French Economist Underscores Role of Micro-finance in Efforts at Reducing Poverty

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PlanetFinance President, Jacques Attali, on Monday, March 30, 2009, in Tunis, Tunisia, said that micro-finance could seriously help cushion the impact of the global financial crisis on Africa. Mr. Attali made the statement during a presentation chaired by the African Development Bank (AfDB) Group President, Donald Kaberuka. 

Speaking during the event which was held under the institution’s Eminent Speakers Programme and on the theme: “Financial Crisis and the Role of Micro-finance”, Mr. Attali pointed out that the continent accounted for just 10% of the global micro-finance sector.

“Micro-finance could be a solution to the financial crisis given that it is based on ethics which is lacking in traditional finance cycles. Micro-finance is also based on close lending; it is a general interest bank which is not driven by profit,” the French Economist and author of some fifty publications said.

He also pointed to micro-finance’s direct impact on poverty reduction, presenting it as “the most efficient official development assistance instrument.”

Adviser to former French President, François Mitterrand, writer and columnist for the French weekly, L'Express, Mr. Attali created PlanetFinance in 1998, a supportive structure to micro-credit that is currently in many African countries.

Speaking to some five hundred persons, he used the occasion to reiterate his conviction in the key role micro-finance could play in Africa’s development.

“The global financial crisis has not necessarily had a huge impact on the micro-finance sector in Africa, but we are noticing some recent changes which are incontestably related to the global economic instability,” the French economist said, using Morocco and Senegal as examples.

In his view, the financial crisis has already had an impact, especially in West Africa, on migrant remittances, a key factor in the sub-region’s micro-finance sector.

“The global financial crisis is already hurting borrowers: in Senegal, for example, 80% of household budgets come from abroad. These remittances play a critical role in the fight against poverty, in providing support to households and in the activities of some sectors,” Mr. Attali argued.

According to recent studies, official remittances from the continent’s Diaspora dropped from close to CFAF 550 billion in 2008 to about CFAF 400 billion in 2009, that is, a CFAF 150 billion reduction.

Mr. Attali called for a professionalization of the continent’s micro-finance institutions which, according to him, should strengthen their governance.

His analyses of the reasons for the global financial crisis are shared by the AfDB President, Donald Kaberuka, who moderated the event which led to a question-and-answer session with participants.

“The crisis comes at a time when Afrique has begun enjoying the fruits of its growth. Efforts should be made to ensure that gains made over the years do not get compromised,” said Mr. Kaberuka who used the occasion to announce his attendance of the G20 Summit scheduled to take place in London on April 2, 2009.

“We will go to ask for rigorous measures for Africa during the summit,” said the AfDB President who had earlier profusely commended Mr. Attali for his brilliant performance.

Following the outbreak of the crisis, the AfDB established a US$ 1.5 billion Emergency Liquidity Facility and a US$ 1 billion Trade Financing Initiative aimed at helping its regional member countries deal with the financial crisis.

Speaking on March 19, 2009 in Geneva, Mr. Kaberuka reaffirmed the absolute need to involve the continent in the global response to the financial crisis.