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Microfinance is adapted to African needs

Source : Jeune Afrique

More and more European funds are being invested in African microfinance. In a recent interview with the magazine Jeune Afrique, the head of PAI Partners (one of Europe's largest private equity funds, which can invest 2.7 billion euros from now until late 2011), said that he would like to invest more in African businesses. He highlighted the need for private equity to support private sector business... and microlending for the people.
Lionel Zinsou, the French-Beninese head of PAI Partners, said, "A bank is meant to finance loans of several million euros. You cannot ask a bank to provide one million loans worth a few hundred euros. The bank would lose money just managing all of that. Even an interest rate of 100% (see article about rates) would not be high enough to sustain such a high number of small loans. On the other hand, if you have a bank put all the microloans together into larger portfolios, then the bank can make it work. In this way, African banks will be very active in financing microfinance institutions."

Traduction : Catherine Jan