The Bank of Innovation and Partnership (BIP) a micro finance institution targeting the poor, with support from the Arab Gulf Program for Development (AGFUND) which is chaired by HRH Prince Talal of Saudi Arabia, has started operations in Sierra Leone. BIP though not yet officially launched has already started benefiting the people of this country.
The CEO of AGFUND Nasser Bakr Al-Kahtani in a press release from Riyadh Saudi Arabia on the 16th of December 2011, said AGFUND “model” for fighting poverty through micro loans is “derived from the vision and initiative” of Prince Talal. This he said is focused on establishing banks for the poor in the Arab world.
AGFUND has established banks for the poor in Yemen, Jordan, Bahrain and Syria and is also planning to set up banks in Lebanon and Syria targeting 5million beneficiaries by 2015. The Sierra Leone project is the first in Africa. Speaking to Awoko Business in Freetown on Wednesday Ayman Albarawi General Manager of BIP said the AGFUND funded project is here on the invitation of the Ministry of Trade and Industry and the President of the Republic of Sierra Leone Ernest Bai Koroma.
The Bank he said targets poor people who cannot access financial services provided by main stream financial institutions as exclusion of the poor from the financial system is now widely accepted globally as a major factor contributing to their inability to participate in national development process and the economy.
BIP therefore seeks to introduce and promote inclusive financial system in Sierra Leone that gives the poor access to micro finance loan program guided by Islamic sharia. “We don’t just give loans to people. We also train recipients on how to effectively manage the financial resources we give to them. We also provide them with business advisory services” Albarawi said. Adding “our major aim is to help them get out of poverty and they in turn help other poor people out of poverty” hence the principle “Support of the poor to the poor”.
Sierra Leone’s Micro finance strategy post rehabilitation (2005) aimed at sustainability, shifted from charity based donor-dependent approach which was characterized by corruption, to a market-based for-profits approach.
This has meant higher interest rates on micro loans beyond the reach of poor people, and “tighter” systemic barriers that has in effect kept the poor away.
The BIP project is designed to attract its intended target. 50 groups comprising of 7 women per group residing at Lumley, Wilkinson Road, Congo Town, and Aberdeen areas have so far benefitted from the pro-poor bank since it started disbursing loans in December 2011.
The six months loan cycle attracts a 2.5% interest rate and loans are not based on collateral but “social guarantee”. According to the Operations Manager of BIP Sierra Leone Victor Abdulai, a “minimum loan of Le600,000 was given to each woman for a start”.
HRH Prince Talal and Mr. Nasser Bakr Al-Kahtani are expected in Sierra Leone for the grand launching of BIP, on a date to be made public soon.