Democracy and Governance > Success Stories

Benin Micro Enterprise Development Project

This activity started in 1997 to issue loans to very poor persons in disadvantaged communities to help them raise their revenue levels and encourage them to participate in local development. Under this activity, Volunteers in Technical Assistance (VITA) created a local micro-finance institution (MFI) called Micro-Bank.

Loan terms

Since its inception, Micro-Bank has been highly successful in offering individual loans and group loans for a 12-month term. The loans are reimbursable monthly at 13.5% per year or 2% per month interest rate.

Clientele

Due to high demand for the product, the bank's clientele has reached about 4000 micro-entrepreneurs in three major regions of Benin. The VITA and Micro-bank initially mobilized US$400,000 as credit capital from USAID/Benin bilateral DG funds and an additional $500,000 from USAID PRIME funds. Micro-bank managed local operations and attracted funds from multiple private donors, to leverage USAID's assistance in capital funding.

Micro-bank becomes a registered NGO

In terms of credit portfolio management, Micro-bank has proven to be a small but highly performing and mature institution. Micro-Bank is now registered as a local NGO with the Ministry of Interior and has signed a convention with the Ministry of Finance, which recognizes it as an MFI.

To better assume its role as an autonomous MFI, Micro-Bank is reinforcing its management capacities. To increase the focus on effective institutionalization and financial autonomy, Micro-bank agreed to aggressively seek private funds for the next three years and shift from the "project" approach to a business management approach.

Moving out of poverty

One of the clients of Micro-Bank, Mme Emilienne Elavagnon, a fish seller at the Cotonou Fishing Port who received a loan of FCFA 200,000, testified that the loan has enabled her to increase her business activities and move out of poverty. Now she owns her business. Profits made from this business, she said, will be used to reinforce her business capital and pay her children's school fees. Her last daughter, for whom there was no hope of schooling because of lack of financial means, will now also have the opportunity of going to school.

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