Bangladesh took the lead in providing micro-finance with the establishment of the Grameen Bank of Bangladesh during the early 1980s. Since then, micro-finance institutions (MFIs) and micro-finance non-governmental organisations (MF-NGOs) have mushroomed globally in a collective effort to combat absolute poverty by 2015. ENDA Inter-Arabe (Enda-ia) is one of these organisations which have tackled poverty in Tunisia head-on. Although many debates exist surrounding the concept and success of micro-finance and micro-credit provision, Enda-ia’s efforts and triumphs are undeniable. The CAI brief celebrates the wonderful work they do for Tunisians.
Micro-financing in Africa
Micro-financing is defined as the “provision of loans and other financial services to the productive poor who are left out of the formal financial intermediation.”(2) These services and loans are therefore aimed towards those who are financially excluded from access to any forms of formal credit. “Financial inclusion refers to a process that ensures ease of access, availability and usage of the formal financial system for all members of an economy.”(3) The majority of the world’s impoverished cannot be labeled as financially included and micro-financing was introduced to level the playing field vis-à-vis access to financial institutions and their services.
The informal sector constitutes the preponderance of developing countries’ economies and GDP (Gross Domestic Product). The International Labour Organisation (ILO) describes the informal sector as “comprising [of] unregistered production units, or micro-enterprises, that typically operate at a low level of organisation.”(4) These micro-enterprises are typically owned by one individual or household and very seldom engage with formal banks, customers, suppliers or any other relevant stakeholders. An array of activities is characteristic of the informal sector, with endeavours and products ranging across many areas. According to the World Bank (WB), between one third and three quarters of total employment in many developing countries lie in the informal sector.(5) The extent and magnitude of the informal sector, especially on the African continent, is a direct result of the incapacity of the formal sector to absorb the growing demand for employment. The unemployed therefore seek alternative ways to put bread on the table and are more often than not in need of financing.
MFIs have typically comprised of the following, amongst others: donor-supported non-profit non-governmental organisations (NGOs), cooperatives, community-based development institutions (e.g. self-help groups and credit unions) and commercial and state banks. Generally, NGOs and other non-bank financial institutions have provided leadership in developing credit delivery methods for the poor.(6) “It has been argued that a dynamic and growing MSE sector can contribute to the achievement of a wide range of development objectives, including the attainment of income distribution and poverty reduction; creation of employment; provision of the seedbed of industrialisation; savings mobilisation and production of goods and services that meet the basic needs of the poor.”(7) Micro-financing has not been deemed the panacea for solving global impoverishment, but is a step in the right direction with regards to addressing this Millennium Development Goal (MDG).
Enda-ia states its mission as aiming to contribute to the improvement of living conditions for low-income Tunisians through providing inclusive financial services to all through integrity, honesty, transparency and showing respect to the environment.(8) Enda-ia was established as an NGO in 1990, as a member of ENDA Third World based in Senegal and has been working in Tunisia for 20 years. It was, however, only in 1995 that Enda-ia directed their efforts towards supplying micro-finance. Presently, their sole purpose is to provide support for micro-entrepreneurs in the form of financial services such as micro-credit, training, marketing and financial advice to clients. In December 2008, the Microfinance Information Exchange Market (MIX Top 100 MFIs in the world) ranked Enda-ia 18th out of the best-performing MFIs in the world (ranked 30th in 2007).(9)
Over the next few years, Enda-ia aims to expand their services to 250,000 active clients, and to increase their number of branches from 59 to 80 by 2012. They also want to contribute to the promotion and development of good micro-finance practices in and around Tunisia.(10) Two of the loans that Enda-ia provides to its clients are Eddar and Al Machia. The former assists clients in making improvements to their housing and neighbourhoods, whilst the latter finances livestock breeding in rural areas. “The people targeted by Enda inter-arabe are vulnerable, self-employed workers with very limited access to financial resources, to human development and training and coaching opportunities.”(11) A 2008 study showed that among urban Enda-ia customers, about 60% of the households are below the Tunisian average in terms of spending per household. Women are the principal target of Enda-ia (73%) due to the fact that women are usually more vulnerable and less educated than men, as well as vastly under-represented in the formal working sector and in public and civil decision-making activities.
Enda-ia primarily finances clients employed in the informal sector. Currently, their focus is on developing micro-enterprises in rural areas as well as taking measures to better target sectors such as production/handicrafts and services. Some of Enda-ia’s successes are palpable in the increase in the share of livestock rearing from 3% in 2005 to 15% in 2009.(12) Under the umbrella of micro-finance provision, Enda-ia also endeavours to provide skill-building for entrepreneurs whilst focusing on the empowerment of women. Enda-ia’s partnership with the National Agency for Employment and Independent Work (ANETI) network has made it possible to run training sessions for an increasing number of micro-entrepreneurs that focus on both technical areas and financial management. These specialised sessions, provided by consultants, are often subsided and have proved to be tremendously helpful to customers in enhancing the quality of their products and learning new skills. These support services are not limited to financial matters, but provide information and awareness of a broad spectrum of topics such as taxes, HIV & AIDS prevention, women’s rights, citizenship, family and socio-cultural obstacles, the environment and so forth.
Micro-financing institutions cannot operate in a vacuum.(13) Their successes and triumphs in the mission to improve people’s lives are contingent on its relationships with other economic and non-economic agents. Micro-financing as a solution to poverty has been much debated, but what it is evident that the endeavours of Enda-ia have been highly successful in addressing the needs of the poor in Tunisia. Every step, taken towards ensuring a respectable and adequate quality of life for all should be acknowledged and celebrated.
Image via Celsias
(1) Contact Milandré van Wyk through Consultancy Africa Intelligence’s Eyes on Africa Unit (firstname.lastname@example.org).
(2) Kyereboah-Coleman, A. 2006. “Corporate board diversity and performance of microfinance institutions: The effect of gender.” in J.Stud.Econ.Econometrics, Vol. 30(3): 20.
(3) Sarma, M. & Pais, J. 2010. “Financial inclusion and development.” in Journal of International Development, June, p.1.
(4) Roy, M. & Wheeler, D. 2006. “A survey of micro-enterprise in urban West-Africa: drivers shaping the sector.” in Development in Practice, 16(5): 452.
(6) Makina, D. 2007. “Evolving trends in the provision of microfinance to the poor.” in Africagrowth Agenda, March-May 2007, p.31.
(7) Green, C. J., Kirkpatrick, C. H. & Murinde, V. 2006. “Policy arena: Finance for small enterprise growth and poverty reduction in developing countries.” in Journal of International Development, 18: 1018.
(13) Zohir, S. & Matin, I. 2004. “Wider impacts of micro-finance institutions: Issues and concepts.” in Journal of International Development, 16: 301-330.