Liberating Women from Poverty via Micro Financing: A Review of Sudan and Selected Countries

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INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS

COPY RIGHT 2013 Institute of Interdisciplinary Business Research 422

SEPTEMBER 2013

VOL 5, NO 5

Liberating Women from Poverty via Micro Financing: A Review of

Sudan and Selected Countries

Zeinab B. D.Goda (Corresponding author)

International Business School

Universiti Teknologi Malaysia,

Jalan Semarak, 54100, Kuala Lumpur.

Malaysia.

Rosmini Omar

International Business School

Universiti Teknologi Malaysia,

54100, Kuala Lumpur, Malaysia.

Abstract

Economic globalization, specifically international funding agencies have been perceived as affecting

economic conditions of female gender all over the world, particularly in developing countries. Across an

extensive literature review of earlier works on micro enterprise funding, this paper aims to identify

trajectories to alleviate poverty among the female gender. The value of this paper lies in its intention to

identify microfinance as an essential element to liberate rural poor women from poverty. A practical

implication of this paper is that government can generally assist such pocket citizens by setting up micro

enterprise financing agencies that help build small businesses, offer training to manage the businesses until

they are able to stand independently while responsible towards their loans. Our focus of discussion is North

Sudan, as the female gender in this country demonstrates potentials to cater for themselves and their family

while expanding their microenterprises.

Keywords- North Sudan; microenterprises; microfinance; micro credit; community poor; female

1.0 INTRODUCTION

Women are minorities who are critically affected when formal financial services to the under privileged fail.

It should precipitate various ranges of informal, society dependant economic arrangements to counter such

pressing financial situations [1, 2, 3]. Hence, in the last few years, rising amount of the formal sector

organizations (non-public, public and the private) have been established with the aim of meeting those

obligations [4, 5]. Such phenomena lead to growth of micro enterprise financing universally as informal and

formal arrangements offering financial services to the poor in the community. Earlier literature posits that

the most suitable example of such arrangement as found in many countries is the Rotating Credit and

Savings Association (ROSCA) [6, 7]. Such an organization comprises of community members who

organize themselves with the purpose of pooling their savings together. The pooled savings is then

alternately lent out to each of the members on a regular basis until each member benefits from the system.

Concept of micro enterprise funding has been observed by various stakeholders. Nonetheless, this seems to

be in the shadows as a result that the well organized financial systems predate them [7, 8]. A serious global

effort was only seen in the last four decades to formalize financial service provision to the poor with

particular focus on women. This process began in earnest around the early to mid-1980s and has since

generated aggressive force. Currently, numerous numbers of micro financing institutions (MFIs) providing

financial services to an estimated 100 - 200 million of the worlds poor exist [9, 10, 11]. This system of

enterprise financing began as grass-roots movement encouraged mostly by a development paradigm. With

time, it is emerging into a universal sector informed increasingly by an economic mechanism. The evolution

of the micro enterprise finance sector represents a substantial achievement taken within historical dimension.

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It has overturned established ideas of the poor as consumers of financial services, shattered stereotypes of

the poor as not bankable, spawned a variety of lending approaches showing that it is possible to provide

cost-effective monetary services to the poor, and gathered millions of dollars of social investment for the

poor [10, 12, 13].

Targeting most microfinance schemes at women clients is with the aim of providing access to financial

services to the rural poor community . Suitable programs can have a strong, positive impact on womens

empowerment. We could achieve this by giving women more chance about owning more assets, giving a

more active role in family decisions, and increasing investment for the future of family well-being [14, 15,

16]. Grameen Bank, is a replica which widely demonstrates that small loans to the disadvantaged women in

the society can be a success story. It is duly managed by women. Such an organized MFI is mainly

government sponsored and subsidized. It liberates the poor women to earn their way out of poverty.

Despite Grameen Banks success story, several concerns have been posed about the effectiveness of MFIs in

reaching the poor women in the community, in raising their incomes, and at what cost. Some researchers

believe that some of the benefits of MFI reached the rural disadvantaged people in the society [17, 18],

although some school of thought argue otherwise. In order to understand in details the benefit of the micro

enterprise financing to the rural poor women, the model of micro financing shall be reviewed as investigated

in many other developing countries like Bangladesh, India, Pakistan, Nepal, Thailand, Ghana, Rwanda, Peru

and many other countries of South Asia and Africa [19, 20, 11, 21, 22]. This particular review aims at

studying the concept of micro enterprise financing as published in existing literatures in various countries to

understand the subject deeper. Hopefully, we could stimulate further discussion for future direction,

especially for MFIs in North Sudan. In order to achieve this objective, we develop the following sections:

the first section consists of a detailed review of the microfinance industry in selected countries with

particular emphasis on the female gender The second section reviews challenges of the microfinance policy

in North Sudan, some of the agencies that have responsibilities to support micro enterprise financing.

Finally, this paper ends with a brief conclusion and recommendations based on our observations.

2.0 MICROFINANCE INDUSTRY

Within the boundary of this discussion, it is imperative to first differentiate between micro finance and

micro credit. Micro-credit refers specifically to small loans given to the poor people. Microfinance was a

broader term. It is an embraced efforts to collect savings from low-income households, provide

consumption loans and insurance along with micro-credit. Microfinance embraces a range of financial

services that seek to meet the needs of poor people, both protecting them from fluctuating income and other

shocks. It also helps in improving their incomes and livelihood [23, 24, 25].

In its infancy, microfinance sector had a diversified growth and multiplicity of impacts, namely income,

employment, health, education, housing and sanitation. The program is pivotal. It changes the process of

development particularly when subsidy and grant based schemes were losing their importance. Yunus [26]

explained that the Grameen Bank methodology was almost the reverse of the conventional banking

approach. Conventional banking was based on the principle that the more you have, the more you get [27].

As a result, more than half of the population of the world was deprived of financial services of the

conventional banks. Conventional banking was based on collateral, focused on men, located in urban centers

and owned by the rich, with the objective of profit maximization. Contrast this with microfinance programs.

The Grameen Bank started with the belief that credit should be accepted as a human right, where one who

did not possess anything gets the highest priority in getting a loan [10, 19]. Grameen Bank methodology was

not based on the material possession but on the potential of a person. Grameen Bank, which was owned by

women, had the objective of bringing financial services to the very poor, particularly women to help them

fight poverty, gain self-esteem and empowerment, as well as stay profitable and financially sound. Sarkar

[28] in his paper discussed the new model of microfinance in Bangladesh and expressed the need of some

institutional reforms in the microfinance development strategy.

In India, micro finance seems to provide answers to problems and failure of its banking system in providing

lending scheme to the less privileged in the community [29, 14, 30, 31]. Hence, the commencement of the

Self Help Group Bank Linkage Programme in 1992 was perceived as a milestone improvement in banking

with the under privilege in the Indian community. The provision of cash lending to focused groups was

noticed to have replaced the Regional Rural Banks security- oriented individual banking mechanism [32,

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18]. The government sponsored programs had occupied much of the economic space but did not achieve the

objective of alleviating poverty [29]. Self Help Group- Bank Linkage Programme is proven successful for

the socioeconomic empowerment of hard core poor, providing financial services to them and preparing them

to take up economic activities for poverty alleviation. The Self Help Group (SHG) is a viable alternative to

achieve the objectives of rural development and to get community participation in all rural development

programs [27, 33, 25]. It was an organized set up to provide micro-credit to the rural women on the strength

of the group savings without insisting on any collateral security for the purpose of encouraging them to enter

into entrepreneurial activities and for making them enterprisingly risk-takers.

Kristruck et al. [34] explained that the financial sector developed in India by the end of 1980s was largely

supply and target driven. The government sponsored poverty alleviation schemes that experienced poor

recovery rates with miss utilization of subsidy and lack of observation of repayment ethics. Harper [35]

studied the differences, outreach and sustainability of the SHG banking system and Grameen banking

system of providing microfinance. SHG bank linkage and Grameen banking systems dominated the

microfinance markets in India and Bangladesh respectively [18, 14]. In SHG bank linkage system, ten to

twenty members formed a group and this group became an autonomous financial organization. They

received loans from the bank under the groups name and the group members carried all saving and lending

transactions on their own behalf. Thus, SHG was effectively a micro bank. But in Grameen banking system

microfinance participants organized themselves into groups of five members and each member maintained

her individual saving and loan account with microfinance organization. The main function of the group was

to facilitate the financial intermediation process. It was also found that both systems were best suited to their

prevailing environments. SHG bank linkage system was more flexible, independence-creating system and

imparted freedom of saving and borrowing according to the members requirements. With such conditions,

it was suitable in the Indian context [30, 22]. Meanwhile, Grameen banking system was more rigid,

autonomous, over disciplined and dependence-creating system which was suitable in Bangladesh where

people were relatively more homogeneous, very poor and had less experience of democracy. Singh [36] had

explained the failure of government initiated anti-poverty programs and the success of microfinance

program as an effective poverty alleviation strategy in India. Singh posited that the public funded

community development scheme was unsuccessful due to the fact that it was funded from the centre without

the participation of the grass root citizens, politically motivated, massive corruption and huge management

expenditure [36].

2.1 Micro Credit Schemes for Women

Microfinance, which is the concept of providing small capital to the under privileged in the society

precipitates and boosts entrepreneurship among communities in developing nations. In addition, this scheme

is often viewed as an effective poverty alleviation intervention, with a positive impact on economic growth

and a number of social development indicators. Microfinance which is increasingly viewed as the miracle

cure for poverty among women is the process of making available financial services to the previously

underserved group of low income households [37].

Microfinance has been proven effective in fighting poverty by providing entrepreneurs with the necessary

capital to start and expand their entrepreneurial activities. Microfinance is also associated with a positive

impact on social and human development [24]. Impact assessments have found positive changes in micro

enterprise output, assets, employment and income. In addition to these effects on the entrepreneurial activity

of the poor, microfinance is being attributed with positive effects on issues such as household income,

savings, children's education, health and nutrition, and women's empowerment. The Swedish International

Development Cooperation Agency (SIDA) contributes with a summary abstract of their microfinance

guideline, produced in Kenya in October 2004 [38]. They argue that as microfinance services become more

sophisticated and microfinance markets more competitive, microfinance must be seen in a broader context

such as that of the financial system. In order to build an inclusive financial system, it has to be comprised of

all financial institutions, markets and instruments, the legal and regulatory framework governing the

functioning of financial markets, and the public authorities mandated to oversee compliance with

regulations.

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2.2 The Objectives of Micro Financing for Women Entrepreneurs

Microfinance technique has covered some objectives targeted to challenge poverty especially women

poverty problem in all over the world. It focuses on lowering poverty especially for women, and determines

an individuals ability to make use of different financial solutions [1, 7]. Contributing agencies should

connect to a mechanism of political, economical and organizational structures making it necessary to make

poverty determinable. Several researchers and some central and local government officials and members of

some development agencies agree that the Microfinance system is especially beneficial for women, resulting

to increased income that will help women perform their role as brokers of health, nutritional, and

educational status of other household members, increasing women's employment in micro enterprises,

improving the productivity of women's income-generating activities, and enhancing their self-confidence

and status within the family [3, 8, 7, 27]. Hence, they serve as independent roles such as producers and

providers of valuable cash resource to the household economy.

Microcredit, on the other hand, should help poor women in three ways. First, as independent sources of

income outside home, that reduces economic dependency of the women on husbands and thus helps enhance

autonomy. Consequently, the same independent sources of income together with their exposure to new sets

of ideas, values and social support should make these women more assertive of their rights. Finally, by

providing control over material resources, it enhances the womens prestige and status in the eyes of their

husbands; thereby promoting intersperse consultation [4, 33].

2.3 Micro Finance and Impacts to Women Empowerment

Hashemi et al. [39] explained that the microfinance program in Bangladesh had led to empowerment of

women. They had used a measure of length of programme participation among Grameen Bank and BRAC

(Bangladesh Rural Advancement Committee) clients to show that each year of membership increased the

likelihood of a female client being empowered by 16 per cent. Yunus and Jolis [40] highlight that the

exclusion of poor women from land rights had been contributory to their marginal position. Grameen Bank

in Bangladesh provided housing loans to members with 3 loan cycles and with title deeds to the land on

which the house was built. As most group members were women, one of the results was that women had

title deeds transferred to them often from their husbands to obtain these loans. This had also reduced the

incidence of divorce since the women, as the owners of their own houses, could not be easily evicted. The

World Relief Rwanda (1999) URWEGO (one of the premier microfinance institutions in the region of East

Africa) found that the greatest impact of microfinance program on empowerment had been on self-esteem of

women. Sixty nine per cent of clients reported increased self-esteem and self-confidence, 54% of URWEGO

clients reported an increase in their level of knowledge about issues that affect themselves and their families,

and 38 per cent of clients reported an increase in business knowledge [21, 19, 20]. Through in-depth

interviews with 13 clients in another study URWEGO found that 54 per cent of the clients experienced an

increase in their ability to control or influence business decisions, 38 per cent experienced an increase in

decision making in their families, 38 per cent in their communities, and 54 per cent in their churches.

Consequently, Ashe and Parrott [41] conducted a study on the women empowerment program in Nepal and

showed that 89,000 out of 130,000 or 68 per cent of women in the program experienced an increase in their

decision-making roles regarding family planning, marriage of children, buying and selling property and

sending their daughters to schools. All these areas of decision-making were traditionally dominated by men.

In addition, in another study [8], it was found that Nepalese women were able to make small purchases of

necessary items like groceries independently. However, larger and personal purchases, like jewelry, always

required the consent of the husband, reflecting incomplete progress toward empowerment in this area. It is in

contrast with Banu et al. [42] concept of empowerment that focus on capacities of women to reduce their

socio-economic vulnerability and their dependency on their husbands or other male counterparts.

Still within the issue of empowerment, Dunbar et al. [25] studied when, how and why women were

empowered. For this purpose, 75 microfinance institutions and opportunity internationals 35 partners were

surveyed. An in-depth research of Sinapi Aba Trust (SAT) located in Ghana also depicted strong evidence

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of MFIs contribution to womens empowerment. One consistent finding was increased self-confidence and

self-esteem [21]. Another finding was increased participation of women in decision-making.

A comprehensive framework of women empowerment has identified process and agency as the main

domain [43, 44, 16]. Women empowerment was a process of progression from one stage to another and the

agency element defines that women themselves must be significant actors in the process of change that was

being measured. In a nutshell, measurement of empowerment encompasses dimensions of economic, socio-

cultural, interpersonal, legal, political and psychological aspects at household and community level.

2.4 The Effect of Micro Enterprise Funding on Women Participants

Having vividly described the term micro financing in the earlier section, it is imperative to look at the

impact of this particular financing schemes on women in the community where they are residents.

Determining the monetary returns of this operations is said to be straight forward. Impact assessments

require adoption of research methodologies capable of isolating specific effects out of a complicated web of

causal and mediating factors and high decibels of random environmental noise. This also means attaching

specific units of measurement to tangible and intangible impacts that may or may not lend themselves to

precise definition or measurement [10, 3]. Use of standard accounting measures of institutional performance

in microfinance frequently requires adjustment to reflect financial subsidies received by MFIs.

Over eighty eight publications on the research on impact assessment of micro finance was carried out [13,

14, 32, 7]. Nine of the ten studies in Bangladesh assessed the Grameen Bank and the Bangladesh Rural

Action Committee (BRAC), in addition at times to other Bangladeshi MFIs. The Grameen Bank and BRAC

are two of the largest MFIs in the world with borrowers and loan portfolios totaling 2,378,601 and US $192,

600, 000 (year end 2001) at the Grameen Bank and 2,900,000 and US$159,500,000 (year end 2002) at

BRAC. The difficulty and cost inherent in assessing social impact are such that most MFIs do not try to

assess social impact. Nonetheless, donors and policymakers have a legitimate interest in assessing the social

returns to their social investments. Some knowledge of social impact is therefore necessary for MFI

management and other stakeholders to assess overall program effectiveness [33, 3]. Information on financial

performance alone gives an incomplete picture of program performance.

Program participation can exert a large positive impact on self-employment profits and that program credit

has a significant impact on the well-being of poor households. Such an impact is greater when credit is

targeted to the female gender (34, 11, 7]. Other researches [1, 2, 27, 24, 22] investigated the issue of

empowering the female gender. Only one of the studies found contrary evidence that microfinance program

participation exerts a statistically significant impact on one or more aspect of female empowerment, such as

contraceptive usage or intra-household decision-making.

On the other hand, a major Bangladeshi impact study demonstrated that significant portions of the womens

loans were controlled by male relatives, thereby limiting the womens ability to develop meaningful control

over their investment activities. However, researches carried out in other countries on effect of

microfinance schemes in Bolivia [45], China [11], Ecuador [45], Ghana and South Africa [46], Guatemala

[47], Honduras and Ecuador [48], Indonesia [49], Peru [50], Thailand [51], Zambia [52], and in multiple

countries [53] and Anderson et al. [7]differs substantially, signifying that effects are highly contextual. .

, Four programs in Bolivia [45] shows that assets and income increased commensurate with initial poverty

levels, but also that MFI services may increase vulnerability if borrowers over-leverage [5]. Bolnick and

Nelson [49] find that MFI participation had a positive impact on enterprises that were typically small, labor

intensive and growing, although the impact was far from uniform across sectors and target variables. As a

matter of fact, borrowers who were able to obtain two loans experienced high growth in profits and

household income compared to a control sample, but borrowers who never qualified for the second loan

were actually worse off due to MFI collection mechanisms[52].

Upward class structure mobility increases significantly with access to credit [47]. Using the same Guatemala

data set in a subsequent study, Kevane and Wydick finds that rapid gains in job creation after initial credit

access were followed by prolonged periods of stagnant job creation. Dunn [54] identifies the better

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performance of program clients enterprises compared to non-client enterprises in terms of profits, fixed

assets, and employment. Finally, an analysis of [7] 147 MFIs concluded that microfinance participation

increased environmental awareness and common pool resource stewardship. Other impact studies address

trade-offs that need to be considered when performing microfinance impact assessments. Mosely and Hulme

[53] study 13 MFIs in seven countries (Bolivia, Indonesia, Bangladesh, Sri Lanka, Kenya, India, and

Malawi) and construct an "impact frontier" describing the inverse relationship they find between outreach

(depth of poverty reached) and impact. Other impact assessment studies, however, fail to find significant

impacts. In his assessment of Thai MFIs, Coleman [51] confirms that "naive" estimates of impact failing to

control for self-selection and endogenous (non-random) program placement significantly overestimate

program impacts. A study of 89 MFIs in the America and some developing countries on their impact

evaluation practices [7] demonstrated that the sampled institutions regularly evaluated their programs, albeit

using inexpensive and un-scientific methods, regularly monitored project performance, saw evaluations as

vital, used findings to implement project changes, and sought formal feedback from clients. This is an aspect

which other settings could learn in terms of improving micro-financing implementation

2.5 Problems of Micro financing

There are some identified difficulties in the system of micro funding of small enterprises. Among those

difficulties are to determine the degree of poverty and of poor people in the community, and the exorbitant

interest charged by micro funding firms [2, 55]. Therefore, it serves as an avenue to ensure changes between

men and women relations. Furthermore, microfinance mechanism has some issues to understand clearly

because it means more than credit for the small and micro entrepreneurship. Some researchers on

microcredit programs claim that this scheme has not successfully reach the poorest people in the community

[31, 30, 20]. This raises very serious questions about donor rhetoric and appraisal processes. It is very clear

that the poorest women either exclude themselves from credit groups, because they know that they will

never be able to meet weekly inflexible repayment rates at 1015 per cent interest. In some cases, group

members, for the same reason, exclude them. With about 15 per cent of households headed by women in

rural communities, and 25 per cent among the landless, it is remarkable that development agencies are not

reporting on this aspect of group membership, and few donors are requiring this type of monitoring. Yet

women-headed families are most likely to be among the very poorest in the community [56, 57].

2.5.1 Microfinance Practices in Some Countries

Evidence from literature depict that the practice of microfinance system began in Bangladesh with the

particular emphasis on alleviating poverty among rural women [14, 32, 30]. Over the years the institution

has been upgraded to look like that of a traditional financial institution in its legal framework. Subsequent

years have witnessed some developing and a few advanced countries considering the framework developed

by the first founder of the micro finance company in Bangladesh and this they refer to as commercial

microfinance system [17]. However, public works programs provide a significant amount of income at the

micro level in some Asian countries such as Pakistan, India, Indonesia and China. In some African countries

such as Benin, Burkina Faso, Burundi, Nigeria, Rwanda, Senegal, Sudan, Malawi and South Africa that

female legislators are mobilizing to strengthen their advocacy for active political and economic participation

of women, with a much emphasis on education for women and the teen females.

In these countries, in order to reach rural women, a microfinance pilot project will be set up, in collaboration

with a qualified civil society organization, which will serve as executing agency; legislature will intensify

awareness and oversight. In Bamako, the participants (from Benin, Burkina Faso, Ghana, Kenya, Mali,

Niger, Nigeria, Uganda and Senegal) had discussed the role of legislatures and had come up with a

comprehensive strategy in the year 2005 which was tagged the year of the microfinance [12, 20].

Microfinance in two Caribbean countries like Jamaica and Trinidad-Tobago has adopted and innovated

some of the lending methods of informal finance, and by doing so has also reinforced the indigenous

informal institutions. Fascinatingly, the researchers posit that although indigenous savings and credit

organizations have a long history in the countries, the group lending model introduced in Jamaica through

microfinance has not fared well [58, 5]. This is so for macroeconomic reasons, as well as for reasons

specific to the urban borrowers. Finally, microfinance in Jamaica and Trinidad-Tobago continues to be

dependent on government and non-governmental sources of funding.

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2.6 ORGANIZATIONS INVOLVED IN MICRO FINANCING IN SUDAN

2.6.1 The Banking Sector

The main financial contributor to the micro finance institution in the country is the Central Bank of North

Sudan. This is the regulatory agency of the country that spearheads the finance industry and micro

businesses funding. In this country, general funding is sub-grouped into two broad categories: the central

bank directly provides the sum of SDP 350 million. They further provide that as part of its financing

instruments that commercial banks must dedicate at least 10% of their investible funds to financing micro

enterprises. This value has been increased to 12% as part of the 2009 financing policy [59, 20]. From the

share capital of the North Sudan Banks they support through the provision of technical experts for

sponsoring banks. The new policy instrument (12% ) has been calculated to be in the value of SDP 832

million [59]. There is a need to highlight that North Sudan practices only the Islamic approach to banking in

its overall financial dealings. Researchers recommend the need for the introduction of credit and other

financial services among the economically active poor and small business developers to help them promote

their income-generating activities, satisfy the basic needs of their families, and cross the poverty line into

self sufficiency [60]. The primary cause for this shortage was deemed to be the lack of among banks and

financial institutions with issues pertaining to poverty alleviation [61], given the stringent conditions

required by traditional formal financing institutions which render the poor not credit worthy [62].

2.6.2 The Religious Sector

Zakat is an Islamic institution introduced since the inception of Islam as a mechanism for social solidarity

and redistribution of income and wealth in society [63, 43]. Zakat is a religious obligation on rich and well-

off Muslims, which they should pay as a specified portion of their wealth annually for the benefit of the poor

and the needy. In North Sudan, a public agency known as Zakat Chamber is saddled with the

responsibility of collection and distribution of proceeds to beneficiaries in accordance with Islamic

regulations. Currently, 61% of collected revenues are directed towards poverty alleviation. The said amount

can be gathered and paid out in kind or as cash payments. Although contrary opinions question on the

manner of Zakat fund distribution, it was suggested that such funds should be better capitalized at helping

the poor become more productive through financing their income-generating activities rather than in the

form of handouts to enhance consumption. Some would even advocate the financing of projects to relieve

unemployment [63, 64].

2.6.3 Development Agencies

The Food and Agriculture Organization (FAO) reported that over 100 development agencies are directly

involved in the coordination of activities with active support of some public officials, in providing

microcredit, emergency loans, medical care, and educational services to poor people in North Sudan [12,

65]. Additionally, several rural development projects include components of microfinance support. NGOs

came into the country for relief purposes to help alleviate the impact of droughts or civil wars. When

conditions improved and became more stable, they turned their attentions to development activities mainly

through microcredit. However, from the training activities carried out by these organizations with the

collaboration of local NGOs, it was evident that the poor were by no means entrepreneurs who were just in

need of money to start successful businesses [24]. Actually, they lacked almost every type of business skill;

particularly project identification, book keeping, and rudimentary of accounting as well as necessary

management skills to keep even small businesses running. This was in spite of the fact that most of the

clients who were involved in the scheme are women who were relatively literate or even well-educated [7].

Hence, these development agencies supports in providing corporate governance by helping them do things

more appropriately.

2.6.4 The Public Sector

It is important to note that there are many other organizations that engage formally or informally in the

business of microcredit. States suffering from insurgency and political conflict situations, such as DarFur,

Blue Nile, and Southern Kordofan, have developed their own microfinance plans as part of their

rehabilitation schemes [66]. Apparently, the government earmarked SDP 2 billion for microcredit in Blue

Nile state to provide loans for refugees returning from neighboring countries and others affected by the civil

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war [20]. In the same way, the governor of Northern Dar Fur budgeted the sum of SDP 200M for micro

financing targeting the rehabilitation of those displaced by the war. However responding to the incidence of

unemployment among university graduates, the federal government earmarked SDP 100 million under the

management of the Ministry of Social affairs, the Savings and Social Development Bank, and the Farmers

Bank for what is chosen as the graduates employment subsidize [66]. The purpose of the fund was to issue

loans for self-employment projects identified by graduates who could not find jobs in public and the formal

private sector.

2.7 THE CHALLENGES OF THE POLICY IN NORTH SUDAN

Microfinance is important and influential tool to combat poverty in many countries over the world. Thus,

banks in North Sudan entered the field of microfinance with the vision that it is the most proper tool to

achieve their social role. In addition to commercial and specialized banks, microfinance is provided through

a wide range of social programs, national and international NGOs and social and charitable funds [69].

Current efforts in the Sudanese micro credit industry shows that the government has approved the

establishment of two agencies aimed at creating employment opportunities for women and youths in the

country. Also the new partnership of the Central Bank of North Sudan with the Islamic Development Bank

(IDB), to establish a jointly funded micro finance firm has paid off with a set of capital from the government

to the tune of US $42 millions. This fund is to be invested in microfinance businesses to support especially

women and youths in entrepreneurial ventures [69]. The recommendations of the Islamic Microfinance

Forum, which was organized by the Center of Studies of Islam and Contemporary World in collaboration

with the International Info-Vision Center for Training in Malaysia, have called for establishment of

specialized units and centers under umbrella of the Central Bank of North Sudan [65]. Recent evidence

shows that the GDP of North Sudan declined from 5% in 2010 to 2.8% in 2011 due to the secession of

South Sudan reducing the population by about 20% and oil revenue by 75%. Average inflation surged to

20% in 2011, up from 15% in 2010, owing to the rise in food prices and the depreciation of the North Sudan

pound [70]. According to UNDP [65], the incidence of poverty in North Sudan stood at 46.5%. The poverty

gap ratio and the poverty severity index stood at 16.2% and 7.8% %, respectively. This signifies how deep

and severe poverty is in North Sudan. About 44.8% of the population of North Sudan are consuming below

food poverty line of 69 SDG per month (USD 14). Food poverty index is higher in rural (55%) than urban

areas (28%). Employment-to-population rate stood at 31.06% and unemployment rate stood at 17%. Youth

(15-24) unemployment rate stood at 25.4%.GDP real growth rate is -0.2% (2011) and GDP per capita

(PPP) is USD 3,000 (2011). Consequently, most stakeholders in North Sudan understate the importance of

sustainability in the provision of microfinance. Despite ambitious development plans, extensive work done

on policy and a large amount of funds available, microfinance remains in its infancy and astonishingly not

much effort has been undertaken to assess their performance [69, 38].

3.0 CONCLUSION

This study offers a review of literature with the aim to understand the structure of micro enterprise financing

in various countries. We emphasize on poor women in the rural community of developing countries. This

review finds that the increasing rise of micro enterprise financing schemes as an approach for poverty

reduction and financial breakthrough makes the study on micro enterprises an essential aspect for MFIs,

public policy makers, development agencies and other stakeholders. By understanding the effectiveness of

micro finance schemes in general, policy makers could examine the broad essentials of micro women

enterprise financing especially in Sudan, hence formulating effective policies to help alleviate women

poverty. This pave ways for economic development through household empowerment of the female

gender. This is very important because the women enterprises in North Sudan has witnessed a slow growth

over the years particularly recently that the economic resources of the nation has dwindled due to the recent

breakaway of the cashflow region into another sovereign nation (South Sudan).

From our review, we posit that financing micro enterprises offers an avenue to make substantial differences

in the lives of millions of poor women in the developing countries and efforts should be channeled by the

government and development agencies to encourage this mechanism. Equity and efficiency arguments for

targeting credit to women are critically sound. Liberating this group may lead the whole family to benefit.

Targeting women entrepreneurs has proved to be successful in various settings projected in this literature

review. An efficient economic development instrument for this group has resulted in the women

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entrepreneurs actions to invest the revenues from their businesses for enhancement of their childrens

education and well-being. It generates profound impact on the lives of their families and communities.

A clear implication of this review is the need for both theorists and practitioners to study interventions on

educating and training the women entrepreneurs on management of funds, growing the businesses and

sustaining them. Imbibing them with the knowledge of sensing business opportunities, managing business

operations as well as evaluating between feasible and non feasible economic endeavors is necessary. In

addition, forum and open communication between MFIs and the women entrepreneurs in evaluating their

achievement across a continuum or via a longitudinal study are point of departures for better practices in not

only North Sudan but also the southern state. These are inputs for further empirical examinations and future

enhanced framework towards alleviating poverty among the female gender.

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Liberating Women from Poverty via Micro Financing: A Review of Sudan and Selected Countries

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