Microcredit to Fight Financial Exclusion
23 May 2011
Read by 1649 persons
A group of associations, in collaboration with the French Institute of Cooperation, organized the Tunisian-French Civil Society Forum in Tunis on Saturday, May 21. The forum addressed citizenship, the environment, and solidarity. A full room of representatives from Tunisian and French civil society listened attentively to a Tunisian-French panel that examined the role of civil society in establishing and strengthening democracy.
The Tunisian revolution was central to the discussions that took place on the sidelines of this forum, including a workshop on the public actions of associations, environmental education, violence against women, and microcredit. As a prelude, Yadh Ben Achour, president of the High Authority for the Achievement of the Revolution's Objectives, Political Reform, and Democratic Transition, warned the audience against anti-revolutionary forces seeking to derail the democratic project. "Without the vigilance of civil society, we are threatened by counter-revolution and the return of dictatorship. This revolution is perpetually in danger if public order continues to be assaulted by what I would call traitors," he said frankly. He added, "It is not true that political parties only have access to power in mind. Political parties are also motivated by love of country and good. But sometimes, in the race for power and competition between parties, they may forget their primary mission." He called on civil society to constantly monitor the revolution and its objectives, as democratic transition would not be easy after several decades of dictatorship, dating back even further than Ben Ali's reign. Martin Hirsh, president of the Civic Service Agency, recalled that all political power seeks to subdue civil society, even if it claims otherwise: "It's a battle that's never won. There must be a legal framework that protects the independence of civil society from all religious, financial, or other powers that might enslave it."
One of the forum's key workshops was dedicated to microcredit, facilitated by Enda Inter-Arabe. The Tunisian association best known for providing credit to those excluded from the economic system was represented by its co-founder, Michael Craknell. He invited microcredit experts to answer questions from civil society members. Arnaud Poissonnier, founder of Baby Loan, a French microcredit organization, began by highlighting the preponderant role of microcredit in developing countries, such as India or Haiti, where 25% of the population benefits from microcredit and nearly 50% wish to start their own project, compared to only 15% in France.
What is microcredit? It is financing that does not exceed 5000 dinars per person and strengthens an already existing activity to develop the economy or meet expenses. The business that benefits is also supported by the credit organization in its operations. However, the cost of this loan is very high; the international average is 26%, well above bank loan interest rates, one reason why this type of financing is often criticized. Arnaud Poissonnier defends this high but legitimate interest rate. "First, there are loans to repay to lending banks, the inflation rate in developing countries which is between 5 and 10%, bad debts to cover, operational costs, and the support dimension which, among other things, involves training people to create business plans and visiting them at home if needed," he said. A microfinance institution (MFI) like Enda Inter-Arabe employs about 870 people. The operating ratio of MFIs is reportedly 70% compared to 40% for ordinary banks. He also mentioned that informal activities are subject to fewer operating costs than formal activities, which ultimately allows clients to honor their debts. Bad debts amount to only 5% worldwide.
Marie Anna Bénard, from the Cerise association, did not hide the excesses of certain Microcredit Institutions, as was the case in India in the 1990s. A well-known institution at the time used harsh recovery methods that caused the suicide of over-indebted women. Arnaud Poissonnier acknowledged that some institutions become commercially driven: "Mercantile investors left the field when they discovered the social aspect of microfinance. That's why we need to liberalize the sector, but not too much, to avoid falling into the trap like other countries."
A representative of an association for employment promotion, located in Beja, questioned why it was impossible to finance young people who want to start a project or who need the self-financing required by social banks such as BTS or PFPME. "It's to avoid indebting people," replied the founder of Enda Inter-Arabe, adding that the association is considering and studying a project to create a project creation credit.
Hicham Talib, a Moroccan expert working at Al Amana, the largest microcredit organization in the kingdom, explains that these types of loans are not intended to fight poverty but for the financial inclusion of individuals who do not have access to traditional financing due to a lack of guarantees.
Published May 22, 2011
Posted online May 23, 2011
gnet.tn
The Tunisian revolution was central to the discussions that took place on the sidelines of this forum, including a workshop on the public actions of associations, environmental education, violence against women, and microcredit. As a prelude, Yadh Ben Achour, president of the High Authority for the Achievement of the Revolution's Objectives, Political Reform, and Democratic Transition, warned the audience against anti-revolutionary forces seeking to derail the democratic project. "Without the vigilance of civil society, we are threatened by counter-revolution and the return of dictatorship. This revolution is perpetually in danger if public order continues to be assaulted by what I would call traitors," he said frankly. He added, "It is not true that political parties only have access to power in mind. Political parties are also motivated by love of country and good. But sometimes, in the race for power and competition between parties, they may forget their primary mission." He called on civil society to constantly monitor the revolution and its objectives, as democratic transition would not be easy after several decades of dictatorship, dating back even further than Ben Ali's reign. Martin Hirsh, president of the Civic Service Agency, recalled that all political power seeks to subdue civil society, even if it claims otherwise: "It's a battle that's never won. There must be a legal framework that protects the independence of civil society from all religious, financial, or other powers that might enslave it."
One of the forum's key workshops was dedicated to microcredit, facilitated by Enda Inter-Arabe. The Tunisian association best known for providing credit to those excluded from the economic system was represented by its co-founder, Michael Craknell. He invited microcredit experts to answer questions from civil society members. Arnaud Poissonnier, founder of Baby Loan, a French microcredit organization, began by highlighting the preponderant role of microcredit in developing countries, such as India or Haiti, where 25% of the population benefits from microcredit and nearly 50% wish to start their own project, compared to only 15% in France.
What is microcredit? It is financing that does not exceed 5000 dinars per person and strengthens an already existing activity to develop the economy or meet expenses. The business that benefits is also supported by the credit organization in its operations. However, the cost of this loan is very high; the international average is 26%, well above bank loan interest rates, one reason why this type of financing is often criticized. Arnaud Poissonnier defends this high but legitimate interest rate. "First, there are loans to repay to lending banks, the inflation rate in developing countries which is between 5 and 10%, bad debts to cover, operational costs, and the support dimension which, among other things, involves training people to create business plans and visiting them at home if needed," he said. A microfinance institution (MFI) like Enda Inter-Arabe employs about 870 people. The operating ratio of MFIs is reportedly 70% compared to 40% for ordinary banks. He also mentioned that informal activities are subject to fewer operating costs than formal activities, which ultimately allows clients to honor their debts. Bad debts amount to only 5% worldwide.
Marie Anna Bénard, from the Cerise association, did not hide the excesses of certain Microcredit Institutions, as was the case in India in the 1990s. A well-known institution at the time used harsh recovery methods that caused the suicide of over-indebted women. Arnaud Poissonnier acknowledged that some institutions become commercially driven: "Mercantile investors left the field when they discovered the social aspect of microfinance. That's why we need to liberalize the sector, but not too much, to avoid falling into the trap like other countries."
A representative of an association for employment promotion, located in Beja, questioned why it was impossible to finance young people who want to start a project or who need the self-financing required by social banks such as BTS or PFPME. "It's to avoid indebting people," replied the founder of Enda Inter-Arabe, adding that the association is considering and studying a project to create a project creation credit.
Hicham Talib, a Moroccan expert working at Al Amana, the largest microcredit organization in the kingdom, explains that these types of loans are not intended to fight poverty but for the financial inclusion of individuals who do not have access to traditional financing due to a lack of guarantees.
Published May 22, 2011
Posted online May 23, 2011
gnet.tn
