Microfinance spreading to Africa from Asia

By Bosire Nyairo

NAIROBI (Reuters) - Selling vegetables at a stall in a filthy open-air market in Nairobi, Fatma Amina barely makes enough to feed her four children, let alone give them an education that would lift the family out of poverty.

The Kenyan government receives millions of dollars in aid to fight poverty, but little of it is available to small traders like Amina unless they can put up collateral.

"I hear of donors but where are they?" Amina said.

But that situation may be changing as African countries follow the lead of Asia, where tens of millions of people have obtained small loans thanks to an explosion of microfinance operations.

Kenya's new Microfinance Act, signed into law late last year, provides a legal framework regulating lenders, known in the industry as microfinance institutions (MFIs).

"It makes business sense for the government to have a clear policy because this is the fastest growing sector of the economy," said Winnie Kathurima, a general manager at Equity Bank, which won an international award in 2005 for its role in providing loans to micro-entrepreneurs.

Microfinance has been around for decades, but has mushroomed in recent years, especially in Asia where nearly 100 million people have access to microcredit, according to the Microcredit Summit Campaign, which hopes to bring microcredit services to 175 million of the world's poorest families by the end of 2015.

FOCUS ON AFRICA