Microfinance Consultancy to Eastern Sudan: August-October 2009
This report contextualises microfinance in Eastern Sudan. It summarizes constraints for the development of a microfinance industry and provides recommendations for funders and regulators.
The government of Eastern Sudan endorsed microfinance as a critical component of its strategy for poverty reduction in 2006. The paper states that the government has failed to recognize the difference between inclusive financial services and social transfers. Constraints to the development of microfinance in Eastern Sudan include lack of capacity building; supply-driven, government subsidized approach; lack of specialized providers of microfinance services and bank branches without authority, flexibility or motivation to adapt.
The paper recommends that interested microfinance providers get access to training, exposure and technical support in order to develop a sound, dynamic and growing microfinance industry in Sudan. It recommends that financial institutions should:
- Design financing and investment products so that they start small and increase with customers' ability to utilise more financing;
- Tailor repayment instalments and frequencies to the revenue flow of business activities;
- Incentivize deposits;
- Not load customers with unnecessary transaction costs;
- Enforce a zero tolerance policy for late repayments;
- Introduce a reliable loan tracking database and an accurate management information system.
