Microfinance and Poverty Eradication: Strengthening Africa's Microfinance Institutions

This study highlights the potential of microfinance towards poverty eradication in Africa. It brings together eighty-five fact sheets on microfinance initiatives. There are three types of fact sheets:

• The majority are examples of microfinance institutions (MFIs) and programs in Africa. They explain what is actually working in the African context;
• The next category summarizes MFIs from non-African countries that offer lessons transferable to the African context;
• The remaining summarize MFIs and programs from international organizations, providing a sampling of the way the global community works with and supports African microfinance.

The paper lists key benefits of microfinance for poverty eradication in Africa:

• Material benefits: Economic security, improved standard of living. Savings and credit services to help people start their own businesses, providing income and generating employment;
• Community benefits: Microfinance initiatives can be scaled-up with sustainable contributions towards community development;
• Non-material benefits: Individually and collectively empowering people, especially women.

The paper recommends strategies for microfinance initiatives in Africa. Some of them are:

• Build upon traditional financial schemes;
• Strive for flexibility and innovation;
• Charge interest rates that cover operational costs;
• Stress participatory approaches;
• Target women;
• Utilize group solidarity;
• Transform public structures;
• Develop standards and assessment tools.