“By adopting a developmental approach, microfinance can serve as a driving force for inclusive growth, generating sustainable livelihoods and breaking down barriers to economic progress.” Kahunga Matsiko
PRO DEO ET ECCLESIA ET PATRIA
…hey, we got a 98% loan repayment and an 18% return on investment…
…hey, we have reached the poorest of the poor…
The challenge facing the microfinance sector today is how to find a golden mean position
between these two extremes in the hypothetical debate above (Fischer et al. 2002).
For microfinance to have a transformative impact in Uganda and Africa, it must go beyond
Micro-credit, [where it has been captured by profit-seeking capitalism] and becomes an all-embracing, self-propelling development philosophy.
The key question to pose now is: Does loan repayment mean that the client’s business is growing and people prospering?
One approach to create developmental and transformative microfinance is adopting the model practiced by a microfinance institution which supports rabbit and honey farmers. If, for example, MFI can finance the poultry farming, including paying veterinary services, suppliers, and other related providers. It then goes ahead and establishes a market link with hotels and restaurants for eggs and chicken. This will create a transformative effect.
A value chain is interlinked, with each stage well planned, managed by mutually reinforcing stakeholders. At each stage, each stakeholder is a winner: farmer, transporter, warehousing, processing, wholesaler, retailer, consumer (cf the cooperative system).
“To achieve transformative microfinance, we must move beyond profit-seeking capitalism and embrace an inclusive, holistic approach that addresses the diverse needs of individuals and fosters sustainable development.” Kahunga Matsiko
Microfinance can only be meaningful as part of this chain, catering to the needs of farmers, transporters, warehousing, processing, marketing, all in an interlinked, internally reinforcing system. The fund is owned and managed by the members for their prosperity.
Reflection
- How can microfinance become a catalyst of empowerment and transformation?
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Credit: Cover Image by Nattanan Kanchanaprat from Pixabay
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