Unexplained irregularities and lack of transparency in the management of donor funds intended for microfinance institutions’ support could threaten the existence of over.
The Microfinance Association of Southern Sudan (MASS) said that unpaid funds could put the future of over 12,000 of their members in jeopardy.
Vincent Olweny Oywak, the association’s chairman said at a press conference in Juba that, “despite the millions of dollars committed to the sector [microfinance], only a scant amount has been accessed by some of the member institutions.”
“These is a clear indication of the existing irregularities in funding within the industry,” he said.
Olweny, who is also the Sudan Microfinance Institution (SUMI) Chief Executive Officer (CEO) said that funds had been unfairly distributed.
He alleged that some donor funds were being directly channeled to a foreign owned micro-finance institution based in Southern Sudan rather than going to small businesses.
“The government and its partners must play leading roles in reversing this trend which is threatening to damage the reputation of the microfinance industry,” Olweny appealed.
The MASS chairman declined to name the foreign-owned institution, saying that his association was not mandated or in a position to blacklist such bodies or individuals.
Established in 2003, MASS is a fee-based membership association composed of nine microfinance institutions.
It is says it is funded by shareholders and international organizations.
About 43,000 micro-entrepreneurs and economically active poor people are members of MASS, of whom 60 percent are women.
“As members of this industry, we strongly believe that through microfinance intervention, the poor and low income earners can be financially empowered to smoothen out their cash flows,” Olweny said.
Members from the association said that irregularities had caused widespread misconceptions about microfinance.
The nomadic state of existing markets and limited products are key challenges to the microfinance industry, Olweny said.
MASS officials appealed to government to allocate a certain percentage of its revenue for supporting microfinance institutions to avoid over-reliance on donor funding.
Duku Olwer, a client of the Sudan Microfinance Institution (SUMI) expressed discontent over the way micro-finance was run in the south.
He urged the Government of Southern Sudan to play a central role in sorting the industry to prevent malpractices could permanently destroy microfinance institutions.
He said that loans he obtained from the microfinance body had enabled him to earn money to send his children to school. But now he said, the future of his business hangs in balance due to lack of funds.
Another client, who asked to remain anonymous expressed concern over the disparities existing between the government and microfinance institutions, saying immediate interventions are required to redeem the sector from the verge of collapse.
He appealed to the various microfinance institutions to not only target educated people, but also involve less educated people.