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Microcredit, a lever for economic self-sufficiency in Chad

In 2016, Chad launched the National Development Plan (Plan de Développement National, PND) for the period 2017-2021, based on the strategy “Vision 2030, the Chad we want”. The National Strategy for the Development of the Private Sector (Stratégie Nationale du Développement du Secteur Privé, SNDSP) for 2018-2021 stems from this plan and is designed to ensure inclusive development in Chad. Such a development is one that ensures that all populations, regardless of their location (rural, urban), have consistent incomes and acceptable access to basic infrastructure. This is why the proposed diversification strategy has prioritised the promotion of sectors with high job creation potential. In this context, microfinance is considered as one of the vectors for the promotion of the private sector. To this end, the government, in cooperation with the international community, will have to evaluate the existing systems and develop a realistic strategy to promote Microfinance throughout the national territory.
Co-financed by the European Union via the Emergency Trust Fund (EUTF) and the French Development Agency (AFD), the Inclusive Development Programme in Host Areas in Chad (Développement Inclusif des Zones d’Accueil au Tchad, DIZA) is one of the successful projects in Chad. DIZA aims to improve the living conditions and resilience of indigenous, refugee and returnee populations in Chad’s host areas through support for inclusive local development in order to minimize the factors contributing to inter-community tensions. This objective is achieved through micro-credit schemes for vulnerable people, refugees, returnees and people from local communities in Logone Oriental, Mandoul, Moyen Chari and Ouaddaï, Sila and Salamat, far from the capital. As part of the operationalisation of the Sahel Alliance in the field, the DIZA programme has a budget of 21.5 million euros and has been implemented since 1st November 2018 by two consortia of NGOs under the leadership of Caritas Switzerland in the South and Concern World Wide in the East. The UNHCR is also associated with the project.

SUPPORTING ACCESS TO BASIC SERVICES
One of the driving forces behind the project is to support access to basic services and social protection mechanisms for all populations through the creation of community investment funds. The aim is to provide assistance for the operation and maintenance of essential services and access to savings and credit. DIZA helps Village Savings and Credit Associations (AVEC) in the provinces of Logone Oriental and Mandoul strengthen their internal management, mobilise funds and involve their members to ensure the sustainability of their activities. In April 2020, 99 AVECs comprising a total of 1595 members mobilised savings of more than 25 million FCFA.
With the support of the DIZA project, a women’s group in Kaba-Roangar, a village located in the Logone Oriental, was able to restructure itself and adopt specific internal rules for their AVEC. The support offered by the project enabled them to revamp their structure as well as their method of subscription. For this AVEC, a purchase share costs 500 CFA francs. Members of the group can buy up to five shares during a subscription cycle. Women who have already benefited from credit opportunities explain that “the resource has enabled them, among other things, to enrol their children in school or to pay health-related costs”. Repayment is subsequently made at a low interest rate (repayment in the amount of 22,000 FCFA for a 20,000 FCFA loan).

STRENGTHENING JOB CREATION
The second objective of the DIZA programme is to strengthen the creation of economic opportunities and jobs in order to empower people to achieve economic self-sufficiency, food and nutrition security and resilience. With this aim in mind, a savings and credit bank was inaugurated in Goré in January 2020 as part of the DIZA project. The operation of the Goré savings and credit bank allows micro-credit beneficiaries a certain degree of financial independence and ensures resilient economic activities. Significant efforts to raise awareness and to educate will be expended during the next years of project implementation. Indeed, the savings culture remains weak in the regions in the South of Chad, mainly because of the various barriers that affect supply and demand in terms of financial products (e.g. lack of services, the fact that much of the income comes from agricultural activities that are highly vulnerable to climatic hazards, lack of trust). A close link will also be established with the AVECs that are supported by the project in order to guide these groups towards a transition to a more institutionalized system. Households will be provided the opportunity to receive advice on financial management, savings, credit and the management of the family budget.
It should be noted that the success of microfinance projects is bolstered by empowering economic circuits usually managed by people with real expertise in issues related to these often economically underprivileged regions. Encouraging actions of this type in connection with the private sector is one of the priorities of the Sahel Alliance as a coordination platform.

DIZA concomitantly carries out actions towards strengthening local consultation mechanisms between populations, local authorities, the private sector, technical services and stakeholders, particularly in the drafting of local development plans and the prioritisation of labour-intensive projects. This component of the project is part of one of the priority sectors of the Sahel Alliance, namely governance, and involves the various contributions of stakeholders in the field.

 

Photo credit:  AFD – Naéma Klouche 

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