Tejal Desai, KF16, Sierra Leone

“Microfinance is not aid. This is the common misconception.” The words echoed through my head during a morning meeting at BRAC Sierra Leone’s country office with microfinance representatives from various organizations and banks in Sierra Leone, all present to discuss the state of local microfinance. I learned that an overwhelming majority of these microfinance providers shared a common challenge: scaling microfinance and infusing economic sustainability into an environment dominated by aid and financial dependency.

Aid: What does it mean for a country recovering from a devastating decade-long civil war that killed over 50,000 of its people? And what does it mean for microfinance organizations that aim to loosen the leash from dependency and push for sustainability? After taking an okada ride through Sierra Leone’s capital, Freetown, one may find the presence of international aid ubiquitous, and acting as a double-edged sword in the fight against poverty.

Two Edges, One Battle

A family planning health campaign sponsored by UNFPA, United Nations Population Fund.

The first edge of the sword has undeniably achieved great feats for Sierra Leone. Since 2001, international aid has helped Sierra Leone take tremendous strides in healthcare, democracy, human rights, and the fight against HIV/AIDS. Donors and organizations such as UNICEF have started to offer pregnant women and mothers with children under the age of five free healthcare, drastically reducing child and maternal mortality. Additionally, private and public funding is being utilized to build and improve roads and public health facilities throughout Sierra Leone.

The other edge of the sword, however, has created a barrier for sustainable growth and capacity-building. Microfinance representatives in Sierra Leone shared that they have often faced difficulty convincing unbanked communities who lack access to the financial mainstream of the self-sustainability and longer-term return on invest and growth associated with microfinance. Due to the infiltration of aid for many socioeconomic services and assistance programs, microfinance loans, according to local reps, are commonly perceived as aid funds, and on occasion, are not repaid by clients. As a result, the organizations providing these loans have to write off more loans as default or delinquent, take on more debt, and struggle to keep their own services afloat.

Aid in Sierra Leone: helpful or harmful for development?

Although aid has created positive changes in health and infrastructure in Sierra Leone, and will continue to help the country make strides as it recovers from the impact of war, it will not win this battle on poverty alone. It will clearly require more than a band-aid solution to foster growth, raise employment, improve health, reduce debt, and create opportunities for economic growth. Hopefully over time, microfinance will become one of  many prominent factors helping shift an economy away from dependency, and towards a more self-sustaining Sierra Leone.

Tejal Desai is a Kiva Fellow serving in Freetown, Sierra Leone. She is working at BRAC Sierra Leone, and encourages you to support entrepreneurship, prosperity, and sustainability in Sierra Leone by joining BRAC Sierra Leone’s lending team and loaning to a BRAC borrower.  To learn more about the impact of BRAC Sierra Leone’s small enterprise loan, click here.


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