Experience of SudanEconomic Empowerment Approach OR

Traditional Microfinance

May 2016

الحسناويأنسAnasse.elhasnaoui@4us.ma

• Microfinance In Sudan » » Field Approaches.

•Field Example of each approach.

•Outcomes & Readings on Sudan Practice.

Economic Empowerment Approaches

Contents

Four Types of Projects for Economy Empowerment :1. Individual Finance: :Single Person or Family is the

beneficiaries.2. Solidarity Individual Finance: : Beneficiaries are

solidarity group with special relation ( number ofthem might exceed thousands) and each one has hisprivate business/project

3. Group Solidarity Groups: Beneficiaries are oneSolidarity group cooperated at one project.

4. Sustainable Development Villages: ProposedSolutions for inclusive development for the villageCamps, Crisis ):

Business Method Differs from one to other type

Economic Empowerment Approaches

Sudan Practice Different Approach According to Project’s Type

Economic Empowerment Approaches

Sudan Practice innovations in Projects & Organizing Beneficiaries

Individual-Solidarity

Groups

Beneficiary is a group of individual

with a certain mutuality ( Similar

business, Same education..

Individual Finance

Beneficiary is the individual or the

family

Community Sustainable

development

Proposed solution for comprehensive

development

Groups Solidarity

Beneficiaries are one solidarity group

in the same business

12

34

Name: Aziza Suliman

Business: Sewing & Business Decoration

Finance Amount: USD 1500

Finance Period: One Year

Pre-finance accounts:

• Net Profits (Linens sales) SDG 10 for the Linen by total of 100 Linens.

Post-Finance Accounts:

• Net Profit (Linens sales) SDG 25 for the Linen by total of 100 Linens.

• Except the seasons where net profit can reach SDG 7000 on monthly bases.

Economic Empowerment Approaches- Sudan Practice

1. Individual Finance field Example

Contracts Used: Muzaraa (Venture capital in Agriculture production), Lease and Leasing financial Products: Ijarah (Lease), Leasing, Mozaraa : contract in farming where the financier can provide land or funds in return for a share of the harvest.Murabaha: is essentially a form of trade credit, in terms of which the lender(s) actually purchases and becomes the legal owner of the goods ordered by the client, and then resells them to the client on delivery, at a previously agreed on price higher than the initial cost of the goods. However, the client has no legal obligation to buy what the lender has purchased on his/her behalf. [The repayment pattern and other terms of finance should be agreed upon by both parties (Seller(s) and Buyer) in a Murabaha Contract.

Economic Empowerment Approaches- Sudan Practice

2. Group- Individual Finance field Example

ABU-HALIMA MUDARABA GREENHOUSES PROJECT

Beneficiaries 125 families headed by their graduates in agriculture formulated in one Co-operative

Business Type Greenhouses for vegetable production/ 1400 ton annually

Finance Module Mudarbah (Capital Management)

Finance Amount USD 4,000,000 for the co-operative/ USD 30,000 for one family

Partners One Technical consultant & two private hypermarkets for marketing

Location Ruler community in North Khartoum the capital

Economic Empowerment Approaches- Sudan Practice

3. Solidarity Group Finance field Example

Business Opportunity Development for MF

Smart Partnerships: Latest Technology ( Specialized Supplier)

Supportive Investments & Assets Required/Appropriate Financing

4. Sustainable Village Finance/

Economic Empowerment Approaches- Sudan Practice

4. Sustainable Village Finance/ WAD Balal Community Field Example

Economic Empowerment Approaches- Sudan Practice

A resident compound with appropriate secured durable cost houses, governed by sustain development program./Not Yet

Inclusive infra-structure for healthy living standards and according to substitute pure economy technologies/Small Clinic Center/Small Kinder garden /Small Primary School/Petrol Station

Public Landscapes & areas for incubating Productive, social & culture activities./Possess 500 Feddan.

Rehabilitation and beneficiaries support program for job opportunities creation & small, micro firms / Organize Business Trips to UAE/ Small Technology Service Center

village executive firms program support

Village Development Fund

Actual interaction of population in community building & development. Cattle fattening project for 100 families/ Poultry Project / Poultry Slaughterhouse

• Persuasion in solution of poverty not only by financial inclusion but in economic and social inclusion

• The large number of poor force us to work with them as SME and unified groups and not individual finances for micro activities.

• The existing environment force us to think on economic basis and not only financial basis.

• Absence of collaterals push us to innovate new financial tools.

• Moving ahead to economic empowerment instead of microfinance activity.

Economic Empowerment Approaches- Sudan Practice

2. Readings on Microfinance Situation in Sudan

Islamic finance purposes

Conventional Finance Purposes

EconomicEmpotement

Islamic finance tools

FinancialEmpotement

Buy and Sell Murabaha for Example

Qard Hassan-SellAmount

Economic Process Financial

ProcessFundamental Change in finance culture

Finance tools developed from mono tools to group tools, (i.e Sallam, Ijara

Pure economic tools without financing (Muzaraa)

Profit in the economic operation and not finance operation

Client needs the collateral not the institution.

Problems in Islamic finance products

Economic Empowerment Approaches- Sudan Practice

Public Capital

Private Capital

Waqfi Funds

Zakat Fund

ZAKAT – Sudan Chamber

Sudan Practice in Economic Empowerment

ALAMAN Syndicate Involvement in BOP

• The legal, political and management aspects, did not reach the level where the field aspect is reached.

• Regulation pushes to implement 12% of CBs financial resources and not 12% of economic resources ( financial direction only)

• Absence of Solidarity unified group regulation.

• Absence of regulation for financing without credits.

• Set ceilings despite feasibility

• Financial MIS and not Economical Empowerment MIS.• Absence of feasibility studies

• Absence of economic and social indicators

• Absence of project follow up and focus only on repayment follow up

• Greatness of needs call to diverse the resources and start to depend on capitals 97.5% and not only 2.5% charity resources.

• It is necessary to revise/upgrade the environment of microfinance in Sudan to match with the field practices in Sudan.

Economic Empowerment Approaches- Sudan Practice

2. Readings on Microfinance Situation in Sudan