Conclusion
The purpose of this chapter has been to give a comprehensive
review of the existing literature to the discipline of microfinance and
microfinance institutions. We have discussed the issues of MFI Welfarists and
Institutionalists approaches, The Self-Sufficiency and Sustainability of MFIs,
client targeting, and impact assessment in a summary literature review.
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Analysis of microfinances' performance and
development of informal institutions in Cameroon
By Djamaman Brice Gaétan
CHAPTER III- THEORETICAL PERSPECTIVE
This chapter focuses on some of the concepts of microfinance
and the role they play in the development of informal institutions. The
concepts chosen are those that are in relation with the area of this thesis.
The chapter opens with an overview of microfinance. This shows the various
products and services that MFIs have and explains how importance they are to
the development of non-formal sector. The next center of attention is the
concept of informal sector. This gives an idea of informal sector in Cameroon.
The following concern is to investigate the theoretical links between
microfinance and the development of the informal sector. Further, we will
explain the microfinance schism i.e. the relationship between social
performance and financial performance.
III.1- The concept of microfinance III.1.1-
Definition
The term micro-credit? was first coined in the
1970s to indicate the provision of loans to the poor to establish
income-generating projects, while the term microfinance? has come to
be used since the late 1990s to indicate the so-called second revolution in
credit theory and policy that are customer-centered rather than
product-centered (Elahi and Rahman 2006:477). But the terms
micro-credit? and microfinance? tend to be used
interchangeably to indicate the range of financial services offered
specifically to poor, low-income households and micro-enterprises (CGAP website
2010; Brau and Woller 2004:3). Microfinance principally encompasses
micro-credit, micro-savings, and micro-insurance and money transfers for the
poor9. Microcredit, which is part of microfinance, is the practice
of delivering small, collateral-free loans to usually unsalaried borrowers or
members of cooperatives who otherwise cannot get access to credit (CGAP website
2010; Hossain 2002:79). And while non-financial services such as education,
vocational training and technical assistance might be crucial to improve the
impact of microfinance services, they are not the focus of this review. Like
anyone else, poor people need an array of financial services to help them deal
with a range of short to long term consumption needs and the ups and downs of
income and expenses, to make use of opportunities, and to cope with
vulnerabilities and emergencies. The needs of the poor for financial services
have been
9 Of late, housing finance for the
poor, micro-leasing, micro franchising and other financial services for the
poor have been added to the broad grouping of microfinances.
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Analysis of microfinances' performance and
development of informal institutions in Cameroon
By Djamaman Brice Gaétan
categorized into three groups, namely life-cycle needs that
can be anticipated (like marriage, burial and education), unanticipated
emergencies (like sickness, loss of employment, death of a breadwinner,
floods), and opportunities (like investing in a new business or buying land)
(Matin et al. 1999:7-8)10.
The spectrum of financial services available to meet these
needs includes investment (savings), lending (credit services), insurance (risk
management) and money transfers. But the poor?s access to formal financial
services is limited, and the services available do not acknowledge the diverse
requirements of the poor (Matin et al. 1999:3). Instead poor people tend to
juggle financial relationships with various financial institutions (and with
friends and family) to have the flexibility and reliability they need (Collins
and Morduch 2010:23). They depend on various types of formal and informal
community funding, credit unions, moneylenders, cooperatives, self-help groups
and associations (like accumulating savings and credit associations, rotating
savings and credit associations, burial societies), and financial NGOs. And
with commercial financial institutions considering ways in which to provide
financial services to the poor in a profitable manner, microfinance services
are now provided by a whole spectrum of role players. To categorize the various
financial institutions, Matin et al. (1999:5) created a three-by-three matrix,
with one axis comprising the financial service components (savings, credit and
insurance) and the other axis the providers (informal, formal, and semi-formal
providers). Rutherford (1996) based his categorization on the type of service
as well as whether it is owned and managed by the users themselves or other
providers, while Staschen?s typology (1999:7-8) is based on the source of
funds. The reality then is a mix of financial services accessed by poor people
from a variety of service providers, depending on local knowledge, history,
context and need (Matin et al. 1999:9).
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