Information Technology as a Strategic Tool for Microfinance in Africa

This paper is a report on the seminar organized in October 2003 by AfriCap, a private equity fund focusing on the African MFIs. It is a synthesis of discussions held during the seminar, and it can be used as a tool to understand various issues concerning information technology (IT).

The author states the different ways in which IT can be an important tool for microfinance in Africa. It discusses:

• The relationship between microfinance and IT in Africa, with focus on the use of new technologies;
• Challenges faced by IT in the African microfinance;
• Recommendations for making IT a more strategic tool within MFIs;
• Need for innovations in the field of IT that would give MFI customers more convenient and flexible access to financial information and services;
• Need for connectivity between branches, institutions and technological devices;
• The necessity for MFIs to choose their core management information systems (MIS) carefully;
• MFI’s decision whether to implement the IT solution internally or to outsource it, and also, which vendor to choose.

The report concludes that the seminar conveyed that IT does have the potential to transform the microfinance industry, but this depends on the extent to which MFIs take advantages of the opportunities that IT provides, and integrate IT into an overall business strategy that is creative, collaborative and focused on the needs of the client.