Microfinance Obstacles: Southern Sudan edition

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Last month, Ryan took a look at the impact of the financial crisis on microfinance in Latin America, arguing that uncompetitive microfinance markets and small or inexperienced MFIs were responsible for increased premiums. A recent paper on Microfinance in Southern Sudan by Melody Atil finds that many of obstacles to expanding microfinance in Sudan's south, and thus lowering premiums, would also be remedied by diversifying and improving the efficiency of MFIs operating in the region:

While (microfinance) agencies are focussing on the key needs of the MFI industry in Southern Sudan, a gap remains unaddressed – that of the development agricultural finance products to meet the acute lack of finance to the rural and agricultural areas of Southern Sudan today.

An immediate priority for quick impact... (would be) greater coordination between donors, streamlining of donor requirements, and pooling of donor funds to ensure a smoother, punctual and enhanced provision of finance to firms according to their needs. A heightened allocation of equity and grant capital would also be recommended to spur the expansion of the Greenfield and maturing institutions as well as encouraging outreach and innovative MFI’s services.

Just as the core principals of microfinace can be applied to a diverse array of economies, so too can the expansion, maturity and diversification of MIFs bring improvements to the functionality of the microfinance business model, resulting is lower borrowing costs and greater payback rates.

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