Report No: 38146 -tg


Main Institutions and Characteristics of the Microfinance Sector



Download 1.23 Mb.
Page9/17
Date02.06.2018
Size1.23 Mb.
#53355
1   ...   5   6   7   8   9   10   11   12   ...   17

Main Institutions and Characteristics of the Microfinance Sector





  1. The Togolese microfinance sector is led by MFIs organized in networks which represent roughly 87 percent of licensed and/or authorized institutions. There are six networks which are FUCEC, UMECTO, UCMECS, URCLEC, IDH and FECECAV. At the end of 2004, the six networks had 53 percent of all outlets and 77 percent of the total sector’s clientele. They mobilized 81 percent of all deposits and provided 71 percent of all outstanding loans.


Savings and Loan Cooperatives


  1. Among the three types of microfinance organizations officially in operation in Togo, savings and loans cooperatives also known as credit unions dominate the market. As of December 31, 2004, savings and loan cooperatives owned 58 percent of outlets (139 over 238), catered to 80 percent of clients (212,451 people), mobilized 82 percent of deposits (CFAF 21,484 million or US$39 million) and provided 79 percent of all loans (CFAF 16,867 million or US$31 million).




  1. The dominance of the microfinance sector by savings and loans cooperatives is undoubtedly due to FUCEC which remains the largest savings and loan cooperative as well as the largest microfinance institution in Togo.


Credit-Only MFIs


  1. Credit-only institutions are the second largest category of MFIs in Togo in terms of amount of loans granted. As of December 31, 2004, with only 2 percent of outlets (4 out of 238), they served 6 percent of the sector’s clients (14,681 people) and granted 12 percent of outstanding loans (CFAF 2,621 million or US$4.8 million). Credit-only institutions also mobilized 6 percent of the overall sector’s deposits (CFAF 1,675 or US$3 million) in the form of forced savings.




  1. The largest institution in this category, TIMPAC34 , mobilized about 23 percent (CFAF 382 million / US$695,000) deposits and granted 42 percent of the outstanding loans (CFAF 1,100 / US$2 million) of all credit-only institutions. TIMPAC was originally created in 1994 by the American NGO Care International in the savanna region of Togo to provide access to financial services, as well as access to education to underprivileged women to enable them to increase their income. In 1998, the project that created TIMPAC came to an end, enabling the organization to become an independent association and obtain in 1999 an authorization to operate from the Ministry of Economy and Finance under the convention regime of the microfinance law.


Donor Projects with a Microfinance Component


  1. Although donor projects with microfinance component possessed about 40 percent (95 out of 238) of outlets and catered to 14 percent of clients (38,299 people), they mobilized approximately 12 percent of deposits (CFAF 3,054 million / US$5.5 million) and provided about 8 percent of outstanding loans (CFAF 1,773 million / US$ 3 million) in 2004. Institutions in this category include WAGES, APGA, JARC-SIFA, ESPOIR TOGO and IDH.




  1. WAGES35 which was created in 1994 by the NGO Care International remains the most important institution of the category and is classified among the top 10 MFIs in Togo. Aiming originally to reach 3,900 low income women of Lomé and vicinity with an array of activities including credit, the institution expanded progressively its activities to farther rural areas and by 1997, WAGES surpassed its original objective and had 5,576 members. In 1998, Wages became independent of Care international and transformed itself in 1999 into to a full fledged microfinance NGO. At end December 2004, WAGES had 23,456 members, mobilized CFAF 2,618 million (US$4.8 million) in deposits while its outstanding loans reached CFAF 1,242 million (US$ 2.3 million).


Informal Microfinance Organizations


  1. In addition to the formal microfinance market, there are a large number of informal microfinance organizations in Togo including money keepers, money lenders, rotating savings and credit associations (ROSCAs) or tontines, in urban and rural markets. There are also “yes-yes” systems, which are informal microfinance organizations that allow clients to save regularly, on a daily basis, with individual money collectors who in turn are able to extend loans to their clients.


Professional Associations


  1. Until recently, the Togolese microfinance institutions were organized around two professional associations namely APIMFT (Association Professionnelle des Institutions de Microfinance du Togo) and Consortium Alafia. APIMFT had about 20 MFIs as members and Consortium Alafia had about 30 MFIs. Many MFIs were members of both associations which happened to have similar objectives and were involved in the same activities. Thus, the duplication of activities and competition between the two associations to attract donors and gain favors from the same Government authorities resulted in an inefficient use of financial resources and a loss of negotiation power for the sector. In search of a better synergy and in order to streamline the sector’s capacities, the two associations merged in August 2004 to create APIM-Togo which has a management structure that includes a Board of Directors and an Executive Director. APIM currently counts about 40 members, is now the main advocacy group for MFIs in Togo and its Board meets every two months to discuss the issues confronting the sector.



    1. Microfinance Clients, Products and Services





  1. Microfinance institutions in Togo grant loans to individuals as well as groups that are guaranteed by non-traditional collaterals such as household items. The clientele is quite evenly divided between men and women, and as a result, slightly more than half (50.2 percent) of total loans outstanding belong to women.




  1. The terms and conditions of loans are very similar from one institution to another. All institutions offer very small, micro-loans. There are no MFI which offers small and medium enterprise (SME) loans like in neighboring Benin. Despite recent efforts by Togolese MFIs to diversify their products in order to attract more clients, there are still only basic savings and loan products being offered. The most popular product is savings deposit which is remunerated and made on a voluntary basis. Some MFIs have a forced-savings product made as a pre requisite for a loan. Differentiated savings products are being offered by some institutions and include “savings for young people”, “savings for the Togolese of the Diaspora.”, “savings contracts with negotiable rates”, and “term deposit savings”. The second most popular type of financial products offered by MFIs is the “rotating savings and credit” product. This product originated from traditional informal Rotating Savings and Credit Associations (ROSCAS) and has now been adopted by formal regulated MFIs. A few institutions in the microfinance sector are also offering some innovative products such as “money transfer services” for their clients. There are no MFIs which offer housing or insurance products or even specialize in agricultural finance.




  1. In general, MFIs in Togo apply an annual nominal loan rate of 18 to 24 percent to their clients. However, effective rates including a variety of fees charged can be much higher than 27 percent, the maximum set by the regional usury law. It is worth noting that a study by BCEAO of several microfinance programs in the region, confirmed that charging an interest rate of 27 percent would not allow MFIs to cover their costs and this, be viable and sustainable. However, BCEAO insists on maintaining a usury rate that should be eliminated as no MFI is able to comply with. Nominal rates on savings deposits in Togo range from 2.5 to 6 percent annually. The maximum of 6 percent is paid on mobilized within a network. With an inflation rate of 0.4 percent in 2004, that still leaves the microfinance clients with a positive remuneration of 2.1 to 5/6 percent for their savings deposits.




    1. Download 1.23 Mb.

      Share with your friends:
1   ...   5   6   7   8   9   10   11   12   ...   17



The database is protected by copyright ©ininet.org 2024
send message
    Main page
european union
high level
financial sector
insurance industry
financial condition
financial system
banking sector