MICROCAPITAL.ORG STORY: US Congressional Delegation Visits Opportunity International Microfinance Bank in Kigali, Rwanda to Promote Proposed US Government Funding for Human Capacity Building in Developing Countries

Mr. Gregory W. Meeks, a United States (U.S.) Congressman representing New York State’s Sixth Congressional District in the U.S. House of Representatives recently led a delegation to Kigali, Rwanda. The representatives met to explore the existing microfinance situation in sub-Saharan Africa, and to better understand the needs for expanding micro-banking services in the region.

Mr. Meeks congregated with fellow Congressman Mr. Melvin L. Watt of North Carolina, U.S., and Congresswomen Ms. Sheila Jackson Lee of Texas, U.S., and Ms. Marcia L. Fudge of Ohio, U.S. The representatives met at Opportunity International’s (OI) bank in Kigali with a group of 30+ clients to discuss the successes and shortcomings of microfinance in Rwanda. OI is an international charity based in Illinois, U.S. operating and supporting approximately 44 microfinance institutions (MFIs) primarily in Latin America, Indonesia, and the Philippines. As of November 2008, OI had total assets of USD 800 million.

Mr. Meeks’ meeting with OI in Kigali was focused on human capacity building. Human capacity refers to the development of an individual’s skill set to enhance performance ability and efficiency. Several international development organizations, including the United Nations (UN), have incorporated capacity building as an integral part of their development programs. UNDP defines capacity building as “the creation of an enabling environment with appropriate policy and legal frameworks, institutional development, including community participation (of women in particular), human resources development and strengthening of managerial systems” [4]. Mr. Meeks says he aims to tackle these issues with his new legislation, the Human Capacity-Building Act of 2009, with cosponsor Congressman Mr. John Boozeman of Alaska, U.S. The legislation is intended to build human capacity on a global level, filling the apparent gaps in sub-Saharan African microfinance.

Prior to the announcement of this legislation, the Forestry Department of UN outlined several activities which, if carried out, could significantly contribute to the sustainable growth of microfinance. One such activity was the need for governments and donors to focus their assistance on human capacity building, including guidance for small-scale businesses and their associated activities [5]. “Such activities should provide a regional and sub-regional approach to maximizing economies of scale and should focus predominately on educating and training African nationals” [6]. In accordance with this need, Mr. Meeks’ and Mr. Boozeman’s legislation aims to work closely with MFIs in Africa; match federal funding with private finances; acquire a guarantee from the U.S. Agency for International Development (USAID) that women comprise the majority of participants in the program; and ensure that 100% of participants are from developing countries [3].

Similar initiatives have been carried out by the U.S. government in the past. A previous MicroCapital story discussed a bilateral development fund initiated during the Bush administration in 2002, namely the Millennium Challenge Account (MCA). Funds were appropriated by U.S. Congress each year and managed by the Millennium Challenge Corporation (MCC). For more information on this initiative, please visit: https://www.microcapital.org/downloads/monitor_volume3/MicroCapitalMonitorPreview_Nov08.pdf.

A study conducted by the World Bank in 2007 found that more than 80% of the population in sub-Saharan Africa do not have access to financial services. Reasons for this barrier include costly user fees, a lack of necessary documentation, and great distances between rural dwellers and the nearest bank [1]. According to the International Fund for Agricultural Development (IFAD), approximately 51.2 % of Rwandans live in poverty. Agriculture provides jobs for 90% of the labour force. Women make up 70% of the Rwandan population, and head 52% of households. As such, microfinance institutions (MFIs) in the area have been targeting their services towards the female population and to individuals participating in the agricultural sector [2].

Opportunity International is one such MFI that directs its efforts towards the female population. In July 2007, Opportunity International Bank Rwanda (OIBR) merged with Urwego, a Christian bank based in Rwanda, to form Urwego Opportunity Microfinance Bank (UOMB). UOMB opened its main bank branch in Kigali in November 2007. OI has an ROA of 0.16% [7]. UOMB has an outstanding loan portfolio of USD 1, 862, 717, an average loan balance of USD 62, and 29, 262 active borrowers, 87% of which are women [2]. For further MicroCapital coverage on OI, please see our interview with Dennis Ripley of OI at: https://www.microcapital.org/downloads/monitor_volume3/MicroCapitalMonitorPreview_Nov08.pdf.

By: Diya Chopra, Research Associate

Bibliography:

[1] Market Wire

http://www.marketwire.com/press-release/Opportunity-International-1040170.html

[2] Opportunity International

http://74.125.113.132/search?q=cache:4IVvpIVdb14J:www.opportunityinternational.ca/learn/projects/rwanda.html%3Faction%3Dd7_file_download%26Join_ID%3D186861+opportunity+international+%2B+active+borrowers&cd=1&hl=en&ct=clnk&gl=ca

[3] The Financial Services Roundtable

http://www.fsround.org/media/htm09/roundtable_and_opportunity_international_host_microfinance_briefing_on_capitol_hill.html

[4] The United Nations

http://www.un.org/esa/coordination/public_multi.htm

[5] Forestry Department of the United Nations

http://www.fao.org/docrep/008/a0226e/a0226e12.htm

[6] South Africa U.S. Embassy

http://southafrica.usembassy.gov/root/pdfs/congress-archive081015.pdf

[7] MIX Market http://www.mixmarket.org/sites/default/files/medialibrary/10001.593/CGAPProfileOPPRTY.pdf