New microcredit system boosts rural incomes and women entrepreneurs

Women
Women comprise approximately one third of the microcredit clients in Central African Republic. Photo: UNDP

"It works," says Solange Ngbara, 35, one of nearly 50,000 people in Central African Republic (CAR) who received small loans through a project, supported by the United Nations Development Programme (UNDP), aimed at helping to rebuild livelihoods of those, especially women, affected by years of conflict.

"Borrowing wisely by the programme deadline, I had no problem repaying the loan,” added Sévérin Saragoune, 40, who received a loan equivalent to approximately US$200 which she used as an investment for a small business. “I don’t need to borrow anymore. I’ve already built up the capital.”

Highlights

  • In 2011, 49,000 clients are receiving basic financial services (savings, loans, money transfer), 14,700 of whom are women.
  • Loans between friends and relatives account for 60% of the funds received in rural areas and 50.5% in urban areas in the CAR
  • More than half of the country’s population lives below the income poverty line and more than 50 percent is unable to meet basic food needs.

Ngbara and Saragoune live in Paoua, a town in CAR’s north-western prefecture of Ouham-Pendé, where UNDP tapped into existing informal systems of community credit-raising to help empower women and low-income inhabitants of rural areas.

Among the lending options already available in Paoua were a small savings or Gogoro fund and an emergency fund, Ndoye, providing free assistance for women managing situations such as urgent illness, childbirth and hospitalization.

Starting in 2008, UNDP, in partnership with the UN Capital Development Fund and local non-governmental organizations, helped to strengthen lending institutions, providing training and devising strategic plans to operationalize rules-based microfinance.

Through UNDP pilot projects, Paoua-based women’s groups mobilized the equivalent of more than US$21,000 and were able to repay loans at rates exceeding 90 percent. Between January and June 2011, all delinquent loans were paid.

Across the country in 2011, women comprised approximately one third of the 49,000 microcredit clients receiving services such as savings, loans or money transfer.

Expansion and adaptation of financial services in Paoua and elsewhere in CAR have improved income security among members of the country’s poorest communities and helped revitalize local economies, through food and craft-based businesses at markets and through other small or household services.

Central African Republic is one of Africa’s 33 Least Developed Countries and a UNDP focus for support in poverty reduction. More than half of the country’s population lives below the income poverty line and more than 50 percent is unable to meet basic food needs.