| Microfinance opportunities emerging in Sudan
In an innovative and high-risk initiative, a microfinance institution in southern Sudan has opened its doors to small borrowers eager to grow their fledging businesses.
Southern Sudan’s 20-year history of civil war, famine, lack of infrastructure, and isolation poses many challenges for the new lender known as SUMI, the Sudan Microfinance Institution.
“Entering southern Sudan is like stepping back in time,” says Lief Doerring, chief of party of the USAID-funded Agricultural Enterprise Finance program that helped launch the institution. “Yet somehow business and enterprise still happens. People want to improve their lives, want more than food aid and subsistence agriculture. It’s exciting to see things move from relief to development.”
Despite the challenges, SUMI is off to a good start. Less than three months since it began operations in Yei, the institution received more than 500 inquiries from interested borrowers, registered some 185 clients—30 percent of them women, and mobilized $1,875 in compulsory savings.
The first loans were issued in October, and repayment after the first three weekly payment cycles is 100 percent.
Isaac Sadik, a used clothes dealer and tailor, started his business in 2001 with $40 he had raised by selling a bicycle. “I joined SUMI in November 2003 with a loan of Ush200,000,” says Sadik. “My stock has increased to Ush350,000. In fact, my stall is now too small so I am looking for space to construct another stall.”
“People didn’t think it could work,” says the project’s deputy chief of party and microfinance specialist Irene Karimi. “Everyone said the borrowers wouldn’t repay… But this is a local business governed and operated by Sudanese for Sudanese. We’ve worked hard to make sure people know that.”
Members of SUMI’s board of directors were selected from the local community based on their reputation, educational background, and commitment to development.
“We really want to see this work,” says SUMI Chairman of the Board Timothy Morris, who has worked as a doctor in Yei through the recent conflict in the area. “We are tired of war, and everyone here wants peace to stay so we can improve our lives.”
SUMI staff went through an intensive two-week training program at the Uganda Microfinance Union (UMU), one of the most successful microfinance institutions in neighboring Uganda. Loan officers trained in the UMU branch in Adjumani, a conflict-prone region with many Sudanese refugees. They learned how UMU had carefully set itself apart from other donor efforts, such as food aid and refugee assistance programs, by projecting itself as a business.
After the training, SUMI launched operations in September 2003, starting with a single group-loan product. The institution forms borrowers into groups of five who pay a membership fee and a total passbook fee of about $2. Members then contribute savings for a period of six weeks, up to a minimum of 16 percent of the total loan amount they will borrow. The initial maximum loan size is approximately $100, with a 4-month loan term and a 3-percent flat monthly interest rate.
“Because I am Sudanese and live in Sudan, no one will lend me money in Uganda,” says Rose Anite, one of SUMI’s first borrowers. “I am so happy I will be able to use the money from SUMI to… expand my fish sales; then when I go to Uganda on buying trips, I can buy more fish at one time. After that, I want to open another business in Yei selling used clothes.”
Building on its experience in Yei, SUMI intends to open two more branches this year in the towns of Yambio and Maridi, also in southern Sudan. Two additional branches are planned for Rumbek and Tonj/Thiet in the Bahr el Ghazal region.
New loan products are also on the design table, including an employer-guaranteed loan product that will be piloted and released early next year. This product will target salaried Sudanese employees of local and international NGOs operating in the region.
Over the next four years, Chemonics will continue to provide technical assistance, training, and operational and loan capital funds through a grant to SUMI. The goal is for the institution to become self-sustaining by the end of the USAID-funded program.
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