remarks from Mr.Omar Halim, Executive Director of NAM CSSTC
the context of the world economy, the majority of developing countries are
becoming more and more marginalized. Their performance with regard to
economic, sustainable, rapid and equitable growth unfortunately have been
less than adequate. NAM CSSTC’s objective is to assist those interested
NAM member countries to significantly improve their performance to obtain
a solid and equitable economic foundation to catch up with the developed
countries. One of the focuses we have in our programme is Small and Medium
Enterprises (SMEs). We are very interested to assist this particular group
because SMEs are the back-bone of our economies in terms of unit of
production and providing employment opportunities and thus become the main
vehicle for many small and medium-income people to increase their
earnings. Yet, in many developing countries SMEs have been very much neglected. They have been taken for
granted. The focus of attention of government policy in the past has been
very much based on the idea of we should grow economically relying on the
big enterprises and entrepreneurs, hoping for the so-called tickle-down
effect to benefit the small and medium producers. But this approach is far
from sufficient in promoting equitable development. The resultant
increasing gap in the distribution of income and wealth creates social and
political problems which weaken the national unity of the country. We feel
that we should pay full attention on the SMEs, on the small producer, on
the medium-sized producer, in order to contribute to their growth. We
could do that by assisting them in a number of areas such as market
information, upgrading of skills and technology, and capital. This
last area is the focus of this workshop on micro financing.
Financing is financing of small companies. They are small in magnitude but
they are many in numbers. This is the challenge of many of these
economies. We will
disseminate your ideas exposed in this workshop and also the
recommendations you will make. We hope that the output of this workshop
would be very fruitful for Non-Aligned Movement countries in formulating,
implementing and monitoring these policies, programmes and projects on
micro financing. Finally on behalf of the BOD of the NAM CSSTC, I
would like to thank the government of the Republic of Indonesia
which has financed this particular workshop.
Session 1 : PANEL
PRESENTATION ON “The Role of Micro Finance in Poverty Eradication”
: Poverty Reduction through Micro Finance Credit Schemes (Tanzanian
1 : Cecilia Keenja, National
Microfinance Bank, Tanzania
main points of Ms. Keenja's presentation are as follows :
and youth have been chosen as specific marginalized target groups for
shows that women area already the majority borrowers.
of expertise in managing macro finance is still in existence.
commercial banks though growing in good number are reluctant to
involve themselves in microfinance activities.
channeling of fund still faces some major constraints such as long
bureaucratic procedure, limited management capacity to handle large
projects and high costs to manage the projetcs.
presenter recommended the followings :
should not be directly involved in provision of microfinance services
rather should give the fund to banks or other MFIs to reach the
should account for funds in a timely, accurate and comprehensive
Role of Microfinance in Economic Development and Poverty Eradication
main points addressed by
are as follows :
of Economic Structure is the case of Indonesia in which vast majority
of business entity are SMEs but their contribution to GDP, market
share and growth are relatively small compare to big enterprises.
acknowledgement of microfinance issue is relatively limited for many
political decision makers which hinders microfinance development.
main problem faced by SMEs and micro entrepreneurs is the lack of
capital. The problem related to capital is mostly how to have access
to the capital.
three approaches in microfinance practices, they are micro financing
the poor, microfinance of the poor, and micro financing with the poor.
presenter recommended the followings :
the imbalance economic structure, the SMEs and cooperative must be
is a must to build the capacity of MFIs in order to make them
financially self sufficient institution.
should be a paradigm shifting in looking the poor no longer as the
have not and powerless individuals but as the have little and having
potential to leaving poverty by their effort.
should be a regulatory framework for both microfinance activities and
develop microfinance there are some points need to be emphasized : a)
the way the poor use their money, b) the existing microfinance
approach that work in specific context, and c) macro economic
and parallel actions are needed to ensure the development of
Alleviation and Micro Enterprise Sustainability (Some Evidence from
main points of Mr. Torres's paper are :
indicates that it is difficult for the majority of micro enterprises
to produce enough revenues to sustain themselves, much less to
is a tendency that commercial banks are reluctant to provide
smaller-scale loans, it is typical to convey the fund to
micro-credit beneficiaries through
intermediary conduits such as NGOs.
support work of the NGOs during the first stage of new micro
enterprise creation becomes indispensable.
of micro credit system in which government plays important roles in
practice brings more restrictions to the development of micro credit
Torres's recommended the following items :
is necessary to amend the lack of coordination among various agencies
involved in micro-credit programmes.
is necessary for the NGOs to have an adequate and clear definition of
their group objectives and to have established technical criteria
regarding sums, installment, rates and supervision.
Credit : Experience and Lesson from Nepal
main points addressed by Mr. Paudyal are as follows :
mobilization is the core activity for any community development
programme directed towards poverty alleviation.
programmes are more effective even in planning and implementing
model of micro financing with its weekly-payment system is not really
appropriate in a hilly region.
approach is the fundamental principle of the micro-credit programme.
Paudyal suggested the following ideas :
empowerment could be achieved with a follow-up package programme
consisting of education, skill training, health, etc.
level institutions should be developed for the sustainability of the
men’s cooperation in order to improve women’s role in Microfinance
Opportunities and Pitfalls of Microfinancing in Developing Countries (The
5 : Joseph
key points of Mr.Nyamunda’s paper are as follows :
players in micro financing include NGOs, private sector and public
sector has been making significant contribution to micro-financing by
extending the programme to the poor.
ensure the programme is effective both in lending and repayment, a
community based approach is mostly used.
is needed to allow private sector play more role in micro financing.
should deal with administrative matters while autonomous bodies like
NGO can be financially strengthened and be engaged into much bigger
wholesale lending programmes.
Microfinance Institution Association should be encouraged.
Role in Capacity Building as a Strategy for Reducing Poverty
6 : Emil
Sarvodaya, Sri Lanka
important points from Mr. Anthony's papers are :
poor households demand micro credit not only for income generation but
also for consumption smoothing and to meet expenses related to life
meeting client demands, a “credit plus” approach is adopted in
which there is a linking of credit with training and enterprise
are three types of micro credit facilities for, i.e.: income
generation, consumption loans to improve quality of life, and creation
of employment by expansion of existing small businesses.
of fund for lending are members’ savings, borrowings from financial
institutions, and accumulated capital
Anthony recommended the followings :
credit institutions should be managed as business organizations and
should have a commercial orientation. There should also be
professionalism in the management of such institutions.
credit institutions should be ‘focused’ with a commitment for
self-sustainability. It shoud not engage in a multitude of welfare
activities, which dilute the level of focus and intensity
credit borrowers should be treated as clients and not as
Session 2 : PANEL
PRESENTATION ON “Government
Support to Micro Financing”
Support for Micro Credit Financing (The Legislative Environment)
Company Division, Mauritius
main points addressed by Ms. Chinien are as follows :
sponsorship and a proper legal environment are pre-requisites for
uplifting the standard of living of the poor and promoting the growth
order to provide the necessary support, the government has recently
introduced a number of flexible provisions in the new Companies Act
which allows a company with one person. This structure serves as a
marketing tool as well as providing easier access to financial
Chinien suggested the following ideas :
creation of a statutory organization whose prime objective is the
promotion of local goods and services is a form of support by the
government to SMEs.
should encourage big outlets and multinationals to source their
products locally from micro and small enterprises. Appropriate
incentives may be given to encourage such a practice.
: The Indian Experience
State Bank of India, India
main points from Mr. Bhasin’s papers are as follows :
concept of “Priority Sector” broadly covers microfinance,
agriculture/rural and SME sectos.
government supports microfinance activities and other private sectors
through commercial banks by requiring them to lend 40% of their credit
to priority sectors, subsidising the banks which provide micro credit
requiring low interest rate.
Bhasin recommended the following :
should be an integrated approach in building on micro credit
practices. Government can play its role by creating a specialized
should be programme enriching by international experience of
Session 3 : PANEL
PRESENTATION ON “Role
of Women in Micro Financing”
Women’s Empowerment through Microfinanace: The Case Study of ENOWID
9 : Magdalen
main points addressed by Ms. Abrokwa are as follows :
generation of micro-finance for widespread poverty and women’s
empowerment is emerging in NAM member countries.
considerable impacts of microfinance on the lives of women and their
dependants among others include increased productivity of women,
creation of jobs, improved literacy level, improved social
interaction, cultivation of saving habit, and minimizing
the predominance of money lenders.
lending capital is about the biggest challenge of
Abrokwa suggested the following ideas :
needs to acknowledge the unconventional nature of micro-finance for
the poor and facilitate the vital role that private micro-finance
institutions can play in poverty reduction.
the operational levels, MFIs targeting women should reckon with the
fact that women’s business strategy is conditioned by time
constraints and concerns about daily household welfare and that women
are more likely to persue risk-averse strategies.
10 : Micro
Credit Scheme: The Experience of Amanah Ikhtiar Malaysia
Amanah Ikhtiar Malaysia, Malaysia.
main points addressed by Mr. Ishak are as follows :
puts into practice a Specialized Credit Delivery System which places a
number of certain requirements.
specialized credit delivery system requires qualified staff.
impact studies show a
noticeable increase in income among the credit participants.
has benefited cooperation and support from the government especially
in the field of financial support, research and study of poverty and
Ishak suggested the following ideas :
rigorous, practical staff training is required
among NGOs and government should be enhanced
11 : Mobilising
Micro Credit Facilities to Help Women in Business Development in an
TCC Ltd, Singapore
key points of Ms. Harilingam’s papers are as follows :
urban states, most poor people in developing countries depend their
incomes on the informal sector, typically micro-enterprises in
services manufacturing and trading.
an urbanized society micro financing serves for some pporpuse such as
training women on business skills and management, providing market
information, coordinating skills training for entrepreneurs,
maintaining quality of products and introducing marketing strategies.
credit beneficiaries especially women see financial independence and
continual personal development as a springboard for total emancipation
are some areas to be achieved to sustain people’s involvement in
micro-financing schemes i.e: “service to members” programs, member
education, involvement/governance, diversity, commitment to the credit
union movement, and public service/corporate responsibility.
Session 4 : PANEL
PRESENTATION ON “Philosophy
and Technical Aspects of Micro Credit Services”
12 : Philosophy
and Technical Aspects of Micro Financing
Bank Rakyat Indonesia, Indonesia
main points from Mr. Nawawi’s papers are as follows :
practicing microfinance, there should be an understanding of the
structure of the poor. Technically
the poor is devided into two groups : a) the poorest of the
poor, and b) economically active poor.
services microfinance can be divided into two groups : a)poverty
alleviation programme and b) commercial microfinance. Mixing up these
two groups will create problems such as deteriorating market
mechanism, creating moral hazards and wasting limited resources.
finance needs a multi-dimensional approach; including sociological and
cultural approaches – using the financial approach alone is not
contributing factors to the failure to establish a sustainable
microfinance are the lack of understanding about the market, over
emphasis on short-term goals, and mixing-up political goals with
is no magic cure for poverty. There are more basic constraints such as
knowledge, health, access to market. Only if the capital is the last
scarce factor the impact of borrowing can be very high.
provision of credit subsidy has proven to be generally unnecessary.
What matter most is effective access to credit whenever the households
Mr. Nawawi recommended
the followings :
market-driven approach is which argues that credits will only be
helpful if business activities are already in place should be adopted.
Simply put, banks or financial institutions should follow where the
to be considered to create sustainability in micro finance business
should be enough margins to cover all of the business costs
a careful pricing policy
self-sufficiency/have enough sources of funding
principle in all aspects of the operations
at all levels
extensive and easy access to financial services ( a large number of
outlets is needed).
micro enterprises is to establish a linkage between micro enterprises
and big corporation as a win-win basis.
of Information Technology should be in place to enable access
information about market.
13 : Philosophy
and Technical Apects of Micro Credit: The Experience of Bangladesh
13 : Shabbir
main points from Mr. Chowdhury's papers are as follows :
applies a credit plus approach provides the poor not only with
financial support but also with technical assistance, marketing
assistance and a regular supply of inputs.
to holistic sustainability is to enhance sustainability of the
programme participants as well as the sustainability of the micro
finance organization itself.
order to bring the rural poor into the mainstream of development, one
of the strategies is to focus on institution building. In BRAC’s
case a concept of Village Organization is introduced.
also touches the so called ‘missing middles’ who neither belong to
the target group of MFI, nor have much access to formal financial
institution. They usually show great promise and entrepreneurial
ability but not keenly interested to go to formal financial
institution becaue of the bureaucratic procedure.
are getting more commercialized. Competition among MFIs creates
more default loan and high delinquency rate.
of micro finance is not being supported by the growth of human
Mr. Chowdhury recommended the
should invest in a strong management information system to meet the
challenges of rapid expansion.
competencies of practitioners and professionals of MF.
friendly regulatory framework of micro finance should be in place.
specialized package which consists of asset transfer, employment and
enterprise development training, social safety net, and health care
provision should be in implemented to target the ultra poor.
14 : Initial
Results and Experiences in Computerized Implementation of Micro-Credit
Schemes of the Vietnam Women’s Union
14 : Cao
Thi Hong Van,
Women’s Union, Vietnam
main points from Ms. Cao’s papers are as follows :
is essential to computerize the credit/saving management system to
reduce workload , time-consuming of credit officers and reduce
unpractical reports which in the longer term will reduce operating
support by the donor is a fundamental need to apply a computerized
Ms. Cao recommended the
is feasible to apply a computerized management system in micro finance
sector, even in the context of developing countries and with a
15 : The
40 Year Journey of Purba Danarta (Lesson Learned)
, Bank Purba Danarta, Indonesia
main points of Ms. Kiswanti’s paper are :
aid that comes too easily would not promote development process.
income will not automatically improve the welfare of the people.
of the poor should start from the proper management of their household
a loan without proper business management could be dangerous to the
Kiswanti recommended the following items :
income management for the small people should be introduced.
concept of “expenses are income minus saving” should be introduced
to help small people managing their cash-flow.
simulation training for small entrepreneurs is recommended.
16 : Microcredit
Schemes in Negara Brunei Darussalam as Condtucted by Islamic Development
Bank of Brunei Bhd.
Hj. Basmah Abbas,
IDB of Brunei Bhd, Brunei Darussalam
main points from Ms. Abbas papers are as follows :
credit is targeted to
micro enterprises and also to youth and retirees.
of micro credit is conduced through a series of marketing activities
such as TV programme, printed media and internet.
facility is in a form of short-term borrowing by pledging an
item such as gold jewelry as collateral.
Ms. Abbas recommended
the followings :
monitoring should involve other bodies such as government and other