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Community-Driven DevelopmentExperiences
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Origins. Current Status. Lessons Learned. Albania Microcredit ... Origins. Current Status. Lessons Learned. Rural Poverty Alleviation Pilot Project (1993-1995) ... – PowerPoint PPT presentation
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Title: Community-Driven DevelopmentExperiences
1
Community-Driven Development Experiences
- Albania Microcredit Project
2
Albania Microcredit Project Rural Credit
Component
- Origins
- Current Status
- Lessons Learned
3
Albania Microcredit Project Rural Credit
Component
- Origins
- Current Status
- Lessons Learned
4
Rural Poverty Alleviation Pilot Project
(1993-1995)
- Participatory design of village credit fund
(VCF) system - revolving fund at village level
- 3-member village credit committee
- loans up to US500 for any income-generating
activity - maximum loan duration 3 years
- interest pegged to US dollar 6
- collateral village solidarity
5
Rural Poverty Alleviation Pilot Project
(1993-1995) continued
- Continuous learning-by-doing approach in 10
poorest districts - Implementation by autonomous government
foundation (Albanian Development Fund - ADF)
6
Rural Development Project (1995-1999)
- Expansion of VCF system
- More emphasis on financial sustainability
- Lek-based loans at a real interest rate
- Pyramid scheme crisis in 1997 proved strength of
village ownership
7
Rural Development Project (1995-1999) continued
- Results as of 3/31/99
- 225 VCFs in 10 districts
- Over 9,300 active loans
- Over 17,000 cumulative loans
- Active portfolio US3 million
- Average loan outstanding US325
- Real effective interest rate 8-14
- Portfolio at risk 1.2
8
Rural Development Project (1995-1999) continued
- Main challenge institutional environment (ADF)
not conducive to financial discipline or
sustainability
9
Albania Microcredit Project Rural Credit
Component
- Origins
- Current Status
- Lessons Learned
10
Microcredit Project (effective December 1999)
- New focus development of private, sustainable
savings and credit association (SCA) network - Goal 340 sustainable SCAs in 11 districts in
five years, governed by a private SCA union
11
Microcredit Project (effective December 1999)
continued
- Separation of ADF Rural Credit Department to
autonomous Rural Finance Fund (RFF) - VCFs in five northeastern districts transferred
to IFAD-supported Mountain Areas Financing Fund - Revised law for SCAs
12
Microcredit Project (effective December 1999)
continued
- Results as of 12/31/00
- 21 SCAs (76 SCAs planned by end 2001)
- 505 SCA members
- 231 SCA loans totaling US300,000
- 156 VCFs in 5 districts
- Over 4,000 VCF loans amounting to US2.4 million
- Portfolio at risk 3.5
13
Albania Microcredit Project Rural Credit
Component
- Origins
- Current Status
- Lessons Learned
14
Lessons Learned 1
- Base credit delivery mechanisms on local context
and tradition
15
Lessons Learned 2
- Community-based microfinance can overcome rural
finance systemic weaknesses and withstand
political/civil crises - Decentralized borrower appraisal and loan
decision making resolves information barrier - Non-traditional collateral substitutes for
traditional collateral - Moral hazard is adverted because reputation of
borrower at risk
16
Lessons Learned 3
- Place early emphasis on financial sustainability
and institutional environment - (Community-based microfinance is the marriage of
social and financial approaches)
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