Institutional

Change
Learning Objectives
● Define all terms
● Explain and evaluate strategies to improve access to banking
including: microfinance and mobile banking
● Increase Women’s Empowerment
● Reduce corruption
● Establish property rights and land rights
Microfinance

Microfinance commonly known as microcredit, refers to credit (loans) in

small amounts to people who do not ordinarily have access to credit.
Microcredit is delivered to poor people through microfinance institutions.
Evidence on micro credit schemes indicates that these have a positive
impact on poverty reduction.
Controversial issues in microfinance

● Microcredit schemes may become a substitute for urgently needed

government anti-poverty policies.
● Micro credit schemes contribute to the growth of the informal economy.
● Poor and highly unskilled people may be harmed by micro credit.
● Interest rates in micro credit schemes are too high.
Mobile Banking
Mobile banking involves the use of mobile telephones to receive or send money and to pay bills.

The advantages offered by mobile banking include:

● ease of making payments to family and businesses with instant access and no delays in making
or receiving payments
● avoidance of having to travel long distances holding cash which may be stolen
● reduced costs of transferring money
● easier to get loans, insurance and other services that facilitate opening a business
● easier to stretch out payments for purchases of equipment needed for a business

The disadvantages of mobile banking:

● network problems, causing delays
● cost of the services, which is high in relation to very low incomes especially in rural areas,
though generally lower than banking services
● inability of some older people to read, which makes them more susceptible to fraud.
 Women’s Empowerment
Women represent 70% of the worlds poor and they earn 10% of the worlds income.

Positive externalities of women’s empowerment:

● Improvements in child health and nutrition and lower child mortality
● Improvements in educational attainment of children
● Quality of human resources
● Lower fertility (lower birth rates)

United Nations Population Fund identifies policies to eliminate inequalities between

women and men:
● Promoting education and skill development and employment
● Improving women's ability to earn income beyond traditional occupations
● Eliminating violence and discrimination against women
 Reducing Corruption
The international Monetary Fund notes the fighting against corruption requires political will to
create strong fiscal institutions that promote integrity and accountability throughout the public
sector

The recommended policies:

● Develop high levels of transparency and independent external scrutiny which allows audit
agencies and the public to provide supervision
● Focus on areas where there is a higher risk of corruption such as procurement, revenue
administration and natural resource management
● Cooperate with other countries to make it more difficult for corruption to take place across
borders
 Property Rights and Land Rights
Property rights based on titles will not provide the necessary legal protection for land based on
custom or communal use. Yet the ability of communities to secure land rights is crucially important
to sustainable development.
Secure land rights :
● Food security as they improve sustainable land use improve access to credit and increase
productivity of small farmers
● Contribute to gender equality when granted to women
● Contributes to poverty reduction

In order to secure land use rights, it is necessary to record individual and collective tenure rights of
the state and public sector, the private sector, indigenous peoples and other communities.