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6%), moneylenders (15%), and other sources (19%). Only 1% of the sample households had bank account.

2.3.0 Country experiences on micro-financing

2.3.1 Experience of Bangladesh

One of the most successful countries often mentioned in the development of microfinance is Bangladesh. Micro finance organizations like Grameen Bank, Bangladesh Rural Advancement Committee (BRAC), Proshika (PK), Association for Social Advancement (ASA), largest 20 credit NGOs (not including Grameen Bank), and Bangladesh Rural Development Board (BRDB) are operating in the country mentioned. For instance, the Grameen Bank, which was established in 1983 as a challenge to existing collateral-based financial system, has had a promising result. It operates exclusively for the poor on the promise that rural people, who won too little land, support themselves as farmers, can never the less make productive use of small loans and repays them on time. The bank also promotes social development by making the poor accountable to individually and socially. Such intermediation improves productivity and income of the poor. This, in turn, also improves their loan payment rate and hence contributes to the Grameen Bank’s financial Viability. As the result it is the most successful credit program for poor and this may be seen from the outreach status and loan recovery so that the bank’s loan recovery rate has consistently remained above 90 percent Pit and Khandker (1998).

2.3.2 Experience of some African Countries

Formalized micro finance institutions’ in Africa is a more recent phenomenon. The 1950s and 1960s led to a proliferation of rural leading programs that focused on the provision of subsidized credit by government development banks. After this period in 1980s, the replication of Bangladesh’s Grameen Bank began to be tested using primary donor funds to provide credit to a wide number of solidarity group members (Paxton and Fruman, 1998).

For our purpose, however, we will look at only two countries: Kenya and Burkina Faso- the former representing relatively densely populated region and the latter is less densely populated. For example, in Kenya KREB (Kenya Rural Enterprise Bank) is a micro finance institution serving the poor in rural and urban areas of Kenya. It was established as an intermediary NGO to provide financial and technical assistance to NGOs in Kenya that are involved in developing or promoting the development of micro and small enterprises. Since 1990, KREB has successfully transformed grants from its development partners into loan capital for nearly 30,000 businessmen and women. It has been able to do so at a positive return since 1994. KREB has distributed over Kenyan shilling 300 million each year since 1995 and has never run short of new customers.

The PPPCR (Le project de promotion du petit credit rural) has been particularly innovative in adopting the Grameen style of group lending to the conditions in Burkina Faso. Certainly the Sahelian region represents one of the most challenging environment for micro finance due to the combinations of failed prevails efforts low population density, poverty and illiteracy. To overcome some of these obstacles, PPPCR has departed from a pure Grameen replication and has adapted its own financial services and organization.

Like the Grameen Bank, PPPC