| Project ID: 1236
Executive Board Document: EB-2002-77-R-25-REV-1
Microfinance and Microenterprise Development Project
Who are the beneficiaries? The target group consists of
approximately 200 000 persons, corresponding to about one third
of the national population or roughly 30 000 households. This includes
approximately 150 000 people living in rural areas and an additional
50 000 in the peri-urban and urban areas of the capital city. About
8 000 Djiboutian households will benefit directly from the project
through access to improved and reliable financial services, either
as members of savings and credit associations (SCAs) or through
the provision of non-financial assistance to microenterprises.
Why are they poor? Poverty among potential beneficiary
households is attributable to: (i) the effects of the protracted
political and social unrest that has affected the country; (ii)
limited assets base; (iii) lack of access to reliable financial
services that are essential for scaling up and diversifying income-generating
opportunities; (iv) frequent and severe periods of drought in predominantly
lowinput, low-output rainfed farming systems; (v) restricted opportunities
for marketing and commercialization of agricultural and locally
produced goods; and (vi) lack of access to essential rural and social
infrastructure. This situation is further aggravated by falling
employment levels in the capital since, up to now, urban employment
and remittances to rural areas had always been a fundamental coping
strategy for rural households. The worsening national economy has
been hit even further by the reduced size of the French military
base and the challenging structural adjustment programme negotiated
with the International Monetary Fund and currently under implementation.
What will the project do for them? The project will improve
beneficiaries’ access to regular, reliable financial resources so
that they may, inter alia, adopt improved technologies and undertake
a wider range of income-generating activities in rural, peri-urban
and urban areas, thereby improving their household incomes. At the
present time, beneficiaries have no access whatsoever to any type
of financial service owing to their inability to meet the conditions
set by the formal financial sector. Women will be able to participate
in SCAs, which will allow them to take up and/or scale up trading
and commercial activities that would be otherwise beyond their reach
due to lack of working capital. Increased incomes and the provision
of savings services will enable beneficiaries to cope better with
external shocks and help them to engage in sustainable economic
activities as a means of coping with and reducing poverty. This
will be enhanced by project assistance in the development and adoption
of a national microfinance strategy and related legal framework,
which will be the first of its kind in the country.
How will the beneficiaries participate in the project? Beneficiaries
will form into groups as a prerequisite to accessing financial services
through membership of SCAs. The project will support the establishment
and development, with necessary technical and financial assistance,
of a network of SCAs managed by local communities with a view to
building up confidence and creating/reinforcing a culture of credit
discipline. The very structure of self-reliant, member-owned and
-managed community-based SCAs, as proposed under the project, will
empower beneficiaries to participate in the selection and approval
of credit applications.
Loan Amount:
SDR 2.75 million (equivalent to approximately USD 3.59 million)
on highly concessional terms
Total project cost: USD 3.94 million
Cooperating Institution:
United Nations Office for Project Services (UNOPS)
|
