Access to a wide range of financial services can have a significant impact on rural communities' ability to weather economic shocks, make investments and build up assets. But supplying those services remains a formidable challenge. High costs, remote locations and the risks of doing business in harsh economic and physical environments deter many financial institutions from entering rural markets. In their absence, informal financial institutions emerge, but by definition they are restricted in the scope and range of the services they can supply. One promising avenue appears to be a strategic partnership between formal and informal financial service providers.

This book explains the concept of such partnerships before examining 11 case studies where linkages have been established, with varying degrees of success. One chapter analyses attempts to extend the outreach of Rwandan People's Banks to the rural poor through village savings and credit associations. Another looks at efforts made by savings and credit cooperatives to expand financial access in rural areas of Tanzania. A chapter focusing on Mali explores a strategy to wean rural dwellers off dependence on donors by forging an alliance between banks and microfinance institutions.

The message that emerges is that pairing formal and informal institutions is a worthwhile exercise which generally offers tangible benefits. But it also becomes clear that this option is not always an easy one, and that there is no simple silver bullet to solving the challenge of providing rural finances.

Expanding the Frontier in Rural Microfinance: Financial Linkages and Strategic Alliances
Edited by M Pagura
Practical Action Publishing/FAO, 2008. 286 pp.
ISBN 978-185339-666-4
Practical Action Publishing
Bourton Hall
Bourton-on-Dunsmore, Rugby
Warwickshire CV23 9QZ
Fax: +44 1926 634502

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