Making microfinance work in Sudan

With the aim to improve micro-finance ecosystem and financial inclusion of refugees and their host communities in Sudan, the ILO brought together key stakeholders from the banking and finance sector at a national workshop.

News | 29 August 2022
Participants of the Making Finance Work for Sudan workshop ©ILO/Sarra Adil Mohamed
Former UN General Secretary and Nobel Laureate Kofi Annan said, “"Microfinance recognizes that poor people are remarkable reservoirs of energy and knowledge. And while the lack of financial services is a sign of poverty, today it is also understood as an untapped opportunity to create markets, bring people in from the margins and give them the tools with which to help themselves."

Conforming his message, ILO PROSPECTS in Sudan is investing in the realization of financial opportunities for the most vulnerable host and refugee communities. Setting a milestone in this process, the ILO managed to bring together the influential brains and minds in the country to participate in a workshop on ‘Making Microfinance Work in Sudan’.

Representatives from banking and microfinance sector at the workshop ©ILO/Sarra Adil Mohamed
A national level workshop on this issue was pertinent after ILO’s socio-economic assessments of Sudan revealed that the financial services sector covers only 3% of country’s total demand. The deteriorating economy, ongoing political instability and inter-communal conflicts have distressed existing operations of the micro finance institutions (MFIs). They are even restricted from expanding their coverage by the obsolete laws and regulations.

“To improve financial inclusion of rural and under-served communities, both strengthening financial education (pull initiatives) and expanding the supply of financial services (push initiatives) are necessary. Without the locally appropriate interventions providing access to finance, we are excluding the most vulnerable from the opportunities that formal financial services have to offer,” said Sean Paterson, Chief Technical Advisor, ILO PROSPECTS Sudan.

The ILO is implementing a targeted training programme for managers of financial services providers - Making Finance Work for Refugees, IDPs and Host communities Programme. It is part of the organization’s initiative on Financial inclusion for refugees and host communities which aims to extend financial services to forcibly displaced persons (FDPs) and host communities in East Africa and the Middle East.
Participants shared their suggestions on financial inclusion of refugees and their host communities ©ILO/Sarra Adil Mohamed

At the ‘Making Microfinance Work in Sudan’ workshop held between 7 – 11 August 2022 in Khartoum, the ILO brought together twenty-five key decision makers from the Sudanese banking sector including the Central Bank of Sudan, Chartered National Banks, representatives of the MFIs, Commission of Refugees, and bank representatives from East Darfur and West Kordofan states.

The group brainstormed to identify potential incentives and risk mitigation measures to help facilitate the entry and operationalization of two MFIs in East Darfur and West Kordofan, the ILO PROSPECTS intervention states in Sudan.

Fatima Sirelkhatim, National Project Coordinator, ILO PROSPECTS Sudan, said, “With inputs from the participants the ILO will identify the operational criteria for selection of two MFIs who will be contracted to develop inclusive and fit-to-context microfinance products and services.”

The discussions at the workshop rightly identified that the traditionally offered “small commercial loans” by the MFIs are rarely accessible to refugees and host communities. “The ILO is making a dedicated effort to ensure that specialized microfinance products and services are developed which are suitable to the socio-economic profiles of the targeted host and refugee communities. These financial products and services of MFIs need to be offered at par with the local market rates and yet shall cover the contextual risks. This will drive the demand for the MFIs and in turn will ensure their sustainability as well,” added Fatima.

AlHadi Adam Abakar, SME Unit Manager of Nile Bank in Sudan, one of the participants ©ILO/Sarra Adil Mohamed
The workshop participants came up with a set of suggestions, which will lead to development of cost effective and legally compliant financial services and products. “Microfinance services, especially services related to agricultural or pastoral finance can benefit the host and refugee communities in these regions. We can consider pastoral financing to support purchase of livestock or tools. In the agricultural field, it could be given to buy harvesting tools. Refugees and host will be able to increase their income and in turn contribute to nation building,” said AlHadi Adam Abakar, SME Unit Manager of Nile Bank in Sudan.

By integrating both push and pull initiatives, PROSPECTS will be able to create the conditions necessary for generating job opportunities, promoting the deployment of new technologies, introducing new value-added products and services, and enhancing agricultural and local economic growth for both the forcibly displaced and host community households.

“By improving the micro-finance ‘ecosystem’, the ILO expects increased financial resiliency, a rapid development of local economic drivers and value chains, and improved household level incomes for our targeted community,” said Paterson.

The “Making Finance Work in Sudan” workshop is the first step in this process, and it will play an important role in sustaining PROSPECTS programming efforts to improve financial inclusion in the country.