Cape Verde – Microfinance Technical Support Project
Providing Techinical Assistance to improve Microfinance Opportunities
ACDI/VOCA initiated the Micro Enterprise Training and Lending Program (METLP) in September 1997 in Cape Verde – a country plagued with drought, leading to both periodic famine and massive migration. The program disbursed first-time loans to 2,648 borrowers, with a total value of $2.67 million and an average loan size of $410. The program achieved operational break-even during its third quarter of operation and financial self-sufficiency in its sixth quarter of operations. It was then transferred to the commercial bank, Caixa Ecónomica de Cabo Verde, on May 1, 2001, having made more than 7,000 loans in three and a half years, and achieving a net profit of $8,021 in 2000. As a direct result of the success of the METLP, the African Development Bank contracted ACDI/VOCA to provide technical assistance to three Cape Verdean entities to enable them to establish self-sustaining financial service delivery mechanisms.
The African Development Bank, through its African Development Fund Microfinance Initiative for Africa (AMINA), funded 90 days of technical assistance delivered over a period of 14 months to three organizations involved in the provision of microfinance services: ASDIS, OMCV and Morabi. ACDI/VOCA facilitated a review of each organization’s microfinance program in conjunction with the respective boards of directors, including operations to date and projections of future activities based on auto-investment. Staff assisted in the development of basic business plans and provided training in the areas of loan application processes and credit analysis, loan follow-up and repayment, operational management, accounting and sustainability. ACDI/VOCA also worked with the three agencies to adopt appropriate accounting and management information systems.
ASDIS (Santiago Island Association for Social Solidarity and Community Development) is a financial institution organized and capitalized by 16 smallholder farmers’ associations, each of which invested $3,000 of its own funds to create a lending institution for rural residents. Under the Microfinance Technical Support Project, ASDIS received extensive technical assistance from ACDI/VOCA in the form of hands-on training and supervision.
OMCV (Cape Verdean Women’s Organization) is a nonprofit social service agency that promotes and supports women’s development and education. In the recent past, OMCV was disbursing loans to urban and rural women microentrepreneurs at very low rates of interest and with an unsustainable level of loan recovery. In 1999, with support from the African Development Foundation, OMCV created a new microfinance department, and with ACDI/VOCA assistance OMCV began to unlearn bad lending practices and adopt new procedures that will lead to sustainability. Training concentrated on best practices, the establishment of a loan accounting system, and the optimal utilization of funds and resources.
Morabi is a Cape Verdean women’s organization that established a microfinance program to reach “the poorest of the poor." Morabi distributes loans of various sizes, both to individuals and to groups, on four of the Cape Verdean islands. These funds are used for equipment, construction and increased inventories. Under the Microfinance Technical Support Project ACDI/VOCA provided assistance in monitoring and methods to ensure on-time payment, portfolio management systems, and setting interest rates at levels sufficient to achieve financial sustainability.
