The Role of a Professional Association in Mutual Microfinance: The case of Madagascar (2003)

This paper describes the creation and evolution of a professional association of mutual financial institutions, Association Professionnelle des Institutions Financires Mutualistes (APIFM), in Madagascar.

Drawing mainly on information collected during the implementation of the ILO-supported project in support of APIFM, the paper:

• Focuses on the growth of the microfinance sector in Madagascar;
• Presents the characteristics of the principal microfinance institutions that are active in the country;
• Describes the creation and the evolution of APIFM;
• Analyzes the challenges faced by APIFM and its role in the national microfinance sector.

The paper states that:

• The government of Madagascar initiated a policy on mutual financial institutions in 1991, thus supporting savings-led financial organizations rather than credit-led ones;
• Mutual financial institutions dominate the microfinance sector in Madagascar (over 80% of the microfinance market in 2001);
• Non-mutual financial institutions make up a small proportion and are rather new compared to mutual microfinance systems.

Finally, the paper recommends national institutions and stakeholders in Madagascar alternative ways to cope with the issues mutual microfinance institutions.