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Financing rural development

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Performing MFIs in underserved rural Africa need financial resources to fuel their development

When the CIDR and Pamiga started their operations, there were few MFIs and limited infrastructure in rural Africa.

Today, a number of microfinance institutions have demonstrated their ability to operate in rural areas. These successful MFIs have a solid customer base and a thorough knowledge of their environment, which can be developed only through time and experience.

Pamiga believes that through additional targeted investments, these MFIs can be considerably strengthened.

Pamiga set up a tailor-made investment vehicle to meet their needs: Pamiga Finance S.A.

Pamiga has created a financing and investment vehicle to raise long-term capital and thus support the development of its network's members and help them face theirs challenges: Pamiga Finance S.A. (PFSA)

PFSA is a financing and investment company aiming to unlock the economic potential of rural areas in sub-Saharan Africa, especially through the MFIs it finances.

This is the first investment company designed to support and structure this still underserved market.

To finance these investments, PFSA raises mid and long term capital, from individual investors, professional investors, financial institutions, development agencies and foundations.


More information on PFSA and how to invest?  Send us a message by clicking on this link.


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Main challenges faced by the MFIs in rural areas

25 years of experience in rural Africa have helped us to determine 6 challenges faced by rural MFIs: 

Improve the profitability: The isolation and concentration of risks penalize the long term profitability of MFIs 

Diversify financing sources: The rural microfinance institutions usually rely upon one external financing source 

Access better refinancing terms: Maturity is usually restricted to one year and repayment terms do not meet MFIs' needs 

Strengthen the equity base: To fuel their growth, rural MFIs in Africa need to strengthen their capital base which is usually too low. The average debt/equity ratio is 4x for the largest rural MFIs in Africa 

Need for sector concentration: To bring access to the financial services for rural households, a combination of scale and product development is most needed. A succesful implementation strategy should involve cooperation with other instutitions 

Institutional change: Due to constraints related to governance, capacities and product range, member-owned MFIs have difficulties reaching scale to be competitive. A change of status is critical.



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