I agree with everything that Jeff has said, except to note that the numbers in Africa are now, at least, 7 million. In addition, our research, carried out by Datu Research in Uganda, is showing a 3-year post project growth in the number of groups, of about 200% - of which about 60% is peer-to-peer replication. We will be showcasing this at the SEEP conference. Poor folks are not sitting under trees to do this because they are deeply irrational, but because a) the service is useful b) the returns are spectacular.
From: MicrofinancePractice@yahoogroups.com [mailto:MicrofinancePractice@yahoogroups.com] On Behalf Of jaashe@aol.com
Sent: 17 October 2013 19:13
To: MicrofinancePractice@yahoogroups.com
Subject: Re: [MFP] RE: South Africa
Milford and Colleagues:
To reiterate a point I have made several times on this list serve, there is an alternative. Savings Groups - VSLAs, Saving for Change, SILC - etc. have grown to about 6,000,000 members in Africa. Instead of usurious profits or indeed any profits going to institutions these groups of about twenty that mobilize their own savings, lend to each other and divvy up the profits earn a 30% return on their savings. Costs are extraordinarily low and impact is substantial. The Saving for Change Groups in Mali (which number about 20,000 with 420,000 members) collectively carry out about 30 million transactions every year between saving and borrowing every year without the involvement of a single staff person. When the groups were being trained the ratio of staff to members was about 1/2000 now in the monitoring stage it is 1/5,600 with most of the remaining staff engaged in agriculture and business training. The cost? About $1,000 to bring groups to a village of 1,000 over several years. The outcomes confirmed by a RCT funded by Gates in 500 villages - a 10% increase in food security, a 13% increase in the value of livestock (living ATM machines), social capital and viral replication into the "control" villages.
Think about it,
Jeff
Jeffrey Ashe
jaashe@aol.com
-----Original Message-----
From: milford bateman <milfordbateman@yahoo.com>
To: MicrofinancePractice <MicrofinancePractice@yahoogroups.com>
Sent: Thu, Oct 17, 2013 12:26 pm
Subject: [MFP] RE: South Africa
Darius
This is a very strange point. If consumer lending is NOT to be classified as 'microfinance', then I would think you will have to omit anything from 60-90% of microfinance institutions from the list of recognised 'microfinance institutions' because what they do is almost entirely consumer lending. This list would include the Grameen Bank, BRAC, ASA, Compartamos, SKS, Bancosol and many many more. Is this what you are saying?
Chuck
You are no doubt once more referring to the appalling Wonga and its horrendous equivalents in South Africa that charge up to 5,000% on their payday loans. But you and I know full well that that is not what I am talking about here: I am talking about microfinance institutions that have long been fully recognised as legitimate 'microfinance institutions' by leading microfinance specialists in South Africa (see various reports by Gerhard Coetzee for example) and by the global microfinance industry itself, but which have nevertheless combined to create a catastrophe for South Africa. I am talking about Capitec, ABSA (a subsidiary of Barclays, but which has now pulled out of microfinance), Standard Bank, First National Bank and others. They offer microloans up to 84 months at interest rates of between 40-100% per year, and they have massively upped the amount of microcredit in circulation not to develop the local economy but simply to make profits. In other words, they are pretty mainstream microfinance institutions providing a pretty standard microcredit offer; in fact, probably a better one than many other microfinance institutions in South Africa and across Africa as a whole - check out some of the interest rates offered across Africa by Opportunity, a universally recognised microfinance provider – details here at Hugh Sinclair's excellent blog -
So I'm at a loss as to why it is that for many years such institutions were unproblematically described by the microfinance industry as 'microfinance institutions', but now you and others wish to say that they are NOT microfinance institutions at all and try to brazenly lump them in with the horrible payday lender crowd. If such harsh terms and conditions disqualify me from describing these institutions as 'microfinance', how come microfinance institutions everywhere else in Africa get away with offering a product at much worse terms and conditions, as Hugh Sinclair showed just now, but yet they can still say they are offering 'microfinance'?
Benoit
I am condemning the bad institutions in South Africa that are a very large part of the microfinance system in that country.
Thanks
Milford
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