microfinance and poverty alleviation

122 Pages·2014·8.16 MB·English

THE UNIVERSITY OF THE WESTERN CAPE

MICROFINANCE AND POVERTY
ALLEVIATION: A STUDY OF THREE SAVINGS
AND CREDIT ASSOCIATIONS, CAPRIVI
REGION, NAMIBIA

LINUS MILINGA SIMATAA

A mini-thesis submitted in partial fulfilment of the requirements for the degree of

Master of Arts Development Studies

at the Institute for Social Development,

Faculty of Arts,

University of the Western Cape

Supervisor: Sharon Penderis

November 2013

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KEY WORDS

1. Microfinance  

2. Savings and Credit Associations

3. Income
4. Poverty Reduction
5. Savings
6. Loans
7. Rural Development
8. Village Bank
9. Microcredit
10. Sustainable Livelihoods
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DECLARATION

I declare that Microfinance and Poverty Allev iation: A study of three Savings and Credit
Associations, Caprivi Region, Namibia is my  own work, that it has not been submitted
before for any degree, or examination at any other University, and that all the sources I have

used or quoted have been indicated and acknowledged as complete references.
Linus Milinga Simataa

............................................................................... .......................................................
SIGNED DATE
iii
ACKNOWLEDGEMENT

I wish to thank my supervisor, Sharon Penderis, for her perseverance, inspiration and

assistance in making my dream of completing my research study a reality. I also extend my
gratitude to my closest friends, fellow studen ts and family for their untiring support. A
special word of thanks must go to the RISE Namibia Representative in the Caprivi Region,
the Regional Steering Committee of the Caprivi Region, the Committee members of the
Namalubi, Masokotwani and Kasheshe Microfinance Savings and Credit Associations and
members for their willingness to share with me their experiences of the Associations. This
mini-thesis is dedicated to my parents whose sacrifices, love and boundless support made the
completion of my research possible.
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TABLE OF CONTENTS

Title Page .................................................................................................................................... i
Keywords ............................................................ ........................................................................ ii
Declaration ......................................................... ....................................................................... iii
Acknowledgements .................................................................................................................... iv
Table of contents ........................................................................................................................ v
Abbreviations ............................................................................................................................. x
Abstract ..................................................................................................................................... xi
Chapter 1:
Introduction and Background................................................................................................. 1
1.1 Introduction ....................................................................................................................... 1
1.2 Background to the Study ................................................................................................... 2
1.2.1 Brief Overview of Namibia’s Economy ............................................................... 3
1.3 Brief Overview of Microfinance at National Level .......................................................... 5
1.3.1 Institutions involved in the provision of provision of microfinance ..................... 5
1.3.2 Poverty Reduction Programmes............................................................................ 7
1.3.2.1 Rural Poverty Reduction Programme ..................................................... 7
1.3.2.2 Basic Income Grant (BIG) Pilot Project in Otjivero-Omitara
Community ............................................................................................. 8
1.4 Institutions involved in the provision of Microfinance .................................................... 9
1.5 Statement of the Research Problem ................................................................................ 10
1.6 Aims and Objectives of the Study .................................................................................. 11
1.7 Significance of the Study ................................................................................................ 11
1.8 Definitions of the key concepts ...................................................................................... 13
1.9 Chapter Outline ............................................................................................................... 15
Chapter 2:
Theoretical Framework and Literature Review ................................................................. 16
2.1 Introduction ..................................................................................................................... 16
2.2 Brief Overview of Microfinance ..................................................................................... 16
2.3 Savings and Credit Associations ..................................................................................... 22
2.4 Brief Overview of the three SCAs in the Caprivi region ................................................ 24
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2.5 Theoretical Framework ................................................................................................... 25
2.5.1 Sustainable Livelihood Approach (SLA) ............................................................ 25

2.6 Conclusion ...................................................................................................................... 28

Chapter 3:

Overview of Case Study area, Research Design and Methodology ................................... 29

3.1 Introduction ..................................................................................................................... 29
3.2 Overview of the Caprivi Region ..................................................................................... 29
3.3 Research Design ............................................................................................................. 29
3.3.1 The Case-Study Approach .................................................................................. 30
3.3.2 Research Methodology ....................................................................................... 31
3.3.2.1 Quantitative Approach .......................................................................... 32
3.3.2.2 Qualitative Approach ............................................................................ 33
3.4 The Literature Review and Secondary Sources .............................................................. 34
3.5 Data analysis, Interpretation and Presentation ................................................................ 34
3.6 Limitation of the Study ................................................................................................... 35
3.7 Ethical Statement ............................................................................................................ 36
3.8 Conclusion ...................................................................................................................... 36
Chapter 4:
Analysis and Discussion of Research Data and Findings ................................................... 38
4.1 Introduction ..................................................................................................................... 38
4.2 Background of Masokotwani Village ............................................................................. 38
4.2.1 Population ........................................................................................................... 38
4.2.2 Economic Activities ............................................................................................ 39
4.2.3 Infrastructure ....................................................................................................... 39
4.2.4 Educational Facilities .......................................................................................... 39
4.2.5 Health Facilities .................................................................................................. 40
4.2.6 Financial Institutions ........................................................................................... 40
4.3 Case Study of the Masokotwani Savings and Credit Association .................................. 40
4.3.1 Background of the Savings and Credit Association............................................ 40
4.3.2 Education of Members ........................................................................................ 40
4.3.3 Management ........................................................................................................ 41
4.3.4 Funding ............................................................................................................... 42
4.3.5 Membership ........................................................................................................ 42
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4.3.6 Microcredit Services ........................................................................................... 44
4.3.7 Micro Financial Savings Services ....................................................................... 45

4.3.8 Networking and Financial Literacy Training ...................................................... 46
4.4 Presentation and Analysis of Results ........ ...................................................................... 46
4.5 Background of the Kasheshe Village .............................................................................. 49

4.5.1 Population ........................................................................................................... 49

4.5.2 Economic Activities ............................................................................................ 49
4.5.3 Infrastructure ....................................................................................................... 50
4.5.4 Educational Facilities .......................................................................................... 50
4.5.5 Health Facilities .................................................................................................. 50
4.5.6 Financial Institutions ........................................................................................... 50
4.6 The Case Study of the Kasheshe Microfinance Savings and Credit Association ........... 51
4.6.1 Background of the Case Study ............................................................................ 51
4.6.2 Education of Members ........................................................................................ 51
4.6.3 Management ........................................................................................................ 52
4.6.4 Funding ............................................................................................................... 52
4.6.5 Membership ........................................................................................................ 52
4.6.6 Microcredit Services ........................................................................................... 54
4.6.7 Savings Services ................................................................................................. 54
4.6.8 Networking and Financial Literacy Training ...................................................... 55
4.7 Presenting and Analysis of Results ................................................................................. 56
4.8 Background of the Namalubi Village ............................................................................. 58
4.8.1 Population ........................................................................................................... 58
4.8.2 Economic Activities ............................................................................................ 59
4.8.3 Infrastructure ....................................................................................................... 59
4.8.4 Educational Facilities .......................................................................................... 59
4.8.5 Health Facilities .................................................................................................. 60
4.8.6 Financial Institutions ........................................................................................... 60
4.9 The Case study of the Namalubi Microfinance Savings and Credit Association ........... 60
4.9.1 Background of the Case Study ............................................................................ 60
4.9.2 Education of Members ........................................................................................ 60
4.9.3 Management ........................................................................................................ 61
4.9.4 Funding ............................................................................................................... 61
4.9.5 Membership ........................................................................................................ 62
4.9.6 Microcredit Services ........................................................................................... 63
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4.9.7 Savings Services ................................................................................................. 63
4.9.8 Networking and Financial Literacy Training ...................................................... 65

4.9.9 Analysis of Results ............................................................................................. 65
4.10 Conclusion ................................................ ...................................................................... 69

Chapter 5:
Findings, Conclusion and Recommendations  ...................................................................... 70
5.1 Introduction ..................................................................................................................... 70
5.2 Summary of the Research Findings ................................................................................ 70
5.2.1 Improvements in Living Standards ..................................................................... 71
5.2.2 MFIs as Source of Credit .................................................................................... 71
5.2.3 MFIs and Increase in Income of Members ......................................................... 71
5.2.4 MFIs and Productive Assets ............................................................................... 72
5.2.5 MFIs and Children’s Education .......................................................................... 72
5.2.6 MFIs and Members’ Health and Nutritional Status ............................................ 72
5.2.7 MFIs and Empowerment of Women ................................................................... 73
5.3 Application of the Model ................................................................................................ 73
5.4 Recommendations ........................................................................................................... 76
5.5 Recommendations for future further Research ............................................................... 78
5.6 Conclusion ...................................................................................................................... 79
References ............................................................................................................................... 80
Internet Sources ........................................................................................................................ 88
Appendix 1: In-depth individual interview questionnaire for regional steering
committee and SCAs committee members ........................................................ 90
Appendix 2: Questionnaire schedule for individual members of the
savings and credit associations (SCAs) ............................................................ 95
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LIST OF TABLES AND FIGURES

Figure 1: Map showing research sites visit ed: Kasheshe, Namalubi and
Masokotwani villages ....................................................................................... 31

Figure 2: Level of education ............................................................................................ 41

Figure 3: Age group of members ..................................................................................... 43
Figure 4: Marital status of members ................................................................................ 44
Figure 5: Level of education ............................................................................................ 52
Figure 6: Age groups of members .................................................................................... 53
Figure 7: Marital status of members ................................................................................ 54
Figure 8: Level of education ............................................................................................ 61
Figure 9: Age groups of members .................................................................................... 62
Figure 10: Marital statuses of members ............................................................................. 63
Table 1: Financial Report of 2008/2009 of Masokotwani SCA ..................................... 45
Table 2: Level of satisfaction of respondents with quality of credit services ................. 47
Table 3: Improvement in women’s livelihood after becoming members of
Masokotwani SCA ............................................................................................ 48
Table 4: Financial Report of 2008/2009 of Kasheshe SCA ............................................ 55
Table 5: Level of satisfaction of respondents with quality of credit services ................. 56
Table 6: Improvement in women’s livelihood after becoming members of
Kasheshe SC ..................................................................................................... 57
Table 7: Financial Report of 2008/2009 of Namalubi SCA ........................................... 64
Table 8: Number of members involved in small business activities before
joining the Association ..................................................................................... 66
Table 9: Members involved in small business activities after joining the
Association ....................................................................................................... 67
Table 10: Improvement in women’s livelihood after becoming members of
Namalubi SCA .................................................................................................. 68
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ABBREVIATIONS

AALS: Affirmative Action Loan Scheme 
BIG: Basic Income Grant

CCN: Council of Churches in Namibia

CD: Co-operation for Development
CISP: International Committee for People
COSEDA: Community Small Enterprise Development Agency
DCD: Division of Co-operative Development
DFID: Development for International Development
DFN: Development Fund of Namibia
IMF: International Monetary Fund
MDG: Millennium Development Goals
MFI: Microfinance Institution
NACP: National Agricultural Credit Programme
NDC: National Development Co-operation
NAMFISA: Namibia Financial Institutions Supervisory Scheme
NAMTAX: Namibian Government Tax Consortium
NANGOF: Namibian NGO Forum
NANASO: Namibian Network of AIDS Service Organizations
NGO: Non-Governmental Organization
NNAWIB: Namibia National Women in Business Development
NUNW: Namibian Union of Namibian Workers
OECD: Organisation for Economic Co-operation and Development
RISE: Rural People’s Institute for Social Empowerment
ROSCA: Rotating Savings and Credit Association
SACCO: Savings and Credit Co-operatives
SBCGS: Small Business Credit Guarantee Schemes
SCAs: Savings and Credit Associations
SME: Small Medium Enterprise
SLA: Sustainable Livelihood Approach
SPSS: Statistical Package for Social Sciences
UNDP: United Nations Development Programmes
UN: United Nations
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