Developments of Microfinance in West Africa and Trends for the Decade

This paper briefly describes the development of the microfinance sector in Africa. It identifies the main characteristics and prominent features of the recent developments as:

• Types of microfinance organizations which include:
  • Savings and credit institutions,
  • Micro credit organizations inspired by the Grameen Bank,
  • Organizations and projects with credit component.
• Phenomenon of rapid growth which can be contributed to:
  • A dominant situation on the microfinance market, such as FECECAM in Benin, which services 56% of the clientele and where the banking sector is totally absent,
  • High competition between microfinance institutions (MFIs).
• New promoters and new generation of MFIs which include:
  • Commercial banks,
  • Promoters from business class forming credit unions,
  • Unemployed urban youth interested in setting up a profitable microfinance business.
• Integration in the financial sector with more MFIs establishing financial relations with banks.

Finally the paper suggests some of the trends for the next decade which may highlight:

• Split in the large federation to form more autonomous regional institutions;
• Increased co-operation from the banking sector as more commercial banks enter the microfinance market;
• MFIs expanding into the urban markets to cater to the small and medium enterprise market due to its profitability.