Headquartered in London, Barclays Bank is a financial services group engaged in banking, investment banking and investment management with a very large international presence in Europe, the USA, Africa and Asia. Barclays is one of the largest financial services companies in the world with over 25 million clients and reported ‘05 pre-tax profits of £5,280m.
In December of 2005, Barclays entered the microfinance sector via a pilot program in the west African country of Ghana. This initiative combines modern financial services with Susu collection, a form of ancient African banking in which collectors personally gather income from their clients and return it at the end of each month – minus a fee (p.56). This collection method ensures greater security for the money than the clients could other wise guarantee themselves. The Susu also lend small amounts of money and make monthly payments on behalf of their clients. The Barclays microfinance initiative has three parts:
- A specialized bank account for Susu collectors, including the provision of capital for on-lending to their clients;
- Training programs for Susu collectors; and
- Financial literacy and education programs for Susu clients
Derban, a Ghanaian Susu client, says he chose the Susu collection model because it is the “most traditional and the most popular.” Other strengths of this collection method are collectors’ local market intelligence and their interaction with clients through daily visits. Clients of this pilot program, whose collective income amounts to around £75 million, are generally excluded from mainstream banking services (p.56).
Margaret Mwanakatwe, MD of Barclays Bank of Ghana Limited describes the project by saying, “What we are doing is somewhat unique. Not only are we creating an account for Susu Collectors to deposit their funds, we are also providing them with loans of their own, which they can ‘lend-on’ to their customers, helping them build their capital. In the process, we are laying the building blocks for a truly financially inclusive society.”
Barclays has committed approximately £227,000 to this project and will measure the success of the pilot project in terms of the rate of repayments, and the number of deposits left in Barclays’ accounts. Additionally, Barclays is currently developing a microfinance policy which will ensure the expansion of microfinance activities in the upcoming years.
Additional Resources
1. ING Bank: “A Billion to Gain? A study on global financial institutions and microfinance,” February, 20062. Barclays 3. Dutch Involvement in International Partnerships: “Microfinance – Credit and Credibility”
4. Barclays Press Release: “Barclays Bank of Ghana Limited Launches Microbanking” December 19, 2005
