Tuesday, May 27th, 2014

A new debate on microfinance?

While microfinance was very popular when first trotted out, the scheme seems to have quietly sunk under the weight of the multitude of criticisms thrown at it. Denigrating microfinance has suddenly not simply become fashionable, but accepted in media and development circles. Yet are microfinance schemes still carrying on apace below the radar, unnoticed but still quietly having great effect?

In this new series of posts for the Arcubus blog, I will be examining some of the most common arguments for and against microfinance that have arisen in many journalistic and academic pieces in the last few years. The pieces I will be referencing will include, but will not be limited to, the following articles:












Any other suggested readings in the comments, particularly academic articles, would be most welcome.



Maddy Fry

Friday, October 18th, 2013

Post-conflict microfinance

Veronica spent several years in an IDP (internally displaced people) camp and is now trying to re-build her life by setting up a small business.

Veronica spent several years in an IDP (internally displaced people) camp and is now trying to re-build her life by setting up a small business.

I had an interesting chat last week with a lady from Uganda who is trying to expand her microfinance programme into northern Uganda. It’s an area devastated by 20 years of civil war. Most of the population suffered terrible trauma – children abducted to become child soldiers and forced to commit atrocities against their own villages, women and girls raped, people losing their homes, land and loved ones. Many of the population spent years in IDP (internally displaced people) camps and became accustomed to ambush, attack, violence – and NGOs. With no way to earn a living, most become dependent on international aid.

Then the war ended. The majority of the NGOs left, and the government disbanded the IDP camps. Trouble was, many people had no land, homes or businesses to return to. A whole generation had grown up in the camps with little education and no handed-down skills of how to farm the land. Add to that community conflict and post-traumatic stress disorder along with continuing land disputes, and the outlook for stability and peace was poor.

Here’s where microfinance comes in. Its group structure nurtures trust, accountability, co-operation and democratic participation. Its business training makes up for lost education. Its capital offers households a chance to start again, to rebuild a business and start to provide for their families again. And crucially, this gives dignity, confidence and cohesion to communities which have long lacked all of these. It’s not just about providing financial services, badly as these are needed, said my Ugandan friend. It’s about providing education and self-belief.

Sunday, August 18th, 2013

Village Savings Groups – how to nurture financial services in the remotest corners

I recently visited the village of Nangarua in Beringo District, Kenya. The journey from Nakuru town to Nangarua  took 4 hours, of which 2 hours was on tarmac roads and 2 hours very definitely wasn’t. During the last hour, we passed through several villages and picked up a local priest to act as our translator, as the Nangarua villagers spoke little Swahili, let alone English.

the long road to providing financial services in remote villages

The long road to providing financial services in remote villages

We were visiting with Anthony Mambo, recently appointed Microfinance Officer in Nakuru. His role is to help villages form savings groups, save regularly and then, once there is enough in the pot, make loans to one another from their pooled savings. Anthony offers training throughout; first on group dynamics, writing a constitution for the group and electing its officers, opening a group bank account, keeping records of savings and loans, how and why to save and invest; and then, once the group is up and running, he gives training on basic business skills: marketing, diversification, customer service, business planning, adding value and so on.

We found the villagers in Nangarua very receptive. Like many poor communities, they struggle to make ends meet but they bring massive resources of hard work and entrepreneurism to the struggle.  The women of Nangarua had already formed a vegetable co-operative and the men had saved together to buy a posho mill, but they were keen to save in a more structured way and to receive training on developing their small businesses.

Anthony’s problem is that he is one man with one old car and a district over 300 miles from side to side. His ambition is to reach the remotest villages, communities with no access to safe places to save or capital to borrow for productive investment.  But reaching just one of these villages can be a day-long trip, and impossible in the rainy season. If Anthony were trying to operate the ‘traditional’ form of microcredit, holding monthly loan disbursement and repayment meetings, the job would be impossible. Not even mobile money transfers, the answer in many remote communities, would work in Nangarua. We met one enterprising young man who had built a shelf into a tree on which to stand mobile phones – the only place in the village to get good reception!

Fortunately, Anthony’s model of microfinance is more about capacity-building and releasing the resources already in the village, and for that you don’t need regular access to the bank or even reliable mobile phone signals. Anthony’s role is to train the villagers to manage their own money, channelling surpluses from one household to meet demands for credit in another, and generating dividends to be shared amongst the group at the same time. Once the group is strong, Anthony only needs to visit to deliver refresher training and check up on the progress; he can move on to a new village to liberate their resources and talents too. In time, one of the banks will open a small agency in one of the larger villages, realising there’s a whole population with savings and credit needs ready to become their customers. But until then, at least the people of Nangarua can operate their own village bank – and keep the dividends for themselves.

Thursday, June 13th, 2013


Ten years ago, Catherine was making a small living buying fish from local fishermen and selling them at a nearby market. She thenCatherine MLF received her first loan from MicroLoan Foundation, which she initially used to buy a net to allow her to fish herself. After a string of successive loans, Catherine made enough money  from her increased  fish sales to purchase several boats, and now has several fishermen working for her, catching fish which she sells at the local market.

The impact the loans and training Catherine has received have had on her life cannot be underestimated. She has saved enough money to build her own house, housing 18 members of her family. She pays for her grandchildren to go to school, and financially supports various other extended family members.

More recently, Catherine has bought and installed a water tap outside her house. She also buys and sells goats, and is planning to purchase some land nearby and build a house which she can rent out for a profit.

Understandably, Ambrose, Catherine’s husband, is incredibly proud of her.

As she says herself, none of this would have been possible without the help of MicroLoan  Foundation.