Linkages between Banks and Microfinance Institutions in Mali: A Case Study

Topic :

Over the last 20 years microfinance has evolved rapidly in Mali. As of 2003, the microfinance sector consisted of 41 networks with 752 local microfinance institutions (MFIs) and a total outreach of 612,000 clients. Since the mid-1980s, the government-owned agricultural bank, Banque Nationale de Développment Agricole (BNDA), has been the main intermediary offering financial services to MFIs. From the beginning BNDA acted primarily as a channelling bank on behalf of donors until the mid 1990s when it began to act more as a channeling bank.

This paper discusses and compares the financial linkages that BNDA has with the two of the 41 MFIs networks in Mali. First it looks at the liquidity balancing linkages with Kafo Jiginew, a federation of regulated savings and credit cooperatives, which is based on self-reliance through savings mobilization, using bank linkages mainly for liquidity balancing. The second case describes BNDA’s financial linkage with the CVECAON (Caisses Villageoises d’Epargne et de Crédit Autogerées-Office du Niger) network. This linkage is geared to credit expansion more than liquidity balancing, with a significantly lesser emphasis on savings mobilization.

Given the striking difference in strategy between the two networks, the question is posed whether donor generosity leads to MFI complacency.

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