Small is beautiful, but growth is inevitable: experiences of apex institutions in Senegal and Tanzania

Abstract

This article examines the experiences of two national apex institutions in two sub-Saharan African countries, Senegal and Tanzania, which channel funds to retail microfinance institutions (MFIs). These two national apexes are the Dyna-Enterprises Project and the Small Entrepreneurs Loan Facility (SELF) project, which are functioning in Senegal and Tanzania respectively. Both Dyna and SELF initially started as small-scale apex MFIs and had been conceived with the same vision in mind – facilitation of access to financial services for the poor. The initial implementation focused on provision of credit through MFIs as well as capacity building. The targeted groups of clients are similar, i.e. the disadvantaged, and mostly are women groups in urban or peri-urban areas carrying out general petty trade activities. Like many apex institutions in sub-Saharan Africa, both SELF and Dyna have stimulated demand for more financial support to the poor and have shown potential to be transformed into viable commercial MFIs. This entails expansion in terms of increased number of staff, branches, cost-effective microfinance services, the number and quality of financial products, capacity building, outreach and information services. The current vision of these national apex institutions is to transform into effective, transparent and efficient corporate entities for addressing poverty issues through harnessing and targeting funds to needy areas, while incorporating microfinance best practices.

1. Introduction

The potential of microfinance, as a poverty reduction instrument, has not been fully understood and exploited. One way by which governments, in collaboration with international finance institutions and other development partners, and in a few cases private organisations, are trying to expand microfinance services is with the establishment of wholesale financial mechanisms, or apex institutions. These wholesale mechanisms, operating in different countries, are known by different names such as apexes, second-tier banks, national development funds, and so forth (Gonzalez-Vega, 1998). In this article, the term ‘apex’ refers to financial institutions channelling funds in a given economy, with or without technical assistance or other supporting services to a significant number of microfinance institutions (MFIs), or retail finance institutions (Levy, 2002).

The apex institutions access funds from donors, multilateral/bilateral organisations in the form of grants, and/or concessionary loans to governments. They repackage these into smaller amounts and, in turn, pass it on to the MFIs as loan products, grants and/or technical assistance. It is observed that most MFIs, like their majority poor clientele, are considered by domestic and foreign financial markets as being risky, uncertain and uneconomic to lend to. They lack conventional collateral and are often not licensed to mobilise savings. Many of them are unable to adopt rapidly developing microfinance technologies and are thus limited in outreach. Hence, they are unable to achieve the economies of scale and other requisites for eventual self-sustainability. At the same time, many formal banks and non-bank financial institutions find it difficult to reach MFIs directly, especially small ones in the rural districts and regions. Many commercial banks have failed to provide the tailored, hands-on assistance and microfinance services that may be required by the MFI (Pederson & Kiiru, 1996).

This paper examines the experiences of two national apex institutions in Tanzania and Senegal that channel funds to MFIs. They are the Small Entrepreneurs Loan Facility (SELF) project in Tanzania, and the Dyna-Enterprises project in Senegal. The article covers issues related to start-up, expansion and growth, and the need for sustainable development of the apex institution. Some useful policy lessons and generalisations are drawn for sustainable development of MFI-type apex institutions for poverty reduction.

2. Start-up apex microfinance institutions

2.1 SELF project in Tanzania

Based on the National Poverty Eradication Strategy and Development Vision 2025, the government of Tanzania undertook a proactive measure to secure a loan from the African Development Bank Group in order to address the concerns of the poor in Tanzania (Tanzania, 1998, 1999, 2000a, 2000b, 2000c; SELF, 1999). The main intention with the loan was to improve the access of the poor, particularly in rural areas, to microfinance services and thereby improve their social well-being through their engagement in income-generating activities. To achieve this vital goal, the loan facility was executed as a project, named Small Entrepreneurs Loan Facility (SELF). The Vice-President's Office, through its Poverty Eradication Division, is the executing agency of the project. As per December 2002, the disbursement made by the African Development Bank and the government of Tanzania, for implementation of the SELF project, was US$1 791 978 and TSH410 454 780 respectively, out of a total US$11 million project fund.

The SELF project became fully operational in early 2001. The five-year pilot project was to be implemented for the period 1998–2003, with a closing date set for January 2004 (SELF, 1999). Due to delays in commencement, the project had attained only 15 per cent of the original project goal by June 2002. The SELF project operates by wholesaling loan funds to MFIs, which in turn lend it out to the poor, particularly in the rural areas. The project is currently in operation in the pilot phase, covering six poor regions: the Coast, Dodoma, Lindi, Morogoro, Mtwara and Singida.

The SELF project consists of the following components: the Project Implementation Unit, Credit and Saving Services, Outreach and Monitoring, and Capacity Building. Its core function is to provide credit and savings services to target groups (SELF, 1999). Through its facilitating function, SELF has been disseminating project information and educating target groups on how to access project resources. Also, SELF offers staff members selected from the Project Implementation Unit, local MFIs and relevant government departments the opportunity to attend and participate in external training and study tours aimed at enriching their knowledge and expertise of relevant subject matters.

2.2 Dyna-Enterprises project

Dyna-Enterprises is a five-year project financed by USAID through a management contractor, Chemonics International Inc., and has been operating since 15 November 1999. The objective is to achieve sustainable income generation in the private sector in the disadvantaged areas of Senegal (Phillips & Fernandez, 2001). The project has two major components, namely microfinance and business development services. The former component has a fund of US$11 million in place for small grants to existing MFIs, which are aimed at improving access to financial services for the underserved. The business development services, with a budget of US$1 million, targets developing markets and stimulates dynamic entrepreneurs in isolated and neglected regions of the country.

The Dyna project's mandate is to expand access to financial services among disadvantaged populations through support to existing savings and loan networks. It aims for general economic impact, even though its current direct activities are limited to five of Senegal's ten regions. Dyna attempts to reach as many people as possible by working through existing institutions and/or subcontracting local service providers. It has capitalised on the provision of microfinance services that are demand driven, and often assists clients in defining their own needs. This approach cuts across all services rendered by the project, namely credit, training, business promotion and other forms of development initiatives (Phillips & Fernandez, 2001).

The Dyna project started by studying the specific sector. The initial survey discovered a much larger number of MFIs than previous records had suggested, i.e. some 800 branches nationwide, ranging from large registered networks with permanent, secured buildings to village savings clubs. Dyna management used modern information technology and management experts to start up the project. For instance, it used geographic positioning system devices and MapInfo software to produce a digital map of MFIs. The project claims to have a high level of transparency, which is being promoted through various means of communications (Phillips & Fernandez, 2001).

At the initial stage, Dyna's team organised 16 training programmes, some of which benefited its own staff by way of state-of-the-art training. The training needs of MFIs range from bookkeeping to basic management techniques. The staff of those organisations that requested computerisation support have undertaken successive computer training sessions.

2.3 Comparative analysis

These similarities were noticed:

1.	Both the Dyna and SELF projects have been conceived with the same vision in mind, i.e. facilitation of access to financial services for the poor (Gonzalez-Vega, 1998).
2.	Both projects received start-up capital from external funding agencies. The SELF project received a large loan from the African Development Bank, whereas Dyna received a large grant from USAID. This is an indication of growing government and donor initiatives to set up a vibrant microfinance industry (Pederson & Kiiru, 1996). Development partners, international financial institutions, governments and some commercial banks are ready to provide the much-needed capital to MFIs. Some offer grants, but with the least involvement in the administration of such funds, though keen on their proper utilisation to fight poverty.
3.	For both SELF and Dyna projects, their typical MFI clientele consists of mostly women groups in urban or peri-urban areas carrying out petty trade and produce buying (Phillips & Fernandez, 2001; SELF, 2000). Most have relatively high loan recovery (repayment) rates, but this is achieved at very high operational costs, for instance for wages and salaries, rent, and other administrative expenses.

A critical difference noted between the two projects is that, when the SELF project was conceived, it was clear that ‘out there’ MFIs had limited capacity and/or experience to deliver the financial services required by the majority of the poor. SELF was held back more by a shortage of credible MFIs at the retail level than by a shortage of wholesale funding. However, this was an anticipated sectoral position. Despite all reforms, institutions starting out to operate as apexes in many sub-Saharan African countries have been unable to identify and attract a sufficient nucleus of viable MFIs to warrant the wholesaling functions.

As in the case of Uganda and Kenya (K-REP, 1997), most MFIs in Tanzania are very small and new, operating with limited capital. They require a great deal of support if they are to grow and serve as retailers. The required support ranges from institutional support, in the form of office furniture, equipment, renovation, rent, transport and information technology support, to marketing, research, business development and personnel capacity building through training the personnel and clients of MFIs. The professional skills of most MFIs are very limited, as reflected in the poor management of savings and credit operations in various small schemes.

3. Analysis of apex performance

3.1 SELF project in Tanzania

The project's performance is discussed in terms of its credit and savings services, capacity building, outreach and monitoring, and overall impact.

3.1.1 Credit and savings services

It is acknowledged that the disbursement of loans by the SELF project has been slow, and that the cumulative amount of loans disbursed has been insignificant compared with the amount of credit resources available and planned targets. This slow pace could be the result of the design of the SELF project in terms of its objectives, targets, strategies, instruments and time schedules, and the nature and capacities of implementation institutions and beneficiaries.

By design, the targeted pilot districts are very poor and lack enterprising individuals with income-generating activities. This was deliberately done in the light of the project vision, which is to address the needs of the rural and urban poor. The high incidence of poverty in these regions is also associated with few economic activities, meaning that potential borrowers' capacity to borrow is also severely limited. Therefore, the focus on rural, low-income areas complicates loan delivery because of the limited absorptive capacity of these pilot areas.

The MFIs in these areas lack essential experience in microfinance and are managed by a skeleton staff. They are predominantly donor funded. Although the exact number of MFIs in Tanzania is unknown, SELF aims to collaborate with about 195 MFIs. So far, however, SELF has managed to work with only 25 MFIs and their capacities are quite low. Most are new organisations with very limited managerial capacity and are characterised by very weak governance structures, management skills, technical skills, equipment and networks. Some of the most promising MFIs, such as the Small Industry Development Organisation and the Promotion of Rural Initiatives and Development Enterprise, have centralised management systems. This implies that the regional offices are not in control of their plans or audits, which makes it difficult to evaluate effective demand for loans and repayment schedules and capacities.

The nominal interest rate charged by many MFIs ranges between 25 and 30 per cent. SELF charges a flat interest rate of 12 per cent, which is seen by most MFIs as being relatively high, for a number of reasons. First, in the same regions where the SELF project is operating, other donor agencies are providing funding to the MFIs in the form of grants. Secondly, the interest rates have been dropping over the past five years while the SELF loan remained stagnant at interest rate of 12 per cent.

3.1.2 Capacity building

Although the provision of loans for onlending was a priority activity of the project, early assessment of the partner institutions revealed that most institutions in the target area had little experience and inadequate skills and capacity to deliver microfinance services. The SELF project therefore had to extend its capacity-building training to the personnel of some of these institutions. The objectives of the training were to expose the staff of the partner institutions to microfinance best practices, such that they would operate effectively and efficiently, while at the same time providing better services to clients.

3.1.3 Outreach and monitoring

The SELF project reaches out to all rural MFIs, even if in some instances it is only to capacitate the intermediaries. SELF is now able to take an active role in sensitising the formation of savings and credit cooperative societies in rural areas, where some of their collaborators operate. The collaboration has also opened a window for the development of a wider range of credit products, such as specific loans for purchasing agricultural commodities. Partnership with the Tanzania Social Action Fund and the government has provided an opportunity for the project to work with the already sensitised communities. The project sensitises and mobilises the formation of savings and credit cooperative societies in such communities, urging the people to save part of their earnings emanating from the ‘wage for work’ programme.

3.1.4 Overall impact

Like many other apexes in sub-Saharan Africa, the SELF project managed to kick-start credit delivery to ‘formal’ MFIs in the pilot districts and regions. This happened at a very slow rate due to a shortage of known, credible and efficient registered MFIs at retail level.

A few studies suggest that in previous years, the numbers of MFIs in Tanzania have grown rapidly, and coverage and quality of services have improved substantially (SELF, 2003). The cumulative funds from internal generated savings in terms of interests from loans have increased over time. There is an increased popularity of grass-roots savings and loans in rural and urban areas, reflecting the trust people have in these financial arrangements. Increased access to, and effective utilisation of credit have led to the improvement of general living standards and increased business performance, employment opportunities and income-generating activities.

3.2 Dyna-Enterprises project in Senegal

This project's performance is discussed in terms of its savings mobilisation and credit operations, capacity-building operations, outreach, project implementation and arrangement, and overall impact.

3.2.1 Savings mobilisation and credit operations

Dyna aims to increase access to financial and business development services in the most neglected areas of Senegal. It took advantage of recent progress in Senegal's own efforts to improve the infrastructure in formerly isolated regions. For the private sector to re-emerge, ordinary Senegalese need not only infrastructure, but also access to business opportunities and financial services.

For years, both local initiatives such as women cooperative groups, and projects trying to work in the interior regions of Senegal have been plagued by inadequate financial services. On the other hand, saving was difficult, as people in villages had no safe place to keep their money. Banks were often a day's trip away, or more, from where they resided. Many villagers simply hid money in their rooms in metal cash boxes, or deposited their cash with the local trader. When a family emergency arose or the temptation became just too strong, the cash shrank or disappeared. It is for this reason that the need to secure savings nearby arose.

3.2.2 Capacity-building activities

Dyna conducted several demand-driven, capacity-building training programmes for some of its own staff and clients. The requirement for partners and clients to pay a significant part of the cost (about 25 per cent) of the training has also proven successful. Some capacity-building programmes were conducted jointly with other international and national institutions.

3.2.3 Outreach

The microfinance team initiated communications with potential partner institutions by publishing an invitation tender and requesting them to submit a concept paper about their organisation, its goals and needs. This competitive bidding system was used as an outreach strategy to limit poor performance of the project. Other than direct business communications, Dyna managers have deliberately avoided publicity. Senegal is such a small economy that the project has become widely known by word of mouth, and by people commenting to one another on newspaper advertisements and radio programmes.

3.2.4 Project implementation and arrangement

Dyna implemented management networks consisting of the MFIs' central management networks and local branches. The central network managers supervise local branches and most central MFI offices obtain their funding from donors. The challenge was to have the local branches generate enough revenues to cover both their own overhead costs and those of the central office. Goods and services are procured through competitive tendering systems and by hiring locally, hiring for gender equity and hiring cost-effectively. Dyna seeks young innovative Senegalese professionals, with the equivalent of a bachelor's or master's degree, who are skilled in modern information technology as well as best practices in business development and microfinance management. On-the-job training and short courses were used to equip staff that did not have the necessary technical skills.

3.2.5 Overall impact

The numbers of new savers and borrowers grew rapidly, as did the value of their loans from savings and loan organisations. In 2001, branches in the workers' suburbs of Dakar and in the Kolda and Tambacounda regions served 23 587 new women savers and 13 470 men who, together, saved 2 061 billion CFA francs (worth US$2,82 million). The popularity of new grass-roots savings and loans reflects the trust people have in them. Group members inspire one another to generate new business. Groups also have a powerful social function and usually create positive solidarity. They can also be hard on those who violate the rules, or those who were not able to join when the group was first constituted.

Mobilised savings are put to work as loans that enable rural and suburban savings and loan members to start or expand their businesses. As with most MFIs in Africa, women constitute the great majority of their clientele. Institutions tend to prefer to work with women because women's organisations have proven to have higher rates of repayment and less fraud. These combined influences suggest that Dyna is succeeding to an extraordinary degree in reaching isolated rural and small-town populations. With the money from their microfinance loans, women are bringing products to market from rural interior regions where there was only a local market before. More diversified agricultural and craft production is being stimulated. Trade is more reliable as well, because people in isolated villages have telephone service. The net effect of these trends is that an integrated national market is beginning to emerge in Senegal. Dyna deserves a good portion of the credit for successfully using global technologies in building local markets.

3.3 Growth is inevitable

This section discussed growth in the context of apex institutions, the services provided, interventions, and dissemination of information.

3.3.1 Expansion of apex institutions is vital

Like many apex institutions in sub-Saharan Africa, both SELF and Dyna have shown potential to expand the supply of resources available for microfinance (Gonzalez-Vega, 1998). There is a need for expansion in terms of increased numbers of staff, branches, cost-effective microfinance services, the number and quality of financial products, capacity building, outreach and information services.

Dyna started as a small project with 12 staff members, but noted very early that the number of staff was inadequate to deliver. Within a period of two years, staff were increased to 35 at the head office and 15 in the interior regions. MFIs have started to respond, and demand for services is overwhelming. The number of SELF staff is still small and inadequate. The demand for credit operations has increased and there is a great need for capacity-building activities.

Much as we believe that small is beautiful, growth, however, is inevitable. In order to improve and move microfinancial services closer to clients and the poor, the establishment of branches, collaborating institutions or contact points near clients' activities is critical.

3.3.2 Services provided are demand driven and cost effective

Dyna's microfinance supporting services are partially paid for by clients. Only individuals and institutions that really require training and/or business promotion are involved and are willing to pay for costs demanded by Dyna. As SELF forges ahead, this cost-effective consideration gradually has to be integrated into its routine activities.

3.3.3 Increased provision of multiple small interventions is crucial

Dyna provides computers and basic computer equipment, office equipment and furniture. It funds MFIs to start new offices and gives training and organisational development assistance before providing loans. Dyna in Senegal considers the expansion of non-financial services as integral to the delivery of financial services, and is more likely to require clients' compulsory participation in training programmes and other non-financial services. MFIs do not like this form of compulsory service, as it may increase the financial and non-financial costs to the client and the MFI; it may imply a certain level of interference with the client's own judgment as to which services are most useful; and it may deprive MFI management of valuable information about client satisfaction with the compulsory services. At the moment, experience suggests that Dyna clients appreciate non-financial services at least as much as the financial services, and that the benefits afforded by these services, including a sense of personal and social empowerment, exceed the costs involved.

3.3.4 Increased modern information dissemination

Information dissemination through information communications technology (ICT) is another area that needs to be improved by the SELF project in Tanzania. Dyna has set up a website through which stakeholders in small businesses can share information, and it also posts information for small businesses on the website. Further, it has published a document on how to use the Internet, and promotes the establishment of Internet cafes. ICT has allowed MFIs to share information, for example on defaulters. It has made information available to MFI stakeholders and thus reduces the risks associated with lack of awareness in the microfinance business.

4. Sustainable development of apex institutions

4.1 Vision and mission of apex institutions in sub-Saharan Africa

The vision of apex institutions is to facilitate access by the rural and urban poor to financial services. The long-run perspective is to transform apexes into an effective, transparent and efficient microfinance support apex institution. It needs to address poverty issues through harnessing and targeting funds to needy areas, while incorporating best practice. The sustainable apexes have to operate as independent and autonomous corporate entities, with their own board of directors, management and staff.

The main corporate mission will be striving to enhance the access of poor people, particularly those who live and operate in rural areas, to microfinance services by way of credit and/or savings, sensitising and catalysing the formation of community-based organisations, as well as enhancing the capacity of MFIs to render better services to targeted clients. This will be achieved through wholesale credit to MFIs, forward retail lending to targeted beneficiaries, capacity building, and outreach and monitoring of microfinance activities.

4.2 Main corporate objectives and strategies

The main corporate objective of an apex is to improve microfinance services to enterprising communities in urban and rural areas in a sustainable manner. Specifically, a microfinance support apex institution has to support MFIs to develop characteristics that allow them to be efficient financial intermediaries (Levy, 2002).

The general strategy of apexes is to ensure that disbursement of loans is fast and up to date, with minimum backloads compared with the amount of credit resources available and targeted for disbursement. The disbursement strategy is to have an open and general coverage policy for credit operation activities. The apex will operate in all districts with potential enterprising communities and individuals with income-generating activities, an enabling environment for many efficient MFI operations, and potential and effective MFIs that have essential experience in delivering microfinance services.

4.3 Institutional framework, management and ownership

As poverty in sub-Saharan Africa is more prevalent in remote rural areas, the location of operating points that facilitate efficient and timely delivery of services is crucial. This needs to considered in relation to the limitations imposed by infrastructure, rollout plans to regions, the location of MFIs, and so on. The desired organisational structure and autonomy that the microfinance support apex institution will retain are vital in addressing poverty issues, particularly when viewed in relation to the other players involved, such as government ministries, donors, multilateral and bilateral organisations.

These national apex institutions are among other microfinance interventions that some governments in sub-Saharan Africa are owning and managing (e.g. K-Rep in Kenya) in implementing anti-poverty policy objectives, strategies and efforts. These have been practical and strategic institutional frameworks, with the primary objective of enhancing effective access of the poor, especially in rural area, to microfinance services (K-Rep, 1997).

Apexes must operate as independent financial corporate entities where the powers of the owners are reflected in the ownership of shares and not in political interference in the management of the business. The apex institutional framework will require interrelating various stakeholders involved in poverty, i.e. the government, apex board, management, MFIs, microcredit clients (the disadvantaged poor), donors, multilateral and bilateral organisations, and so forth. The board of directors needs to be strong, understanding their vision so as to facilitate transformation and expansion of sustainable microfinance services and inter-linkages.

4.4 Financial requirements

One of the conditions for sustainable growth in a world of scarce, subsidised resources and for financial viability of microfinance services is crucial for expanding outreach to large numbers of the nation's poor. Financial viability entails covering all the costs of delivering microfinance services with earned income, and retaining profits to fund expansion and growth (Tanzania, 2000c).

Apex institutions will develop detailed lines of activities for mobilising additional financial resources with public and private entities, in order to increase the amount available for core business. These actions will seek new forms of co-financing; promote direct participation of MFIs, communities, public and private sectors in the process of solving microfinance problems; and encourage the use of specific Poverty Reduction Strategy Paper funds in poverty reduction activities. The financial strategy should also focus special attention on establishing innovative and self-sustaining financial systems such as capital formation and expansion funds, and the use of best-practice mechanisms to mobilise additional funds.

4.5 Domestic mobilised voluntary savings

Savings is the beginning of all financial intermediation, and credit delivery should ordinarily be accompanied by savings mobilisation. It has been acknowledged that the poor save as households or as microentrepreneurs. Domestic mobilised voluntary savings is potentially the largest, sustainable and the most immediately available source of finance for many national apex institutions. Three conditions, some of which are beyond the control of the institution, dominate the sustainability issue of when an apex should start mobilising voluntary savings (David, 1999; Robinson, 1995):

1.	In the first consideration, profitable mobilisation of voluntary savings requires an enabling macroeconomy, an appropriate legal and regulatory environment, a reasonable level of political stability, and suitable demographic conditions.
2.	The second consideration concerns the supervision of institutions providing microfinance. For the protection of their clients, especially depositors, financial institutions that mobilise voluntary savings should come under government supervision. This, of course, requires that governments modify their banking supervision so that the rules for apex institutions are accommodated and appropriate for their activities, and to ensure that the supervisory body is capable of monitoring these financial institutions effectively.
3.	The third consideration relates to the history, capability and performance of the apex in these sub-Saharan African countries. Before mobilising voluntary public savings, an apex should have demonstrated consistently good management of its own funds. In other words, it should be financially solvent, with a high rate of loan recovery and earning attractive returns. This established financial record is important because, in many countries, low-income people who have entrusted their savings to small, unsupervised financial institutions have lost all their savings.

Many sub-Saharan African countries have not created a regulatory environment conducive for apex institutions to start mobilising voluntary savings. The immediate policy recommendation is to speed up microfinance reforms by introducing regulations (or, more likely, deregulations) regarding interest rates, capital requirements, salary levels and other factors that enable MFIs to provide financial services profitably.

There is substantial empirical evidence that institutional savings that offer security, convenience, liquidity, confidentiality and returns to the depositor represent a crucial financial service for poor clients. If priced correctly, voluntary savings can contribute to the institution's self-sufficiency and outreach. The introduction of commercial microfinance is likely to have some level of political visibility nearly everywhere in sub-Saharan African countries. The probability becomes higher when voluntary savings instruments are added, as both the institution's outreach and visibility increase. Therefore, apex institutions that plan to pursue deposit mobilisation will need political support at both local and national level.

5. Conclusion

The success of microfinance programmes in sub-Saharan Africa is not without its limitations, nor does it mean that humanity has finally found a permanent solution to the total eradication of poverty. From a strictly economic standpoint, credit alone is not sufficient to allow borrowers to increase their productive or commercial capacity and, in turn, their incomes. No amount of credit can help poor entrepreneurs claw their way out of poverty in the absence of economic opportunity. It is the infusion of credit into an atmosphere of economic opportunity that creates greater income potential and prosperity. Without access to real economic opportunity, credit programmes could become sources of indebtedness.

Moreover, microfinance schemes alone cannot alleviate the broader, non-physical symptoms of poverty that deprive the poor of a full social existence through their effective participation in the various patterns of everyday life. The battle for total eradication of poverty from the lives of many poor in Africa, therefore, requires combining microfinance schemes with parallel, complementary programmes for addressing the social and cultural dimensions of want, privation, impoverishment and dispossession.

Thus, microfinance programmes face the challenge of expanding their operations to include the provision of such basic services as adequate health care, drinking water, education, and craft learning. These poverty reduction efforts would make the financial initiatives more efficient and enhance their effectiveness, as they are likely to have smooth and sustainable growth in the sub-Saharan African countries.