1 / 12

Thematic Roundtable II/3 Financial Linkages in Mali: Self-reliance and Liquidity Balancing

An International Conference on Rural Finance Research: Moving Results into Policies and Practice FAO, Rome, 19-21 March 2007. Thematic Roundtable II/3 Financial Linkages in Mali: Self-reliance and Liquidity Balancing vs Liquidity Supply and Donor Dependence By Hans Dieter Seibel

lonna
Download Presentation

Thematic Roundtable II/3 Financial Linkages in Mali: Self-reliance and Liquidity Balancing

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. An International Conference on Rural Finance Research: Moving Results into Policies and Practice FAO, Rome, 19-21 March 2007 Thematic Roundtable II/3 Financial Linkages in Mali: Self-reliance and Liquidity Balancing vs Liquidity Supply and Donor Dependence By Hans Dieter Seibel University of Cologne, Germany 13 March 2007

  2. Background, 1987:Linking formal and informal finance Basic research: Informal finance, upgrading IFI, 1900... Development hypothesis, 1980s: „Financial services to rural populations can be improved by linking informal and formal financial institutions.“ FAO policy: „ ... The modalities of linkages between banks and informal groups are a major priority area of FAO and will remain so during the coming years.“ (Mittendorf, Chief, Marketing & Credit, FAO, 1987) Practice (1988...): Linking banks and SHGs – APRACA/GTZ in Indonesia, Philippines, Thailand, India AFRACA/GTZ in Nigeria, Burkina Faso, Zimbabwe

  3. FAO/Ford Foundation, 2005:A Global Study to Examine Innovative Linkages to Expand Rural Financial Services Focus: Partnerships between banks and MFIs: • overcoming information and enforcement problems • lowering transaction costs • increasing outreach • providing services beyond credit 12 case studies in 11 countries in Africa, Asia, LA Small Enterprise Development, May 2006; www.ruralfinance.org Maria Pagura, ed., Expanding the frontier in rural finance: financial linkages and strategic partnerships. Practical Action Publishing, Bourton on Dunsmore, 2007

  4. Mali:Linkages between banks and MFIs • Mali: 70% rural, per capita income $234, HDI rank 174 • MFIs: 41 networks, 752 local MFIs, 614,000 members (2003) • Total assets €69m, deposits €36m, outstandings €49m (2004) • 3 MFI subsectors, in % of total outreach: • Cooperatives 70% (88% of deposits, 84% of loans outstanding) • village banks/caisses villageoises 20%, • solidarity credit groups (Grameen type) 10% • Regulation: Parmec law • Monitoring & supervision: CAS/SFD, a unit in the MoF

  5. Linkage banks BNDA, a government-owned AgDB, main linkage bank: • backward linkages with AFD, KfW • 2.9% of loans outstanding invested in the MF sector • Two largest borrower-MFIs: Kafo Jiginew and CVECA-ON • Interest rate to networks: 8% (corporate rate: 15%) • Networks to MFIs: 10%, onlending rate to members: 20-25% BIM, a commercial bank: • Refinances MFIs since 1994, focus on 3 networks • linkages with MFIs since 1986; wholesale & corporate lender Banque Malienne de Solidarité, for MFIs, since 2002, 7% interest Banque Régionale de Solidarité Mali, since 2005 Repayment rates at BNDA, BIM: 100%

  6. Overall functions of banks 1st: Seasonal liquidity balancing: • Accepting deposits from MFIs at times of surplus • Refinancing MFIs at times of shortage of funds 2nd: Liquidity supply to MFIs for portfolio expansion 3rd: Channeling donor funds • Banks willing to lend more, lack of effective demand

  7. Semi-annual fluctuations in client loans, deposits and liquidity balances, 2001-03

  8. Kafo Jigenew, a federation of savings & credit cooperatives • Established 1987, cotton belt, CMDT area • 129 cooperatives, 165,000 members, 25% female (31 Dec 2003) • Linkages mediated through a central fund • Total assets €23.6m • Loans outstanding €16.7m • Client deposits €12.2m, • Bank borrowings €5.5m • ROA 0.8% (2003), 2.7 (2002) • ROE 5.3% (2003), 16.6% (2002)

  9. CEVECA-ON, a network of village banks / caisses villageoises • Village banks initiated in the early 1980s by CIDR • 276 village banks, 120,000 members, 6 networks, 14 unions • KfW main financier since 1986, followed by AFD • CVECA-Office du Niger, est‘d 1994, originally cotton, now paddy • 51 village banks, 26,300 members, 35% female (31 Dec 2003) • Linkages mediated through 3 financially independent unions • Total assets €3.23m • Loans outstanding €2.43m • Client deposits €0.73m, • Bank borrowings €1.55m • ROA 1.25% (2003), 0.37 (2002)

  10. Financial strategies • Kafo Jiginew: self-reliance; fund management through a central fund, to be transformed into a bank or finance company in 2008 • CVECA-ON: portfolio expansion through bank borrowings, refinanced by donors; fund management through BNDA Niono „Sans le refinancement, les caisses n‘existeraient pas.“ (A. Cissé, CAREC) Kafo CEVECA-ON Deposit-to-loan ratio 73% 30% Borrowings-to-loan ratio 33% 64%

  11. Growth dynamics of financial strategies:Kafo Jiginew and CEVECA-ON

  12. Questions, no conclusions(after 20 years of linkages) • Do donor credit lines for bank linkages undermine savings mobilization, self-reliance and growth? • Does donor and gvt financial support for bank linkages crowd out commercial banks? • Why are S&Cr coops in Mali working so well , in contrast to other developing countries? • Should village banks turn into self-reliant coops? • National and regional solidarity banks: what for? • With 30% of households in Mali organized in MFIs, why is Mali still one of the poorest countries?

More Related