Africa – Urban concentration of Microfinance

We received a concerned email from a member of our Poverty-focused MF Community of Practice (PovCoP) on microfinance trends in Africa:

“I have watched with keen interest the current influx of Micro finance banks and Institutions in Africa. What is worrisome however is the fact that majority of them have concentrated their attention in the urban Centres. This has given rise to overlapping. My fear is that we may be heading for another Andhra Pradesh.”

What are your thoughts on this?

Is there reason to fear a crisis of overindebtedness in Africa?

7 thoughts on “Africa – Urban concentration of Microfinance

  1. Je voudrai bien répondre mais je suis francophone et je n’arrive pas à répondre convenablement.

    Freddy NUMBI NGOIE DG ADEKOR IMF RDC Tél.: +243816047349 – +243994799527

    • Bonjour Freddy – Merci pour votre intérêt. S’il vous plaît n’hésitez pas à répondre en français. Nous allons essayer de traduire entre français et anglais.

  2. C’est un problème serieux. En RD Congo, près de 75 % des IMF sont situées en milieu urbain. Trois raisons peuvent expliquer cela:
    1) la plupart des IMF orientent les crédits avec les activités commerciales, car nous savons que c’est dans les villes où le commerce est florissant.

    2) Les activités rurales sont souvent risquées pour les IMF. C’est ainsi les IMF hésitent de s’installer en milieu rural pour y faire du crédit. Elles préservent la qualité de leur portefeuille.

    3) Le milieu rural a souvent une faible densité de la population. Or pour atteindre rapidement le seuil de rentabilité, les IMF voudraient opérer dans les mileux où il y a un potentiel de croissance très élevé.

    Toutefois, à l’allure où vont les choses, je suis d’avis que dans quelques années, les villes africaines connaitront des crises de surendettement très aïgues.

    André NKUSU
    Directeur Exécutif
    APROCEC- R.D.Congo
    +243 9 98 58 88 38

  3. As a student, i do not think so. What the MFI’s should do, would be to embark on an enligtment(extensive) campaign in the rural areas for people to understand the importance of the MFI’s. I want to remain the individual that raises alarm, to consider the fact that the MFI’s are profit oriented to some extent. What is the use of having the MFI’s where people would not partronise. For take off i believe we should start with the urban before moving to the rural areas.

  4. Another Andhra-Pradesh case in Africa may be too earlyt to conclude. I don’t think such overlapping of too many service providers (as to cause over-supply) would occure in urban Africa. Because in many African countris, the gap in access to financial services is still high — even in so-called urban centers.

    But in relative terms, yes urban areas have more concentration of microfinance service providers compared to rural areas. And it would be fair to balance this.

    Getaneh (

  5. Effectivement si les IMF, les bailleurs de fonds (qui sont derrieres ces IMF) et les decideurs politiques ne prennent pas les mesures necessaires (aide pour les IMF à cibler les zones rurales, mise en place d’infrastructures pouvant diminuer les couts de transactions, ….), le phenomene d’Andra Pradesh risque de polluer le secteur microfinancier africain et je pense que c’est deja le cas dans pas mal de pays mais à un echelle moindre. Comme “les arbres ne poussent pas jusqu’au ciel”, les concurrences et l’attrait pour les zones urbaines sont dangereux …

  6. I think it would not be fair to generalize micro-financing in Africa, I think that no matter how similar the situations may be, there are still some peculiarities in each country. Depending on how you look at it, in some countries there is still a very high potential for micro-financing to grow in the urban centers.
    Take my country Ghana for example,with a country population of 25million and over 25 commercial banks, only 30% are banked. urban population stands at 52% and this is growing at a rate of 3% yearly while rural population is growing at less than 1%. Meaning there is a huge potential for urban micro-financing as a lot of the rural folks are migrating to the urban centers and these folks have no option but to rely on the micro finance institutions as they may not meet the commercial banks criteria. I think that the bottom line is a strict regulation by the central bank and a credit bureau register for the sector will help any country not to fall the way of Andhra Pradesh

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