Community-Driven Development Experiences Albania Microcredit Project.
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Transcript of Community-Driven Development Experiences Albania Microcredit Project.
![Page 1: Community-Driven Development Experiences Albania Microcredit Project.](https://reader035.fdocuments.in/reader035/viewer/2022072113/56649e1b5503460f94b09e2d/html5/thumbnails/1.jpg)
Community-Driven DevelopmentExperiences
Albania Microcredit Project
![Page 2: Community-Driven Development Experiences Albania Microcredit Project.](https://reader035.fdocuments.in/reader035/viewer/2022072113/56649e1b5503460f94b09e2d/html5/thumbnails/2.jpg)
Albania Microcredit Project Rural Credit Component
Origins
Current Status
Lessons Learned
![Page 3: Community-Driven Development Experiences Albania Microcredit Project.](https://reader035.fdocuments.in/reader035/viewer/2022072113/56649e1b5503460f94b09e2d/html5/thumbnails/3.jpg)
Albania Microcredit Project Rural Credit Component
Origins
Current Status
Lessons Learned
![Page 4: Community-Driven Development Experiences Albania Microcredit Project.](https://reader035.fdocuments.in/reader035/viewer/2022072113/56649e1b5503460f94b09e2d/html5/thumbnails/4.jpg)
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 US$500 for any income-generating
activity– maximum loan duration: 3 years– interest: pegged to US dollar + 6%– collateral: village solidarity
![Page 5: Community-Driven Development Experiences Albania Microcredit Project.](https://reader035.fdocuments.in/reader035/viewer/2022072113/56649e1b5503460f94b09e2d/html5/thumbnails/5.jpg)
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)
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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”
![Page 7: Community-Driven Development Experiences Albania Microcredit Project.](https://reader035.fdocuments.in/reader035/viewer/2022072113/56649e1b5503460f94b09e2d/html5/thumbnails/7.jpg)
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: US$3 million Average loan outstanding: US$325 Real effective interest rate: 8%-14% Portfolio at risk: 1.2%
![Page 8: Community-Driven Development Experiences Albania Microcredit Project.](https://reader035.fdocuments.in/reader035/viewer/2022072113/56649e1b5503460f94b09e2d/html5/thumbnails/8.jpg)
Rural Development Project (1995-1999) continued
Main challenge: institutional environment (ADF) not conducive to financial discipline or sustainability
![Page 9: Community-Driven Development Experiences Albania Microcredit Project.](https://reader035.fdocuments.in/reader035/viewer/2022072113/56649e1b5503460f94b09e2d/html5/thumbnails/9.jpg)
Albania Microcredit Project Rural Credit Component
Origins
Current Status
Lessons Learned
![Page 10: Community-Driven Development Experiences Albania Microcredit Project.](https://reader035.fdocuments.in/reader035/viewer/2022072113/56649e1b5503460f94b09e2d/html5/thumbnails/10.jpg)
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
![Page 11: Community-Driven Development Experiences Albania Microcredit Project.](https://reader035.fdocuments.in/reader035/viewer/2022072113/56649e1b5503460f94b09e2d/html5/thumbnails/11.jpg)
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
![Page 12: Community-Driven Development Experiences Albania Microcredit Project.](https://reader035.fdocuments.in/reader035/viewer/2022072113/56649e1b5503460f94b09e2d/html5/thumbnails/12.jpg)
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 US$300,000
156 VCFs in 5 districts Over 4,000 VCF loans amounting to US$2.4
million Portfolio at risk: 3.5%
![Page 13: Community-Driven Development Experiences Albania Microcredit Project.](https://reader035.fdocuments.in/reader035/viewer/2022072113/56649e1b5503460f94b09e2d/html5/thumbnails/13.jpg)
Albania Microcredit Project Rural Credit Component
Origins
Current Status
Lessons Learned
![Page 14: Community-Driven Development Experiences Albania Microcredit Project.](https://reader035.fdocuments.in/reader035/viewer/2022072113/56649e1b5503460f94b09e2d/html5/thumbnails/14.jpg)
Lessons Learned #1
Base credit delivery mechanisms on local context and tradition
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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
![Page 16: Community-Driven Development Experiences Albania Microcredit Project.](https://reader035.fdocuments.in/reader035/viewer/2022072113/56649e1b5503460f94b09e2d/html5/thumbnails/16.jpg)
Lessons Learned #3
Place early emphasis on financial sustainability and institutional environment
(Community-based microfinance is the marriage of social and financial approaches)