Summary: This book examines the dynamics and constraints faced by informal sectors in 12 West African countries -Burkina Faso, Cape Verde, Chad, the Gambia, Guinea, Guinea-Bissau, Mali, Mauritania, Niger, Sao Tome and Principe, Senegal, and Sierra Leone- as well as the issues confronted by the microfinance institutions that serve them. Nine microfinance companies considered to be among the most effective in the region were selected and evaluated for their suitability for partnership with the Bank. The book sums up major findings of the country profiles and of the institutional case studies, and lays out a series of options for World Bank involvement. Among the major findings are that informal sectors are very large and appear to be growing rapidly, accounting for one-third to three-quarters of total employment in most countries. The majority of informal activity is rural and agriculture-related, although large-scale urban migration is changing this. Women, particularly poor women are major participants in all informal sectors. Key constraints include saturated and stagnated markets, lack of access to credit and savings services, weak technical skills, inadequate information, and poorly developed infrastructure. Low-income entrepreneurs rely mainly on family and friends, moneylenders and trade creditors and esusus and tontines for savings credit. A few access financial services from donor-supported nongovernmental organizations and credit unions, but virtually none interact with banks. Microenterprise assistance programs are scattered unevenly across the region: there are many in some countries and few in others. They range from very small, high-cost programs to fairly large, efficient institutions. The authors advocate that the Bank categorize microfinance delivery as a financial sector operation, and help these institutions increase their outreach and move toward sustainability, by working to strengthen the links between microfinance institutions and banks, underwriting the establishment of a regional training center, and developing effective management information systems, among other strategies.
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