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Last Updated: 4/6/2009
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President Mwai Kibaki Thursday underscored the need for micro finance players in Africa to collaborate and help disadvantaged majority in the continent to access formal credit that was critical in poverty alleviation.
Opening a one-day Conference on Micro Finance in Africa at the United Nation Office Nairobi, Gigiri, the President said low income households needed access to cheap credit to enable them break the vicious cycle of poverty.
The President noted that while micro finance may not be the sole panacea to the poverty problem, it remained an important tool in employment creation and poverty eradication in the continent.
The Head of State however commended African countries that had taken the initiatives to strengthen their micro finance sectors saying the institutions had proved to be major contributors to the social economic transformation of the continent.
"We need to strengthen Micro finance institutions such as the non-governmental organizations, non-bank financial institutions, cooperatives, rural and village banks, savings and credit societies, as well as the more liberal commercial banks that offer financial services to low-income clients," he said.
In Kenya, President Kibaki told the conference which brought together over 400 local, regional and international leaders that, the government had taken the necessary steps to facilitate access to affordable credit to the low income households that cannot quality for commercial loans.
The president said Kenya had put in place the necessary laws to promote a sound, vibrant and efficient micro-finance system for the good of the country, including enactment of the Micro-finance bill.
He noted that the Youth and Women Enterprise Funds, which have been established by the government with the objective of providing affordable loans for business start-ups and expansion, had assisted thousands of Kenyan youth and women were both a success.
"You may wish to note that these funds have generated a lot of excitement with thousands of Kenyan youth and women coming forward to borrow in order to start or expand their businesses. The experiment may be worthy to study and see how much it will contribute to national economic growth, employment and poverty alleviation," said he.
President Kibaki noted that despite limited access to formal credit and other financial services, the micro finance enterprise sector in Kenya accounts for 75 per cent of the total number of people employed in the country contributing 18 per cent of the gross domestic product (GDP).
"Experience has demonstrated that availability of financial services constitutes a critical tool that enables low-income households to improve their living standards by engaging in income generating activities in the micro-enterprise sector," the President said.
He noted that technological innovations, product refinements and the ongoing efforts by stakeholders to strengthen the capacity of African micro finance would go a long way in reducing costs and increase outreach to boost overall profit and sustainability.
He gave the example of the mobile phone banking, as an innovative method of banking that had proved successful in Kenya.
President Kibaki urged key players in the sector to encourage responsible micro financing and continue pursuing the noble cause of empowering the poor economically to meet the objectives of the movement started in the continent 30 years ago.
The Head of State challenged micro finance lenders to seek innovative and cost-effective methods of delivering value added services.
"In your pursuit of growth, I appeal to you to not only consider the financial returns, but also the social returns you make to your communities; it is crucial that you stay focused on a double bottom line," the President said.
President Kibaki at the same time encouraged the conference participants to re-examine the nature of financing the micro enterprise sector in view of the fact that development partners are moving towards equity and debt at commercial rates which, he said, were beyond reach of the majority players in the sector.
Addressing the same forum, Her Royal Highness, Grand Duchess of Luxembourg, Maria Teresa expressed her conviction that micro-finance institutions play a critical role in reduction of poverty and promotion of the culture of peace.
The Grand Duchess said that the majority of the poorest people have no access to financial credit and that micro finance institutions helped restore human dignity and justice especially for women who lacked access to affordable loan facilities.
She said an estimated 85 per cent of people served by micro finance institutions are women who were less likely to default on loan repayment unlike men.
PPS
Posted: Thu, Jun 04, 2009
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