Promising programs in Mali

The following essay is extracted from an email message posted by
Anita Campion [ ] on the Devfinane list.

The most promising programs in Mali in my opinion are CIDR, Kafojiginew, NesigiSo, and the Chemin de Fer. They have different strengths and weaknesses which I will try to describe in a nutshell.

The CIDR system is a good one mostly because it is so grassroots oriented, utilizes highly decentralized decision making, and targets the poorest of the poor. They started about ten years ago in Dogon country near Bandiagara, Mopti region, an extremely poor part of Mali. They learned a lot and have replicated their system with improvements in Kayes region. The NGO helps the village set up a village bank which the village then runs completely autonomously after the initial training period. The village sets the interests rates to be offered on both savings and credit, types and terms of loans,etc. The effective interest rates go as high as 60% per year but are mostly very small, short term loans. The good thing about this system is that the village banks can continue operating indefinately whether the NGO continues to exist or not. The draw back of the system is that savings mobilization takes time and limits the lending capacity and overall growth of the system. But, CIDR feels that in the long run building this local ownership for the system is more important as the system is more likely to continue to exist and be sustainable. It is better for the locals to learn prudent financial management with small amounts of only their own money. But, CIDR has begun onlending funds from the National Development Bank of Mali once a village bank has acquired a certain level of local deposits, amounting to approximately US$4000. So far this has gone smoothly.

One of the limitations of the CIDR system that Kafojiginew overcomes is the lack of flow from one village bank that has surplus savings to another that has excess demand for loans. Kafojiginew is a system that was set up around the Cotton industry. They opened banks in villages that had contracts to porduce and sell raw cotton to the parastatal agency, CMDT (Companie Malienne de Developpement et Textiles). They times the opening of the banks to the cooton harvest, accumulating savings in the banks for six months for the locals to become familiar with how to manage the savings aspect of the system before starting lending, which began at the start of the next agricultural cycle. Kafojiginew chose to start up in the wealtiest rural areas of Mali in a sector that has largely benefited from devaluation of the CFA. This helped the NGO have easy early successes and grow quickly. This made it easier for them to begin replication in other, less wealthy areas of Mali. This system is a little more centralized in that all village banks deposit excess savings with Kafojiginew which then onlends them to deficit village banks or deposits it in a formal bank. The problem with this system is that financial problems in the system or at the NGO level could cause the whole system to collapse. While financial management of the organization is quite good, Malians are still very distrustful of financial institutions. There was a threat to the system at one point when there was a conflict between French and Malian involvement in the system. Luckily, the statues and by-laws were written in such a way that empowered the Malian Board of Directors which are elected by depositors, which allowed the Malian view to prevail in the dispute, which thereby reinforced Malian ownership and commitment to the system.

NesigiSo operates similarly to Kafojiginew but pays no interest on deposits. One of the problems for both Kafojiginew and NesigiSo is in achieving financial sustainability at the union or NGO management level. Both programs have been very successful in covering costs of management and operations at the village bank level, but have a harder time covering costs of overseeing the overall program, which encompasses promotion of the system, computerized monitoring of financial data, trainings, and new village banks start-ups. I would argue that it is mostly the push to expand that has kept these organizations from achieving financial sustainability. And perhaps it is in this area that their will continue to be need for donor support, rather than in providing capital to be directly lent out as microcredit.

The Chemin de Fer, or the Malian railroad's credit union is the only organization that I worked with that started and continues to operate sustaqinably with absolutely no outside financial support. One branch was started in Mahina, Kayes, in response to dissatisfaction with the railroad's formal retirement and savings program. The railroad workers started their own system which draws money directly out of their salaries and into the system. Most of the money was put directly into cereal grains that could be resold at a higher price during the rainy season, when their was a shortage of grains for local consumption. So, this system also provided food security. It was at the point that the system had accumulated so much money that they needed help in making the system more dynamic and wanted to begin lending that they approached us for technical assistance. The system was so successful that other railroad branches started a similar system, which eventually led to the collapse of the old government retirement system all together, forcing the last location to have to start a replacement system which was also modeled after the Mahina experience. They are now looking to link the different branches along the railroad and have started collaborating and sharing information to customize and make improvements to the system. They may look for a loan soon to computerize the system. Some people in the system are nervous that things are going too quickly and outside funds may cause problems rather than enhance the system.

The reason I consider these systems most promising is because I think they are most sustainable both financially and managerially. This is largely due to a fair amount of decentralization, ability to adapt to changes and make exceptions when necessary, and the focus on local ownership for the system. Other programs in Mali tend to focus more on short-term impact, wanting to be able to quote amount of loans lent, etc. Some systems were started with outside funds and later saw the need for local ownership and started a savings component, but it is very difficult to change local perspective on ownership after a program is already up and running. The Chemin de Fer railroad workers are very proud of their system and will do anything to ensure its continued success, where as many other systems that are started with outside funds, it is the donor or managing organization that is most concerned about sustainability. The closer the beneficiary is to perceiving him/herself as the donor/manager of the system the better.

- Anita Campion

Hari Srinivas -
Return to the Mali Page
Return to the Virtual Library on Microcredit