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Sierra Leone News: Microfinance Institutions (SLAMFI) apprise Bank Governor on its activities

It was a historic event and tremendous step forward in moving the Central Bank and the microfinance sector toward collectively focusing on harnessing and further enabling the expansion of digital financial inclusion across Sierra Leone. During a courtesy call on the Bank Governor, Professor Kelfala Morana Kallon, the Board of the Sierra Leone Association of Microfinance Institutions (SLAMFI) on Tuesday 26th March, 2019 acquainted him of its activities and programs. The visit was primarily aimed at seeking the support of the Bank of Sierra Leone (BSL) with a more sustained collaboration in the development of a promising microfinance sector. SLAMFI is a network of microfinance providers and practitioners who recognize the microfinance sectors need for an institutional framework through which common issues and concerns can be discussed and addressed. Archibald Shodeke, Chairman SLAMFI said that their visit was pre-meditated, and decisive in recognizing not only the contribution the BSL is making towards enhancing financial inclusion in the country but also SLAMFI’s belief and intention to collaborate with the bank as a strategic partner in achieving its objectives of improving the microfinance sector.   “We are also proud of the many initiatives currently nurtured by the central bank in its role as a regulator and want to specifically thank the Governor and team for establishing the Other Financial Institutions (OFI) department as well as leading the strategy in the review and update of various regulatory guidelines tailored towards enhancing financial inclusion including the MF sector” Chairman Shodeke said whilst speaking on behalf of his Association. He went on to note that key among these is the inclusion of MFI in the Credit Reference Bureau (CRB). He recalled that few years ago, SLAMFI advocated for the MFI’s to be part of the CRB “this is now a reality.” They acknowledged that they have also seen marked progress in the implementation of the collateral registry system and they also believe these and several other initiatives are a testament to the Bank’s commitment towards advancing the FI strategy. Chairman Shodeke informed the Governor about the efforts that were put into the organization of SLAMFI which started in 2006 but those efforts he said were not sustained causing SLAMFI to become inactive. But, however on 27 March 2013, eight (8) MFIs decided to reorganize SLAMFI and to take on a permanent legal structure by registering as a company limited by guarantee.  Explaining the activities undertaken by SLAMFI, the Chairman said that they share sector data and annual report on the state of the microfinance sector in Sierra Leone. Other planned activities include the design of code of conduct for SLAMFI members, conducting a national study on the state of the sector and training programs.   He reported that the supply of microfinance services from among 10 SLAMFI members is as follows:

  • Total branch network stood at 104 branchesin all the 14 political districts in the country
  • Total loan portfolioas of 4th quarter 2018 stood at about Le168 Billion serving over 114,937 clients with 70%
  • SLAMFI members also employed over 664 staffacross the country

Referencing the Association’s capacity building efforts over the past years, members have been able to develop several products meeting the needs of different market segment in the country ranging from small business loans to small and medium enterprises (SME) loans to agricultural loans, asset backed finance, consumer loans and even mobile money transfer services.  Most recently, the sector he said has also seen two MFIs transitioning into Deposit-Taking MFI’s thus increasing outreach in providing savings products. More are in the process of such transitions.  To show their commitment towards financial technology, SLAMFI members he stated have also participated in the fintech innovation programs with a member enrolled in the BSL sandbox program to test new FinTech products. “SLAMFI members will continue to participate in such programs as the sector evolves” he promised. In addition, during the Ebola outbreak some SLAMFI members provided cash-out services to health workers engaged in the Ebola fight around the country. SLAMFI members also played a significant role in the post-Ebola rebuilding by providing loans (through funding from the DFID) to petty traders to help in the recovery process for micro businesses.  “The Association continues to engage stakeholders on policy review and advocacy programs including participation in some of the financial inclusion sub thematic working groups.” As part of SLAMFI’s capacity building efforts, a web site was developed and for that they are grateful to CORDAID for supporting SLAMFI. A training needs assessment he said was conducted and the outcome resulted in the conduct of several major trainings on thematic areas in 2015 -2017. The Association he said will continue on this path in 2019 and beyond. In pursuance of it its role in promoting sound practices in the industry as well as influencing policy initiatives, among other activities scheduled for 2019, SLAMFI intends to organize a two days’ Microfinance Summit (initially scheduled for April 2019) at the Golden Tulip Aberdeen.  The goal of the summit is to bring all actors (investors, regulators, providers, customers) together and share perspectives and to showcase the successes of the MFI’s over the past decades and their contribution towards Financial Inclusion. The Association also made a request to Governor Kallon to deliver the keynote address at the proposed summit on the theme ”Advancing financial inclusion – the role of Microfinance institutions”.  Moreover, they solicited the bank’s support as an official partner to the conference and they will be duly informed on the planning details in due course. Amidst the gains highlighted, SLAMFI members have been having operational challenges, and the Chairman made known some of the barriers affecting them, as listed below.

  • Multiple borrowing from clients – thanks to the Credit Reference Bureau we hope this will soon be behind us.  
  • Human Resources challenge
  • Access to Funds to scale up operations
  • Very high interest rates on debt funds from the international market
  • Dwindled loan portfolio as a result of the Post Ebola Crisis and inflationary pressure

Based on the aforementioned challenges, the Chairman appealed for the BSL’s support in the following areas:

  • Capacity Building – where possible training opportunities to help build the human resource capacity amongst MFIs – for instance through WAIFEM in the past
  • Support SLAMFI’s plans and initiatives – for instance official partner for upcoming Microfinance Conference (organized by SLAMFI).
  • The bank encouraging other MFI’s to register with SLAMFI
  • Increased collaboration and coordination in other mutual areas of interest

The vision at SLAMFI is to have a viable and sustainable microfinance sector that is fully integrated into the national financial system and responsibly meeting the financial needs of the economically active low-income people throughout Sierra Leone. Its mission is to promote the development of professionally sound and financially sustainable microfinance institutions (MFIs) through coordinated capacity building, dissemination of best practices, advocacy for a conducive microfinance environment, promotion of strong partnerships with donors, investors and other stakeholders, and the provision of the appropriate quality and variety of products and services that meet the financial needs of the economically active low-income people of Sierra Leone.

Their principal objectives among many are;

  • Develop linkages and strategic partnerships at the local and international levels
  • Promote microfinance best practices among members
  • Enhance institutional capacities of MFIs to deliver high quality financial services
  • Advocate for policies with the Government of Sierra Leone for an environment conducive for microfinance operations
  • Undertake research, publications and dissemination of Sierra Leone microfinance industry information, innovations, evaluations and best practice tools and systems.

The Association currently has a membership of 12 Microfinance Institutions made up of Banks; Credit only Microfinance Institutions and specialised microfinance NGOs. A new board of 5-member directors including the Chairman and President was recently voted in. The Association has a secretariat, which is managed by the National Coordinator.

By Zainab Iyamide Joaque

Friday March 29, 2019.

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