Microfinance

Microcredit clients are often assigned to credit groups with joint liability for loans. But what makes a credit group work well? What credit groups are likely to generate the internal social dynamics needed for group solidarity to form and repayment to happen? This is a matter of both group dynamics and individual characteristics, as some individuais conform more easily to in-group norrns. This brief presents an experiment conducted among rnicrocredit clients in Angola.

Através do Programa de Meios de Vida Sustentáveis (SLP) KixiCrédito, o LUPP tem pilotado, com sucesso, um instrumento sustentável para dar assistência aos pobres economicamente activos para que saiam da armadilha da pobreza. O SLP serve, actualmente, mais de 13.000 clientes nas províncias de Luanda e Huambo – mais do que 60% destes clientes são mulheres, chefes de família que têm que encontrar forma de prover às necessidades das suas famílias.

Through the Sustainable Livelihoods Program (SLP)/KixiCrédito, the Luta Contra Pobreza Urbana (LUPP) has successfully piloted a sustainable tool to assist the economically-active poor to rise out of the poverty trap. SLP now serves more than 13,000 clients in the provinces of Luanda and Huambo -more than 60% of these clients are women heads of households who have to find a way provide for the daily needs of their families.

The impact of HIV and AIDS reach far beyond the infected individual. It can be disastrous for affected households, and in high prevalence countries the economic effects of lengthy illness and death are felt by society as a whole, impacting institutions such as NGOs, businesses and government alike. HIV/AIDS has particular impacts on Microfinance Institutions (MFIs) and their clients. Affected clients face stigma which can hurt their business.

Presented to the Workshop on Democratization, Civic Strengthening and Human Development Arena, in Sub-Saharan Africa at the Mazingira Institute & Settlement Information Network Africa (SINA) in Nairobi. The Sustainable Community Services Project (SCSP) is a component part of the Luanda Urban Poverty Programme (LUPP). SCSP sets out to pilot a model of basic service provision in an area of the musseques of Luanda, and at the same time create links between the users of these services, the local government and the providers of the services. These two objectives are closely linked: the linkages between the stakeholders are vital for the management and sustainability of the services, as well as being an opportunity for creating space for participative politics (which can contribute to peace-building and democratisation in Angola).

This paper discusses the experience of the Sustainable Livelihoods Project (SLP) in Angola implemented by Development Workshop Angola in partnership with One World Action. The microfinance program has been successful in reaching significant numbers of poor women and men in the informal sector and maintains a high repayment rate. The main focus of the SLP is the development of poverty-targeted microfinance adapted to the Angolan context. The underlying goal is poverty reduction through developing sustainable businesses of clients. The focus on micro-enterprise is because of the large numbers of poor women and men dependent on the sector as a means of coping with economic vulnerability and dislocation caused by the civil war. Support for development of this sector is therefore crucial to any poverty elimination strategy in Angola

Prepared with support from the following DAI consultants: Jan Schoeman, Nathanael Bourns and Terence Gallagher. The DWA Microfinance Program sees itself as unique in Angola, combining a deep commitment to the peri-urban poor with a commitment to becoming fully sustainable and capable of financing its own growth and expansion of outreach. In November 2002, the DWA Microfinance Program undertook an extensive strategic and business planning exercise involving its coordination committee, management and staff, and including several meetings with selected groups of clients.

Within a difficult environment, DWA has implemented microfinance operations more successfully than any other entity in Angola, learning ways to mitigate the many risks involved and to serve the poorest of the economically active in their peri-urban target markets. DWA is showing the beginnings of a sustainable model for microfinance in Angola. Nevertheless, the microfinance program will have to meet a number of challenges before it can reach sustainability.

Presented by Margaret Jiri at the Southern Africa Capacity Building Regulatory and Supervisory Workshop. Angola is a founding member of SADC. The country has suffered 40 years of war since launch of the independence struggle in 1961 until the ceasefire which ended the civil war between the Government and UNITA in February 2002. The 27 years since independence have been an era of almost continuous internal conflict. Due to the war, agriculture has stagnated and the industrial infrastructure has largely been destroyed. Angola has shifted from being an agricultural producer of diverse commodities to almost complete dependency on oil and diamonds.