Jeanette Thomas
+1 202 473 8869
jthomas1@worldbank.org
Tiphaine Crenn
+221 33 820 50 70
tcrenn@orange.sn
FOR IMMEDIATE RELEASE
Critical Moment for Expanding Access to Finance: Central African Policymakers Participate in Microfinance Meeting in Yaoundé
21 March 2008, Yaoundé, Policymakers from ten Central African countries meeting in Yaoundé over the last few days heard that access to formal financial services is still severely limited in Africa. "With just one in five households having access to formal financial services, Sub-Saharan Africa suffers from one of the lowest rates of access in the world" said Jennifer Isern, who leads CGAP's work in Africa.
"There are excellent examples of governments who create a favorable environment for microfinance and overcome the obstacles", said Princess Maxima of the Netherlands, who champions microfinance as part of the United Nations Advisors' Group. One of the obstacles she highlighted in her speech here is interest rate caps. "We are convinced that the best approach for governments is not to impose articifial interest rates. Instead, they should improve efforts in consumer education and create a level playing field."
Microfinance has received considerable attention in recent years, particularly since Professor Muhammed Yunus and the Grameen Bank were awarded the 2006 Nobel Peace Prize, raising awareness of the role that financial services play in helping poor families manage their precarious lives. The growing recognition of microfinance by governments in the region is seen as an opportunity to gain consensus and standardize approaches to microfinance. "There are huge opportunities", said Isern. "With the right policy direction, Africa is poised for massive expansion in financial services, building on robust economic growth, donor commitment, a strong savings culture, and a very diverse landscape of providers."
Increasing awareness among regional governments offers the opportunity to create consensus and standardize approaches to microfinance. In this context, regional leaders from Cameroon, Congo, Gabon, the Central African Republic, Chad, Equatorial Guinea, Madagascar, Rwanda, Burundi, and the Democratic Republic of Congo, met in Yaoundé for what François Kanimva, Governor of the National Bank of Rwanda described as a useful meeting "to exchange ideas with other countries in the region on these issues."
The need for greater transparency around pricing of services and consumer education are all hot-button issues for decision-makers in Africa today. Here was an opportunity to put in place the mechanism to create "best practices and accelerate their implementation", said Javier Puyol, European Commission representative in Cameroon, on the opening day.
Policymakers discussed how to address the critical shortage of accountants in the region and the need for better enforcement of financial standards. On the positive side, said Djibril Mbengue, CGAP Africa microfinance specialist, regional accounting bodies, such as the Fédération des réviseurs et experts comptables d'Afrique Centrale (FRECAC), are driving improved harmonization, and countries in the region are recognizing IFRS standards. "Increasing harmonization will help promote financial transparency and sound institutions, and ultimately this will protect poor people's money."
Innovations such as the use of mobile phones and other new technologies for the delivery of financial services offer great promise for reducing transaction costs, and therefore potentially making these services available to millions more poor people, including those living in Africa. But while they could drive the reduction of costs of financial services, new technologies also pose new challenges for policymakers and regulators, said Tim Lyman, CGAP senior policy advisor. Lyman, co-author of a new CGAP report on the policy implications of "branchless banking". "Being too restrictive can mean fewer people in the formal financial system, and higher costs to access services. But policy makers also need to be aware of potential protection gaps."
The Central Africa Policy Forum was organized by CGAP, a microfinance industry body housed at the World Bank, in partnership with the BEAC/COBAC, the EU, MAE/France, AFD, FIRST Initiative, the United Nations Advisors Group on inclusive financial sectors, and Making Finance Work for Africa (MFW4A).
CGAP (The Consultative Group to Assist the Poor) is the world's leading resource for the advancement of microfinance. CGAP provides the financial industry, governments and investors with objective information, expert opinion, and innovative solutions to effectively expand access to finance for poor people around the world. More information: www.cgap.org
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