Financial Linkages in Mali: Self-Reliance and Liquidity Balancing Versus Liquidity Supply and Donor Dependence

This article examines the evolution of the microfinance sector in Mali. It discusses and compares the financial linkages that Banque Nationale de Développment Agricole (BNDA) has with the following two microfinance institution (MFI) networks in Mali:

• The liquidity balancing linkages with Kafo Jiginew (Kafo), a regulated savings and credit cooperative;
• The linkage with the (Caisses Villageoises d'Epargne et de Credit Autogerees-Office de Niger) CVECA-ON network.

The article states that:

• Kafo uses BNDA credit lines mainly for liquidity balancing and donor funds for expanding their portfolio;
• CVECA-ON financial linkage model accesses credit for portfolio expansion, rather than for liquidity balancing.

The article examines the impact of this difference in strategies on growth in terms of savings mobilization and loans outstanding and finds that:

• All members of Kafo save, and they save significantly more than the members of CVECA-ON, less than half of whom have a savings account;
• The Kafo cooperatives are far more dynamic than CVECA-ON village banks in terms of growth of client-deposits and the growth of loans outstanding.

The article concludes that:

• Donor credit lines have played an important role in the first stage of evolution of microfinance in Mali;
• They have now been taken over by domestic banks, marking the second stage of evolution;
• The third stage would include the establishment of a bank by the largest network of MFIs and the incorporation of linkages within that apex institution.