[The Impact of Microfinance on Poverty Reduction]

by

Acknowledgement

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible.

DECLARATION

I, [type your full first names and surname here], declare that the contents of this dissertation/thesis represent my own unaided work, and that the dissertation/thesis has not previously been submitted for academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the University.

Signed __________________ Date _________________

Table of Contents

ACKNOWLEDGEMENT2

DECLARATION3

CHAPTER II: LITERATURE REVIEW5

The Need for Microfinance5

Banking System in North Sudan-Khartoum12

Women Small-Scale Entrepreneurs and Microfinance Institutions14

CHAPTER III: METHODOLOGY17

Purpose, Scope and Methodology17

Case Study17

Demographic Data and Sampling20

Aim of the Study23

CHAPTER IV: FINDINGS24

Findings from Structured Interviews Conducted in the North Sudan24

Findings from Focus Group Interview Conducted in the North Sudan29

Findings from Interviews with Credit and Saving Workers in the North Sudan31

Discussion and Policy Implications32

Managing a Microfinance Programme: Institutional Concerns in Service Delivery35

REFERENCES40

CHAPTER II: LITERATURE REVIEW

The Need for Microfinance

Microfinance refers to the provision of financial services to the rural and urban poor who are self-employed. The financial services provided to low-income clients, including the self-employed, generally include credit, savings and technical assistance. Microfinance is wider than microcredit as it includes savings, credit, insurance and others (Kirkpatrick and Maimbo, 2002, 102). In Sudan, on an average, 60?per?cent of the microfinance portfolio represents loans for on-farm investments whereas income-generating activities and petty trading account for about 40?per?cent.

In most of Africa, explosive growth in microcredit delivery is creating new opportunities for many households (Nelson and Temu, 2005, 49) especially through channels such as microfinance institutions (MFIs), credit unions and village banks (Holt, 2001, 215). Channels of microcredit delivery such as Accumulating Savings and Credit Associations have largely benefited women groups in Kenya. They surpass the mainstream MFIs in terms of deposits, outstanding loans and savings accounts and provide a fully sustainable model independent of donor funding (Johnson, 2004, 26). Women's associations and development groups like Mpigi Women's Development Trust have also been found effective (Snyder, 2000, 26).

Microsavings occupy an important place in the agenda of microfinance communities in Africa (MicroSaveAfrica, 2011, 149). Compulsory savings that act as collateral and are withheld by the MFI are the most common (Dejene, 2009, 63). Entrepreneurs, who lack necessary resources but who want to be involved in income-generating activities, are mostly benefited by the services offered by the MFIs (Schafer, 2001, 21). Participatory methods are focused on monitoring, evaluating and assessing the impact of MFIs in Africa (Mayoux and Chambers, 2005, 45).

Ledgerwood (2000, 78) argues that women have attracted special attention of MFIs. Webster and Fidler (2006, 79) have identified social benefits that women gain from participating in microfinance programs. These benefits include feeling less marginalized, having higher life aspirations, being more likely to use contraceptives and being less likely to marry at an early age. A comprehensive study in Kenya, Uganda and Tanzania found that accessing microfinance services enhances risk management, empowers women and reduces their vulnerability to risk (Cohen and Sebstad, 2005, ...