Africans-Stop-Being-Poor
ISSN
1563-4108

AFRICABIZ ONLINE SYNOPSIS RSS FEED
Trading And Investing In & Out Africa

ISSUE 62- VOL 1
JUNE 15 - JULY 14, 2004

Dr. Bienvenu-Magloire Quenum
Click here for Contact/Support console


Word From
Editorial Desk

Business
Opportunities
In Africa

Control
Your Desktop

Freebie

Countries


MarketPlace

Currencies

FAQ

SUBSCRIBE TO AFRICABIZ

Surf In Peace

Welcome to AFRICABIZ, Please scrolldown to see more

Welcome to Africabiz Online Synopsis RSS Feed edition. Previous issue available at this link

Dear faithful reader,

MICRO FINANCE IS NOT THE ANSWER TO THE DEVELOPING GAP

Click here for the beginning of the article

Micro finance could be defined as banking for poor. It had been developed and popularized by Professor Muhammad Yunus. The word micro-finance itself covering a wide range of micro loans, which need to be defined in a proper manner in order to know what one is speaking about. The paper dedicated by Pr. Yunus to the definition of micro finance is worth reading because the proper definition of the several categories of micro financing is necessary to devise proper set of actions to reaching the persons who precisely need micro-finance.

For this article let us just consider the broad definition that reads as follows: Providing unsecured small amount of money to the poorest portion of the populations in developing countries.

MILLION OF POOR AROUND THE WORLD BENEFITED FROM MICRO FINANCING

The World Bank estimated in 2003 that there are over 7,000 microfinance (MF) institutions, serving some 16 million poor people in developing countries. These MF institutions more or less imitated Pr. Muhammad Yunus Grameen Bank in Bangladesh. The Grammen Bank alone provided MF loans to 5 million poor in Bangladesh in 2003.

One should hail the humanitarian movement initiated by Pr. Yunus and emulated by many around the world. However, intellectual honesty recommends noticing that these achievements represent a drop of hope in a sea of poverty.

Indeed, we live in a world of deep poverty amidst plenty. Half of the world population - 2.8 billion people - live on less than US$2 a day, and 1.2 billion, a fifth of world population, live on less than US$1 a day. In several African countries the percentage of people living on less than US$ 1 or 2 per day far exceed world's averages as here exposed.

MICRO FINANCING ALONE DOES NOT REDUCE POVERTY IN DEVELOPING COUNTRIES

Courtesy World Bank
-Let us analyze the impact of Micro Financing in Bangladesh to see if it helped to reduce poverty level in said country.

The graph at the left side shows the level of poverty in Bangladesh during the last decade of past century. The period during which micro financing empowered up to 5 million people - in majority women - to becoming more or less financially independent through self employment.

One notices there is no change in the number of people living in poverty in spite of the "remarkable" achievement of the micro financing system in Bangladesh.

Table below is even more explicit. One notices that Bangladesh's per capita Gross National Product (GNP) evolution is flat around US$ 370 per year. That explains why there is no reduction in the percentage of poor either in rural or urban areas. Further, the apparent good performance of the economic growth rate in 2003 (5.3%) is eaten by the inflation rate (4.2%) and the population growth rate (2.06%). Therefore, there is no economic growth's margin left to creating riches and consequently fighting against poverty.

Economic Indicators About Bangladesh
Years19901999200220032004
Population (x million)108.9128.1131.4138.5141.3
Population Growth rate1.91.82.62.062.06 est.
Per capita GNP (US$)280370373370372 est.
Annual economic growth rate2.234.45.35 est.
Inflation rate 5.55.53.14.24.7 est.
Urban poverty line47.649.748.348.149.5 est.
Rural poverty line47.847.148.649.549.7 est.
Sources: Asian Development Bank and the World Bank

SO WHAT?

Figures in above Table and comments made in previous paragraph show clearly that micro financing is not the solution to bridging the developing gap in Bangladesh, and therefore, in any other developing country.

Micro finance provides survival means to the poorest of the poor; but it does not trigger sustain economic development - even in rural areas where it is the most used. It does not create sufficient jobs to cope with demand and the growth rate of the populations. The only way developing countries would achieve that is to engineer double-digit growth rate of the global economy; year over year.

According to a joint World Bank/Asian Development Bank report, Poverty in Bangladesh: Building on Progress, released on April 27, 2003, experts wrote:

"For Bangladesh to meet its poverty reduction goals, it must grow its economy faster than it ever has-with an annual average GDP growth rate of at least 6 percent," said Salman Zaidi, World Bank senior economist and lead author of the report. He continues stating, "That may seem like a tall order, but it is possible, and the country has shown that it has the capability to achieve this, as long as it maintains consistency of commitment and effort."

In another study - Bangladesh 2020 - prepared by a group of leading Bangladeshi scholars with the support of the World Bank, experts go further stating:

"Bangladesh's growth rate must be at least 7-8 percent per annum if it is to eliminate poverty substantially within two decades. Although there is some potential for continued agricultural growth through higher productivity and diversification, lifting the growth rate on a sustained basis will depend on strong industrial performance, with industrial growth averaging 8-10% annually."

Conclusions made through these reports are in accordance with analysis and studies published by Africabiz Online about the developing of sub-Saharan African countries - (SSA). Unless these countries target double digit growth rate, there is no hope to alleviating poverty in a century time - if ever!

Up to 80% of SSA's populations live in rural areas. Empowering rural people to earning descent salaries and wages is the key to successful developing. The continuous increase of the purchasing power of rural people is the key. That would be achieved only through a developing strategy that closely links agriculture, transformation of crops and related services as here described.

To conclude, one is entitled to say that Micro Finance alone is not enough to bridging the developing gap. Micro Financing would play a more dynamic role if included in a global developing strategy that helps diversifying economic activities in rural areas. And to diversify economic activities, financing, far beyond the micro finance system, will be needed because "Before Trade Comes Production of Goods and Services At Competitive Prices".

Therefore, the Action Plan on Poverty decided upon by the G-8 heads of states at the last meeting (June 8-10, 2004) of the club, at Sea Island, Georgia, USA, is not the answer to the problems sub-Saharan African countries are confronted with, which read as follows:

a) High level of poverty (up to 80% of the population in some SSA countries);
b) High level of unemployment (up to 70% of the available working force outside agriculture);
c) Low purchasing power (flat evolution of the per capita GNP around US$ 500 per year - over three decades running).

To become an effective "weapon" to fighting poverty in Africa, the Action Plan on Poverty, would need to properly address the problem of financing global developing schemes in each single sub-Saharan African country, through the set up of a "Bank Guarantee Structure" for Africa as here briefly exposed

MORE ON MICRO FINANCE
Beyond Micro-Credit
Putting Development Back into Micro-Finance By Thomas Fisher, M. S. Sriram
Profit for the Poor
Cases in Micro-Finance / By Malcolm Harper
Banking and Micro-Finance Regulation and Supervision Lessons from Zambia
By Kenneth Kaoma Mwenda, Kenneth K. Mwenda
Rural Credit and Self-Help Groups Micro-Finance Needs and Concepts in India / By K. G. Karmakar

Microfinance Handbook
An Institutional and Financial Perspective (Sustainable Banking With the Poor) / By Joanna Ledgerwood
Poverty and Development Into the 21st Century / By Tim Allen, Alan Thomas
The Micro Economy Today
By Bradley R. Schiller
Entrepreneurship in Africa A Study of Successes / By David S. Fick

"CONTRIBUTOR'S GUIDELINES" are available here. We invite you to contribute to AFRICABIZ ONLINE MONTHLY ISSUE - with articles related to "How Africa Could Bridge The Developing Gap".

Many thanks for subscribing to Africabiz. See you on July 15, 2004.

Dr. B.M. Quenum
Click here for contact & support console


Click here for: G8 will not deliver


Business Opportunities

TROPICAL ROOTS AND TUBERS (PART VII): C- OPERATING BRIEFS ABOUT CASSAVA PLANTATION

Starting from Issue 60, four deliveries (A - Introduction B- Market C - Plantation's creation and D - Medium-scale industrial production unit) deal with the production of a granulated cassava flour that is a popular food in Africa: GARI

A medium scale processing plant to producing Gari is discussed in delivery N°: 63. (July 15-August 14, 2004.) Said plant is tailored to transform 10,000 metric tons per year of fresh cassava - at full capacity and at following operating conditions: a) One shift / 8 hours / day - b) 22 days per month and c) Processing of 38 metric tons of fresh cassava per day. More details on operating conditions are provided in issue 63.

Therefore, the plantation, considering Cassava variety TMS 81/ 00110 that produces 28 metric tons of fresh cassava per hectare (in optimal cultivation conditions), should cover an area equal to: 357 hectares. Let us make it 360 hectares - assuming some minor discrepancies in production's yield. Those 360 hectares are divided in 12 plots of 30 hectares each. Harvesting of each plot occurring after 13 months.

Planting and harvesting period - considering root maturity: 13 months - could be organized as par Table available here


More on Cassava Plantation


Control Your Desktop

TOOLS TO MASTER PROJECT DEVELOPMENT TO SUCCESSFUL IMPLEMENTATION


What make the difference between a successful manager and one who struggles to keep his enterprise afloat? The care taken to analyze all aspect of projects undertaken by the corporation.

Here one speaks of project in a broad sense: Manufacturing, restructuration, staff management, communication with clients, suppliers and financing partners; quality development and marketing of products. Etc.

The manager who masters all the aspects of projects concerning his enterprise or business line is the one who succeeds. He knows, as a team-leader, how to manage a team to successful achievements; how to distribute tasks to team's members, to motivate or sanction, to follow-up implementation, coordinate, reassign tasks if necessary and finally control completion of tasks in accordance with project's deadline - all that in the framework of allocated budget.

Whatever maybe his managerial academic background, no manager in the world could master the complexity of tasks above briefly outlined without the assistance of a good Project Management software.

There are, in the IT marketplace, excellent Project Management tools that help a manager to stay in the path of success, avoid hardships and destabilizing bad strategic decisions. Here you will find indication to free desktop and online Project Management software.

More  on Project management


Freebie Of The Month

TRAVEL AT INCREDIBLE PRICES WITH BOARDINGPASS

BoardingPass is a FREE software program that helps you thieve through tons of trips destinations at the lowest cost possible. You run it from your desktop and in one click you have access to up to up to 200 of the top travel and discounted travel websites.

Click here to get BoardingPass and travel with Low cost flights.


Regulars

  • Demands and Offers Marketplace
  • Questions and Answers
  • Live News On Africa
  • Commodities Page
  • Advertise for Free
  • 1000 of products to resell
    FREE SUBSCRIPTION TO AFRICABIZ

    You can subscribe to Africabiz Online monthly issue synopsis RSS Feed . For free. Your feedback is highly appreciated. Your contribution in line with international trading and investing matters is welcome Click here for Contributor's Guidelines. And here for Media Kit Copyright 1997 - 2017 Dr. Bienvenu-Magloire Quenum - Investment and Business Planner.

    VIP MEMBERS CLICK HERE TO LOGIN