Microfinance Has a bright future in Africas Development

COMMENTARY

Story by JAMES MWANGI
Publication, Sunday Nation Date: 4/3/2008
Dr Mwangi is the CEO of Equity Bank. These are excerpts from a speech he delivered on the future of microfinance during the 10th Annual African Business Conference at the Harvard Business School.

IN THE EARLY 1900s, OIL MAGNA-te J. Paul Getty was once quoted as saying: “If you owe the bank $100, that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.” Little did he know that barely 100 years later, a revolutionary banking model would turn his perceived world view on its head.

One might argue that Getty was a millionaire with little time for the poor. However, his perception is not far-fetched, judging by the common perceptions held regarding the provision of financial services in developing countries.

The foremost danger our people face today is the inability to get out of debilitating poverty. The reasons are varied, but the most fundamental, and perhaps most visible particularly for entrepreneurs, is lack of finance to start off.

I am under no illusion about the challenges of doing business in a growing economy like Kenya, but examples abound where the injection of small loans has turned people into notable businessmen, let alone making it possible to feed, clothe and shelter a family.

THE OVERWHELMING ADVANTAGE of microfinance, which generally refers to the making of tiny loans to people who would otherwise not access credit, is not that interest rates are low. It is that it makes it possible for poor people, many without collateral, to access credit.

A Sh10,000 loan, a pittance for many in the middle class, can be the beginning of a successful business for the vegetable vendor, commonly referred to as Mama Mboga, or the Jua Kali artisan. Read more on the article from the link below: -

http://www.nationmedia.com/dailynation/nmgcontententry.asp?category_id=25&newsid=120347