit
Insurance
Payments e.g. for agricultural inputs, paying
resource persons, etc
Small loans e.g. working capital
Capacity building
Repeat and larger loans, based on repayment
performance
Streamlining loan disbursement and monitoring

Challenges
Identifying businesses worth financing (to avoid
losses and ensure efficiency in the use of funds)
Production capacity (lack of volumes)
Information acquisition:
Markets (consumer preferences, etc.)
Resources and production techniques
Micro-finance supports

Recouping of funds
Policy implications (how do financial and nonfinancial institutions make sure the right people
get the needed assistance, loans are recouped,
businesses are successful and sustainable)

Control Mechanisms
Integrated approaches/strategies
Informal appraisal of borrowers and
investments;
Collateral substitutes, such as group
guarantees or compulsory savings;
Peer pressure to enforce contractual
obligations (solidarity groups);

Control Mechanisms (cont.)

Access to repeat and larger loans,
based on repayment performance;
Streamlining loan disbursement and
monitoring;
Secure savings products.

The Way forward

Capacity building
Encouraging group formation
Developing their entrepreneurial skills

Making funds available to credit

worthy individual and groups
Effective monitoring and evaluation

Summary
Issues addressed so far are:
Reasons why small enterprises should be
supported
Forms of micro financing support to provide to
micro enterprises
Which entrepreneurs can benefit from the support
Of what significance is micro-financing in
promoting export and entrepreneurship
The ultimate implications of micro financing in
poverty reduction, wealth creation and national
development

Thank You For Your for

Patience