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BRIEF
REPORT
The
Jakarta workshop held on the 20th of June 2002 on “Micro
Credit Schemes in NAM Member Countries” recommended that a series of
similar training programmes be held in the NAM Member countries. The
rationale behind this initiative was that if micro finance practioners
were capacitated their institutions would contribute more effectively
towards poverty alleviation. Hence, a training programme, which aimed at
imparting best practices, was seen as a vital first step in this
direction. In
total 21 participants from Southern Africa Developing Countries (SADC)
attended the training programme (see attachment 4). The
training was divided into the following areas:
As
most of the participants were adults and hence well exposed to micro
finance, a participatory training technique was used. In addition to
this, case studies, group discussions, and a field trip were conducted.
At the end of the training programme, all participants presented an
action plan to be implemented upon their return in the various
countries. These action plans should form a solid market driven approach
in any future interventions in SADC by NAM CSSTC with the full
cooperation from MEA. In
his opening remarks Mr. Rachadi Iskandar made the following statement: “On
behalf of the Board of Directors of NAM CSSTC, I would like to welcome
you to this beautiful city of Pretoria, South Africa to attend this
Regional Training on “Micro Credit Scheme”. This training is held in
cooperation with Micro Enterprise Alliance (MEA). A similar training has
been held in Jakarta, Indonesia in August 27-31 this year for East Asia
and the Pacific Region. Prior to the training programme was a workshop
on Micro Credit Scheme in NAM Member Countries (Empowering
women’s role in small scale business development) which was held in
Jakarta on June 2002. The training is a follow-up of that workshop. The
government of Indonesia financed both activities. Let
me first explain to those who are not familiar with our Organization,
NAM CSSTC. It began in the 10th Summit of NAM in Jakarta
where the idea of establishing NAM CSSTC was come into the surface.
Then, the NAM Summit in Cartagena Colombia, in 1995 considered that the
Centre focusing on technical cooperation is an important catalyst in
enhancing the process of development in NAM Member Countries. So, one of
the decision taken by the Summit of NAM in Cartagena, Colombia, in 1995
was to establish the Non-Aligned Movement Centre for South-South
Technical Cooperation or NAM CSSTC. The Summit also emphasized the
importance of creating greater cooperation among the countries of the
Movement in the field of education and training, which are essential
factors for economic and social development. An overriding priority for
developing countries is to eradicate poverty through sustained and
accelerated economic development The Heads of State or Governments
attending the 12th NAM Summit in Durban South Africa in 1998
declared that the eradication of poverty through sustained and
accelerated economic growth continues to remain the overriding priority
for developing countries. This priority formed the core of the
Non-Aligned Movement’s objective during the 21st century.
In response to this the NAM CSSTC is uniquely positioned to promote
activities, through the effective utilization of human resources,
exchange of information and sharing of experiences among NAM member
countries, in eradicating poverty. Although there are other Centres,
this Centre is a complementary of the existing Centres of the
Non-Aligned Movement as well as being an integral part of the endeavor
of the Movement to strengthen South-South cooperation. Let
me now explain the background of running this particular training. The
majority of the poor population in the developing countries lives in
villages and most of them are women. They play significant role in rural
development particularly in helping to cultivate land and harvesting
agriculture. Many of them are also engaged in household cottage
industries. However, lack of education and access to capital to support
their activities has hindered the growth of their “business”, and as
a result they remain poor. With
this is in mind, NAM CSSTC took the initiative to facilitate cooperation
among NAM member countries especially in the area of micro credit
services. It has been identified that some developing countries have
quite many credit institutions specializing in providing loans to
farmers and fishermen; however the result is still less satisfactory,
most of village people still remain poor. A micro credit financing,
could help to empower women’s role in small-scale business development
in particular and the potential poor people in general to uplift their
welfare and at the same time it eradicates poverty gradually. A sound
and professional credit institution that possesses a good credit system
and has successful records in meeting the need of the village people
would be a greatly needed by the community. It is clear that there is a
new generation of micro-finance. Therefore, the government needs to
acknowledge the unconventional nature of micro-finance for the poor and
facilitates the vital role that the private sector micro-finance
institutions can play in poverty-reduction. Probably within eight years
of time. I believe that in your countries there are micro financing
institutions that have been very successful, but in other countries they
are not too well performing. We have to work on that. In
these five-day training you will be exposed with technical aspects of
micro financing that you might have been familiar with. More importantly
you will also learn various experiences in running the micro financing
services from other countries. Bank Rakyat Indonesia, usually referred
as BRI, which is a one of the leading banks in Indonesia, specialized in
retail and micro banking has vast experiences and reputations in
providing loan to farmers, fishermen and to small and medium enterprises
in the rural as well as in urban areas. We have their representatives
here with us. NAM CSSTC had recently collaborated with BRI in running a
similar training in Jakarta for the East Asia and the Pacific region. On
behalf of the Board of Directors of NAM CSSTC I hope this training would
enrich your knowledge and when you come home the subjects that have been
discussed here could be applied in your respective institutions so that
our efforts are indeed worth doing. I also hope that you could share
experiences you’ll get here with your countrymen who have the same
aspirations as you do to uplift their welfares. Finally I would like to
say success with your five-full day training. Your active participation
is strongly encouraged in order to create a productive training session.
The Board of Directors of NAM CSSTC would like to extend appreciation
and gratitude to Micro Enterprise Alliance and its affiliates for their
marvelous cooperation to make this training possible and I would also
like to invite suggestions from the participants for the improvement of
our future programme. Last but not least I should say have a nice stay
in this city, the Capital of the Republic of South Africa for those who
come from far away places. Thank you”.[1] The
training followed the outline agreed for the workshop (see the detailed
attachment):
A
composite of training methodologies were used to ensure that the
required level of involvement and interest was maintained. The
approaches involved lectures, group work, case studies, assignments,
observations during the field trip and the final action plan
presentations. 2.1 In
Class Training Sessions Day
1: This
day involved exposing the participants to the philosophy of micro
finance. In this area the objectives of micro financing, principles of
micro credit, micro credit development, market for micro credit, micro
credit technology, loan procedures, loan disbursements and document
filing were dealt with. The
aim was to equip the participants with the fundamental concepts for a
deep understanding of micro finance practices. Day
2: There
were only two topics covered namely financial statement, and financial
indicators for measuring performance. This section exposed the
participants to the income statement, balance sheet, cash flow
statement, adjustments to these, measuring profitability and appropriate
strategies to institute. Day
3: Risk
management was the topic for day three. The types of risks in micro
finance were discussed, their causes explained and how to manage and
reduce it. Day
4: Class and Field Trip The
second last day was divided into two; first was the section on interest
setting. This topic tooled the participants in calculating the interest
rate to be charged for loans disbursed to clients. Often micro finance
institutions use inappropriate pricing methods, which result in
repayment problems. Day
5: The
participants began their day by reporting back on what they learnt from
the field trip. On
the last day participants dealt with management information systems.
Detailed investigations of types of reports use of information by
decision makers and types of available software packages were
investigated.
Field Trip
The
second part of the 4th day was a trip to the clients of two
micro finance institutions, which conduct their businesses in Soweto, a
popular suburb of Johannesburg. The
aim of the field visit was to enable the participants to see the type of
clients commonly served by MFIs in South Africa and the difficult
security environments the micro businesses operate in. In
all, three clients were visited and during the drive to and from the
sites the participants received verbal descriptions from the staff from
Basani and Nations Trust on their organizations and the type of clients
they serve. Time was allowed for participants to ask questions to the
staff members from Basani and Nations Trust. This discussion proved to
be very valuable for the participants. It
was very apparent to all that certain clients had graduated and needed
to be passed on to Banks. However, Banks in South Africa still practice
red lining, i.e., areas are defined where they cannot operate in no
matter how lucrative the business is. The other two were typical micro
finance clients.
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