Linkages between Banks and Microfinance Institutions in Mali: A Case Study

This document studies various aspects of linkages between banks and MFIs in Mali, which it describes as being poor, but stable. The document discusses the microfinance sector in the country, as follows:

• Rapid evolution since 1980s;
• Full recognition of financial cooperatives;
• Renewable licensing to other types of MFIs;
• Prudential regulation of the sector;
• Three sub sectors:
  • cooperatives - 70% outreach;
  • village banks - 20% outreach;
  • solidarity credit groups in the Grameen tradition - 10% outreach.
• Similarities and differences in the sub sectors similar in operational terms, different with regard to savings in terms of total resources;
• The linkage banks:
  • An agricultural development bank (BNDA) that does social lending;
  • A commercial bank (BIM) that concentrates on three major networks;
  • A solidarity bank (BMS), a bank for MFIs.
• Linkage models - Functions of bank linkages in Mali:
  • Liquidity balancing through bank deposits and borrowings, e.g. Kafo Jiginew (KJ), the largest network of financial cooperatives;
  • Expansion of the portfolio through bank borrowings, backed by donor funds, e.g. the village banking network CVECA-ON.

The paper then explains the features and financial strategies of KJ and the village banking system. It concludes by attempting to answer the questions:

• Does donor generosity lead to MFI complacency in terms of savings mobilization and a slow-down of growth?
• Will backward linkages with donors become superfluous?