IFC, MasterCard partner in Africa microfinancing: Uganda Mobile Money Telecoms could benefit
The World Bank partner devoted to developing the private sector and a major credit card company will spend millions of dollars so more impoverished Africans can get loans and other financial services, officials said Monday.
At a Johannesburg news conference Monday, officials from the International Finance Corporation, which is part of the World Bank group, and The MasterCard Foundation said they would spend $37.4 million over five years to support banks and other institutions across Africa that provide small loans, a strategy known as microfinancing. People around the world have used such loans to lift themselves out of poverty by starting or expanding small businesses, sending children to school or buying fertilizer for subsistence farms.
The IFC-MasterCard project, the IFC’s largest with a private foundation, also targets banks and communications companies that help mobile phone users send and receive money and get access to other banking services. Mobile phones have meant people in remote rural areas and urban slums, where banks have been reluctant to build branches, can still get banking services.
The IFC, which started investing in microfinance programs in Africa in 1997, estimates only between five and 25 percent of African households have bank accounts or other relationships with financial institutions.
Only 2 percent of the world’s microfinance institutions are in Africa, the IFC says.
Reeta Roy, president and chief executive of The MasterCard Foundation, said she and the IFC were seeking to radically expand access to banking for Africans at a time when their continent’s middle class is expanding and political stability is growing.
The initiative, she said, is “part of a much, much larger story. It’s the story of the political, economic and social transformation that’s happening across this continent.’’
Thierry Tanoh, the IFC’s vice president for sub-Saharan Africa, also was optimistic about Africa’s prospects. He added the IFC sees microfinancing and mobile banking as priorities in the campaign to ensure more Africans have access to banking services.
Perhaps the world’s best known microfinance institution, Grameen, was founded in the 1970s in Bangladesh by economist Muhammad Yunus. His pioneering concept — giving the poor, women in particularly, small loans to help them build their families and businesses — earned Yunus the 2006 Nobel Peace Prize.