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#sfrome: Microfinance to support Gum Arabic Producers Associations (156)

Posted by Beate Stalsett Monday, October 3, 2011

Written by Maria Losacco

Do we all know what gum Arabic looks like and what it could be used for? The gum Arabic processed products that project staff brought from Sudan and the pictures from the field helped participants to “visualise” the project and its outcomes: this orange resin can actually take several commercial forms and be a precious source of income for people in Sudan.

In the fact IFAD-supported “Revitalizing the Sudan Gum Arabic Production and Marketing Project” aims to increase the production and income of small scale gum producers in selected areas of the gum belt. In particular, as gum Arabic tapping starts right before the sorghum harvest, when household food and cash reserves are at their lowest, addressing the problem of poor access to formal rural financing services for small-scale producers becomes key.
  • Which are the reasons for microfinance failure?
  • How can we tackle this difficulties?
  • Which tools/actions can we use to ensure the sustainability of microfinance?
These three questions led the group discussions.

It has been acknowledged that microfinance could fail mainly because of:
  • cultural constraints, with regard to trust and transparency;
  • faulty selection processes;
Among the tools that could be implemented to tackle these difficulties, the attendees stressed the need to have:
  • clear selection criteria (systematic, fair and transparent) and process in general;
  • enhanced outreach and capacity of microfinance institutions to supervise project loans and provide support as needed.
With regard to the sustainability of microfinance, the following aspects emerged as key:
  • the capacity of the government to create an enabling environment;
  • complete transparency, for example releasing annual reports and being available to explain figures and data to the community.