Paper
Linking Debt Relief to Microfinance - An Issues Paper
The challenges of building pro-poor sustainable microfinance capacities in Sub-Saharan Africa
31 pages
This concept paper provides a framework for ongoing field operations by the 'Social Finance Programme', advising governments and social partners on building pro poor sustainable microfinance capacities. The paper:
- Tries to make a brief appraisal of the potential for linking the issues of debt-relief and microfinance development.
- Focuses on Sub-Saharan African countries to develop its ideas and to review the current practices.
The paper is structured in three sections as follows:
- Section one:
- Looks at theoretical issues;
- Establishes the necessary conditions for donor operations on debt relief to be optimal interventions;
- Focuses on additional resource generation and the desirability of earmarking;
- Applies this general conceptual frame to 'debt-for-microfinance swaps'.
- Section two reviews linking practices that are already active.
- Section three suggests some practical steps for further study and operational networking on the issue.
The paper:
- Divides the total impact of debt relief initiatives into two components:
- The impact on the amount of resources available and their productivity;
- The way donors try to influence the use of funds.
- Describes micro, sector and macro-earmarking.
- Examines the integration of microfinance into debt-relief, including the practice of debt-swaps.
- Explains various ways in which debt relief is useful in microfinance to correct market failure.
- Presents examples of debt relief and microfinance.
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