Market Beat would like to continue from where we left-off last week Tuesday the 08th. July, 2008 on this august piece deliver at the second anniversary of the Gambia Association of Accountant (GAA). We are wrapping up this very material laden piece this week and I hope you have learnt a thing or two from it. Thus:

The beneficiaries of this project will be from rural households whose poverty situation is exacerbated by lack of diversification in their economic activities and these will be identified through a community based demand driven approach which will ensue after extensive information dissemination on project activities. Thus, the project will offer, on demand-driven basis, entrepreneurship and skills development training, including training in accessing and managing micro-finance for business start-up to rural community members, especially women and youth.

The offer of training opportunities will be demand-driven in that initially the rural population will be sensitized on the project activities and mobilized at the Divisional level to benefit from the training offered, specifically with regards to the type of skills they would be interested to learn.

It is worth mentioning that the Gambia Vision 2020, a long-term strategy (1996-2020) that envisions transforming the Gambia into a dynamic middle-income country. The strategy is in line with National Micro and Small Enterprise Development Policy, the National Strategic Framework Paper for Micro-finance, National Youth Policy, and the National Women’s Development Policy, all of which are emphasizing the need to address rural poverty and livelihood security issues by empowering communities to diversify economic activities and generate income sustainably.

Thus, the project is also in line with ADF policy on poverty Reduction. The selection of interventions is also underpinned by the ADF X Plan of Action with respect to poverty reduction and rural entrepreneurship development, which include support for institutional capacity building and promoting rural households’ access to assets, technology, markets, and improved livelihood security. Last but not least, the project is in line with the Bank’s CSP for the country related to enhancing production capacity of the poor.

The project is in conformity with the Bank’s Microfinance Policy. It will intervene at the three levels of the Gambian microfinance sector and adopt an overall and coherent strategy to tackle the issues related to the legal and regulatory environment, infrastructure and support services and retail capacity of Non Bank Financial Institution’s (NBFI’s). "

The Bank will primarily support investments in building the capacity of retail intermediaries to increase their sustainability and outreach to people who do not have access to quality financial services, improve the quality and increase the variety of their services, make them ratable by competent rating agencies, and assure their financial self-sufficiency".

Moreover, it applies the recommendations of CGAP relating to best practices under the constraint of the Gambian specific environment and size of the institutions: all NBFIs supported are legally registered by the CBG, are submitted to national prescriptions relative to the interest rate determination. The interest rate to be charged to NBFIs will be the CBG discount rate. Moreover, a well defined set of criteria of eligibility for the accessing loans by NBFIs will guarantee the integrity of the fund and transparency in the funds allocation.

The refinancing fund will be hosted by the Social Development Fund (SDF). To ensure the effective implementation of this component, the Government of the Gambia has approved the transformation of SDF into a Semi-Autonomous FFI with an independent Board of Directors registered as a company limited by guarantee, not having a share capital (charitable association). Institution support will be provided to reinforce SDF’s management systems.

The project will therefore support policy users dialogue sessions with all stakeholders over a four year period to create micro finance awareness amongst decision makers, involving presentations and interactive sessions with Members of Parliament, Senior Regional Officials and Politicians; awareness raising sessions for communities and rural NBFIs clients; two national pro-poor workshops to align the micro-finance policy framework to the needs of the poor communities and their financing requirements.

The out come of this consultation process will be the drafting of the National Micro-Finance Policy Document for presentation to the Government. The project will sign a MOU with UNCDF-Dakar to back-stop the process of micro-finance policy development in Africa and in particular in the region, through the programme called Building Inclusive Financial Sectors in Africa (BIFSA) Program.

Support to Regulatory Environment: To enable the Central Bank of the Gambia (CGB) to respond effectively to the growth of the microfinance sector through the creation of a conducive regulatory environment. The project will also support the recruitment of a Microfinance Regulation Specialist, with experience in Central Banking and Micro- Finance regulation.

The expert will assist CBG in reviewing the legal, regulatory and prudential framework and the NBFI prudential Rules and Guidelines, amending them as necessary in order to enhance microfinance development.

The expert will also propose recommendations for the revision of the Financial Institution Act (FIA) using an integrated approach and these recommendations will provide the basis for regulatory and prudential aspects of Microfinance Law to be presented to the Government for approval.

The project will support the recruitment of a consultant to undertake a training needs assessment in microfinance related fields for CBG; two exchange/ exposure visits for staff and management of CBG to share experience with other central banks and regulators, particiapation of three of its staff members in various short-term training courses and management seminars in micro-finance promotion. The micro finance regulation expert will work closely with the consultant assisting the Micro-finance policy development.

The project will also support the design of a microfinance curriculum which will be offered as microfinance Management and Development (MMD) Diploma course by GTTI , and MDI (similar to MSEPTCurricula). Moreover, the project will support 2 person months(annually) of national consultancy to respond to demand-driven and unprogrammed NBFIs training needs with a view to continue to enhance the performance of NBFIs  and build their capacity for increased outreach to rural areas. NBFIs will also be trained in development of loan appraisal tools and guidelines for assessing client’s economic activities.

Thus, communities will be exposed to a refresher training , to be undertaken by the participating NBFI staff, on basic bookkeeping, producing basic financial statements with a view to determine their assets, net income, cash flows and financing needs, in addition to sensitizing the clients on the NBFI specific repayment requirements, applications, etc. Training will also be given to improve their access to NBFIs by improving their comprehension of basic financial concepts, such as determinants of interest rate and formulation of a loan request, etc.

Training of NBFI staff, both at Divisional and National Level, will be supported to equip them with skills which will help link them with communities such as group mobilization, negotiations skills, community and group participation skills. Special training will be provided to equip NBFI staff with competencies in rural participatory methods and gender sensitive approaches in order to ensure gender responsive NBFI service delivery and new product development. Skills training in identification, formulation, and rapid appraisal of small and micro projects, entrepreneurial skills development and gender roles and decision making will also be provided.

Conclusion and Recommendations

Conclusion: The Gambia Entrepreneurship Promotion and Microfinance Development Project is an important component of the Bank’s Strategy for the Gambia. And critical to support of the country n enhancing the productive capacity of the poor (PRSP II, Pillar I), building the capacities at local level for people centered development management (PRSP II Pillar II), and providing economic and social infrastructure support to the poor (PRSP II Pillar V). It is also critical to achieving the targets set out in the outline of PRSP II and the Gambia CSP (Draft, 2005-2007). The project is also in line with the attainment of the Millennium Development Goals (MDGs) and the Vision 20202 of the country.

*** (See Next Week For Market Beat’s Commentary On The Piece)