The gauteng inafi africa declaration on microfinance in africa

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  • 1. International Network Of Alternative Financial Institutions THEGAUTENG-INAFIAFRICA DECLARATIONONMICROFINANCE DEVELOPMENTINAFRICA By Henry Oketch and Herman Abels WE MEMBERS, partners, and Friends of INAFI Africa being the pan- African arm of the International Network of Alternative Financial Institutions (INAFI), a global network of like-minded microfinance institutions reaching a total of 12 poor families with a wide range of financial services in three continents of Africa, Asia, and Latin America Congregating at the Holiday Inn Garden Court, Johannesburg, South Africa, as from 29th August to 2nd September 2005 During this United Nations Year of Microcredit [in 2005] HAVING reviewed, debated, and discussed the state and dynamics of the microfinance practice in the region during our GlobalConferenceonCapitalizingonthegains:AFreshLookat MicrofinanceandPovertyEradicationinAfrica In solidarity with the global community towards halving poverty by the year 2015, as earmarked by the United Nations Reached the following consensus: In terms of our poor people that we are seeking to serve, we noted that our various efforts and initiatives over the last decade have created much

2. 2 wider access to financial intermediation at better terms and conditions and more convenience than realised ever before in the early 1970s. Secondly, we noted that our delivery of financial services has contributed to economic and social empowerment for many of the few under-privileged and marginalized families and communities that have been able to serve. Across the board (among these first lucky few to be reached by us), the status of women has been raised and solidarity among different segments of society strengthened. At the same time, however, we members, partners, and friends of INAFI Africa, acknowledges that access to our microfinance services is still reaching less than 5% of the millions of Africans who can potentially use it to better their lives due to insufficient capital, underdeveloped capacity, and a plethora of policy and regulatory obstacles. Similarly, we acknowledge that we are yet to achieve the fullest economic and social empowerment possible from microfinance due to serious constraints in the global economy and persistent cultural and gender based barriers. From the point of view of enterprise and organisation development, we are pleased with our progress in not only crafting an alternative financial systems which takes care of the needs of poor people, but also in building completely new types of grassroots institutions, able to transform into sustainable and permanent institutions. Many of us have considerably increased our outreach and product range, become professional in serving our poor customers, and in many cases (as earlier mentioned) achieved operational and financial self-sufficiency and become visible throughout the continent. We now have a level of social acceptance and public recognition that was not possible at the beginning of our pilgrimage in the mid 1980s. Yet, we still have much work before us, as we have another 95% of 313 million of our poor people to reach. Besides serious undercapitalization, rudimentary capacity and systems, poor infrastructure remains a major obstacle to reaching the rural poor everywhere in our continent. As if this is not enough, there are powerful but merciless global forces; such as globalization of markets, geopolitics, and vested interests, pushing many of our organizations to become self-seeking at the great risk of abandoning the very poor people we exists to serve. Moreover, because of our divided attention, lack of cooperation, and uncritical response to global ideas, we needlessly horde potentially valuable collective information, knowledge, and experience about our breakthroughs, good practices, and innovation from one another, and 3. 3 instead engaged in antagonistic relationships. Because of this attitude, we compete for the few easy customers to reach, instead of using our improved knowledge and technology to expand the frontiers of innovation and outreach. Consequently, due to this needless behaviour, there are growing threats to our ethical and moral standards. New players have entered the market with an exclusive and overwhelming focus on making profits, which is already negatively affecting our hard- earned public recognition. Our image and reputation is also threatened by increased tendencies to politicize microfinance and by attempts to make microfinance the cure-all solution to poverty. From a developmental perspective, we members, partners, and friend of INAFI Africa take pride in contributing towards poverty eradication in the parts of our continent and communities where we have a presence. However, we have realized that our intervention with financial services in the fight against poverty can only be effective if combined with other non- financial interventions, such as opening and protecting economic to the poor people we serve, building better infrastructure, roads, and preserving the value and wealth that they produce from all exploitation. The unstable and poorly-functioning macro-economic environment in our region and heightened globalization is working against our poor people. Their local markets have become the dumping grounds of choice for products and toxic/hazardous wastes produced in the industrialized world, and lassies faire trade liberalization imposed on our countries by multilateral organizationsespecially the IMF and World Bank, is ruining home-grown production capacity everywhere in poor countries, particularly our region. More than ever before, African economies are threaten to become little more than the extraction and slaves-supplying economies that they once were before independence. Food insecurity has become a permanent feature of our continent. From the same international aid perspective, some of the positive milestones achieved by us in the past two decades are threatened by counter productive developments initiated by our own partners. For instance, while the donor community has helped us build initial capacity and systems, and provided with capital; which allowed us achieve spectacular growth and dynamism in the early period of our activities, more of our partners are gradually abandoning us prematurely (and without notice) in favour of investors and capital markets at a very critical point when we need to consolidate our gains, upgrade capacity, and cross the 4. 4 threshold into permanent and sustainable institutions. While our partners worked more closely with us in finding the alternative systems to provide financials services to poor people, our shared vision and common mission ensured we listened to each other, found collective solutions to the challenges as they arose, and shared blame when we failed in our endeavour. But suddenly, our partners saw a different vision from 1993 that we are still struggling to comprehend, acquired a new language and thinking that we still cannot comprehend, and have not cared to give us time to learn and adjust or to listen to our fears and concerns. Their now preferred financial systems approach to help us in reaching more poor people with services however seems ineffective in solving our problems, and we already see signs of harm to the very same people that we are seeking to serve. The profit motive embedded in a financial systems approach microfinance is a merciless, temperamental force, only controlled by the desire for more from less. Surely, a true commercialization of microfinance can only detach us from our developmental roots and purpose. From a political perspective, the last decade has produced predominantly positive results, but even here there are threats as well as unexploited opportunities. On the positive side, African governments have come to acknowledge microfinance as an important service and economic activity in its own right, and in many of our countries we now have supportive systems towards developing ourselves. But there are also shameful rigidities and lack of sense in some of the policies. HAVING now concluded our deliberations on these matters we the members, partners, and friends of INAFI Africa HEREBY wish to: Recognize our progress in seeking to widen and deepen access to financial services to the majority of our poor peasant farmers, fisher folk and self- employed men and women, who face the threat of disease and poverty daily, Noting the increasing; rather than abating, magnitude and depth of poverty in our continent, which in just two decades has climbed from [...] to 313 million people in just the last two decade alone, 5. 5 Noting the resilience, energy, and resolve of our poor people to earn their own living, maintain their dignity as human beings, and even enjoy better lives like everybody else created on an equal footing by God Recognising the potential and ingenuity of our poor people in taking advantage of various appropriately designed and reasonably priced financial products and services to exploit available economic opportunities, Considering the gains we as microfinance institutions have made in the last decade and a half in crafting alternative products, services, methodologies, and institutions that are more adapted to the culture and needs of our poor people, Confused about the changing focus and definition of microfinance clients due to the transformation and metamorphosis of existing, as well as the emergence of completely new players into microfinance, Alarmed by the increasingly exploitative effects of global economic system on the most socially and economically disadvantaged families and communities, more than two thirds of whom live in our continent alone, Concerned about the direction and new thinking about our mission and means of delivering services to our poor people, Aware that Declare our solidarity, duty, and commitment to keep the search for innovative, effective, convenient, and affordable financial services to our millions of poor people alive against globalisation and all odds; whether manmade or natural