The economic situation of West African countries like Sierra Leone, Liberia, and Guinea has gone through a tumultuous time. Especially in the case of Sierra Leone where there has been an 11-year-long civil war. What is it like to be a digital immigrant in a developing country?
So this part of the African continent required the establishment of the Rural Finance and Community Improvement Programme. There are three areas of this part of the continent that require help as needed the development within the rural community, the enhancement of the rural financial condition, activities that can generate a sufficient amount of income, and the improvement and growth of small enterprises in these areas.
However, due to the adverse effects of the Ebola outbreak in the year of 2013, the plan was kind of disrupted. Statistical analysis was conducted in these three parts of the African continent after the Ebola outbreak, where it was found that all the major benefits that were initiated by the microfinance institutions were mainly for the benefit of business activities. And in terms of credit facilities, the microfinance institutions established well enough channels as the entire program was a big success getting an average score of 8. However, in terms of other kinds of training programs on community support and skills delivered were not that satisfactory.
This proves the fact that even though in some areas the microfinance institutions needed to work even more their role of it in these parts of the world is crucial for its economic emergence. The heavy shock effects that were delivered to it by the Ebola outbreak were one of the main reasons for the current economic condition of these West African countries. Now before we move ahead with the exact summary of the economic effects of the Ebola outbreak let’s have a look at the role of Microfiuannace institutions in these parts of the world.
What is MicroFianance?
The term MicroFinance can be specified as a banking-related service that can be delivered to various low-income groups of any society who do not have any other alternative for financial assistance. These are basically financial services delivered to the marginalized sections of society who do not have any kind of access to other banking services and Allianz launches Sharia-compliant mobile loan service.
In the context of these African countries like Sierra Leone and Liberia, microfinance institutions can be used as a weapon to combat poverty. The other main goal of these institutions was to create a big social impact in these developing countries of West Africa. However, the success of these Microfinance institutions depends on their sustainable operations. If it can cover the overall operational cost then only these institutions can survive and get success in these parts of the country.
- Microfinance schemes focus on the economic and social impact.
- Through these microfinance schemes, one can address financial accessibility, skill development, food, healthcare services, and the overall income rate of households.
- According to The World Bank microfinance institutions have provided support to more than 500 million of the population of the entire world.
- By the year 2021 microfinance operations have greatly benefitted more than 120 million of the population.
- In the context of the developing parts of the world also microfinance operations like IFC enhanced the credit reporting bureaus as was witnessed in more than 30 nations.
- The overall positive effect of microfinance operations is not only to give financial assistance to marginalized sections of people as it also helps in the case of small business enterprises which in turn can create jobs and contribute to the overall enhancement of the economic situation of the entire community.
Microfinance operations can be initiated through various types of operations like microcredit, small loans, microinsurance, saving accounts, and other kinds of payment services. With the proper knowledge of microfinance operations in mind, now let’s have a look at some of the areas of these three West African countries like Sierra Leone, Liberia, and Guinea where they can make huge differences.
What is the Role of MicroFinance in West African Countries?
The main goal of any microfinance operation is to give financial support to marginalized sections of society. All Microfinance schemes are naturally established for the sake of giving impoverished people a chance for self-sufficiency. Now in the context of developing countries like Sierra Leone, Liberia, and Guinea, these MFIs can easily establish Susanville and cost-effective financial services to all its low-income groups of people. Here are some of the roles these Microfinance institutions can have in these parts of the West African continent.
Enhancing the Standard of Living
It is found from the surveys in other developing countries like Bangladesh that these Microfinance Institutions can enhance the overall standard of living but for that, these schemes and institutions need to be managed sustainably. In a country like Bangladesh, it was witnessed that these microfinance institutions have given the opportunity to low-income people to have three meals a day as the overall improvement rate increased by more than 10% of the whole population. Thus it is proven that in any developing part of the world like Sierra Leone microfinance institutions can play a big role in improving the overall, standard of living as it is needed even more after the negative effects of the Ebola outbreak.
Benefits for the Rural Societies
In the context of rural communities like Sierra Leone, these microfinance institutions can effectively increase investment in micro-farming activities. In the case of any rural community, it is a proven fact that the place can get more benefits if funds can be invested in farming rather than other businesses. This can definitely benefit the rural societies of West African continents as these people will be more on micro-farming operations than other businesses.
Increase in Income Levels
One of the other main objectives of microfinance schemes is to increase the overall income rate as people can agree to these schemes for their enhanced financial state. Recent samplings and surveys conducted in other developing countries have proven the fact that there was a more than 250% increase in income levels. In the context of West African countries, the overall income levels need to be enhanced for the quality of community life. This can be made possible with the help of various microfinance institutions.
Improvement in Savings of Low-Income People
The benefits of the MFIs can also be spread out to household expenditures and savings as this can be really helpful for the low-income section of society. It is a proven fact as is seen in the case of Bangladesh where more than 3000 households have benefitted hugely from these microfinance schemes.
In the case of the West African countries, all the low-income people can get tremendous amounts of benefits from these microfinance institutions as they can handle all of their savings and household expenditures. Ultra-poor graduation is the strongest case so far for why financial services must be a part of the solution to extreme poverty.
However, due to the Ebola Outbreak, the current socioeconomic condition has worsened in these three parts of the West African continent as the cases have doubled in the last few weeks. If the virus outbreak is not mitigated immediately it can cause even more economic damage which can spread out of these three countries.
What was the Microfinance situation in Sierra Leone After Ebola Outbreak?
The overall microfinance situation has gone through various stages in these three countries in Africa as it has also tried to improve the financial sectors. One of the first instances of microfinance institutions in Sierra Leone was the Association of Rural Development. The ARD started its journey as a mini microinsurance company as it has several branches in Freetown and Makeni. In the initial stages, the ARD was giving loans that amounted to the range of 200000-5 million. Apart from this institution, there were also community banks and non-government organizations which provided small loans to various women in society.
However, after the ill effects of the Ebola Outbreaks, there were 80%-90% of economic losses within these parts of the African continent. Due to the low supply of workers, the entire microfinance section of these countries collapsed. The Ebola outbreak resulted in the illness of the employees and even death as this created a lot of void in the workforce in healthcare services. The overall negative effect of the epidemic has resulted in irregular treatments for seriously ill people.
These kinds of shortages in manpower and other resources have resulted in the panicked buying of resources. Which in turn has created a lot of shortages in resources within a very short amount of time. Thus financial inclusion from a consumer perspective can be required. The overall microfinance of these areas was majorly impacted by this epidemic as it was already pretty rough, to begin with. Within the three countries of West Africa, more than 50% of the population was already living the below poverty line as the microfinance situation has reached a halt due to the ill effects of the Ebola epidemic.
The Economic Effects of the Ebola Outbreak on the West African Countries
The entire Ebola epidemic has caused a massive catastrophic effect on the economic structure of West African countries like Liberia, Sierra Leone, and Guinea. These three countries within the West African continent have faced tremendous pressure economically due to the Ebola Outbreak. So much so that the GDP rates of Liberia have fallen more than 12% whereas, in the case of Sierra Leone, it has fallen more than 9%.
Apart from the economic slowdowns as well as health care services the microfinance institutions are also negatively impacted by this epidemic situation. More than 90% of the economic losses can be directed to recent HINI and SARS outbreaks. As all of these viruses combinedly have negatively affected the entire workforce of these three countries. People are buying stuff in a panic state which in turn has resulted in a shortage of essentials.
A lot of healthcare workers are falling ill causing a massive void in the workforce of healthcare services. This also negatively affected the healthcare services as a lot of seriously ill patients are not getting their required treatments. All of these have created a traumatic state of affairs for these three countries as these three parts of the West African place have seen the most damage due to this Ebola outbreak.
One of the main bad effects of this Ebola outbreak is the overall economic slowdown just like any other country. Even though in these three West African countries Sierra Leone, Liberia and Guinea the overall economic positions were already tough even before the epidemic. But it has become even worse as the overall GDP rates of the countries have dropped more than 10%. The entire economic condition was already tough, to begin with, in these three countries as more than 50% of the population was already living below the poverty line.
However, due to the Ebola outbreak, the entire condition has worsened even more as these three countries have faced the toughest challenge compared to all the other countries. Due to recent HINI and SARS outbreaks there were reportedly more than 90% of economic loss.
Closing of Business Operations
Apart from the economic slowdowns, there were multiple closings of business operations as which resulted in the overall growth in the industry. The low supply of workers can be the main reason for the closing down of business operations. Due to the poor health effects resulting from Ebola, the general workforce got reduced which resulted in the closing of various business operations. In the case of start-up businesses, all of these suffered from this shortage of workers as they were forced to shut down their enterprises. In the context of these West African countries, the closing down of businesses has resulted in more economic downfall.
Lower Supply of Healthcare Workers
The Ebola outbreak just like any other country has caused a major disruption in the healthcare workers in these three countries of Western Africa. With the ill effect of this virus, the majority of the healthcare workers in these three countries fell ill or died which resulted in a shortage of workers. This worsened the overall condition of the seriously ill patients as they were left untreated due to the absence of sufficient workers in the healthcare sectors.
The Collapse of the Healthcare System
The overall healthcare system of these three African countries was majorly impacted by this Ebola virus. The onslaught of the Ebola virus has rendered the entire healthcare system clueless as it collapsed under tremendous pressure. As a result, a lot of seriously ill patients did not get sufficient care. The shortage of healthcare workers as well as the increased panicking of patients clearly shows the collapse of the entire healthcare operations in these countries.
Shortages in Useful Resources
The increased panicking of the citizens has also caused a huge amount of void useful resources as most of them bought all the available resources in the marketplace. This caused a shortage in these resources as the other citizens were not able to buy a sufficient amount of products for their day-to-day lives.
Now that we have seen the ill effects of the Ebola outbreak on these three West African countries let’s have a look at how the microfinance institutions are taking precautionary measures to mitigate this issue. As we have seen earlier the microfinance institutions were already present in these three African countries but due to the Ebola effect some of these had to take some cautionary measures to combat this situation.
Precautionary Measures Taken by Microfinance Institutions in West African Countries
BRAC Liberia is one of the biggest Microfinance institutions in Africa due to the Ebola effect this organization has stalled loan operations for almost a month. In the context of Sierra Leone also BRAC has also closed its loan operations for some time. There are some lenders who take an easy approach to repayment structures for all the guaranteed clients.
During the time of financial need as most microfinance institutions were struggling to continue any sort of financial assistance these were using all the non-lending options to mitigate the virus spread. In this way, the microfinance institutions were trying to support the overall resilience of the community during the time of this Ebola crisis.
Different sorts of microfinance institutions like BRAC Sierra Leone and Liberia have offered health communication awareness campaigns for the local citizens. As all of this awareness was provided through one on one meetings, group meetings, and street theatre. A lot of community healthcare providers have participated in these kinds of actions.
In recent scenarios, the BRAC microfinance institutions have focused on different platforms for their awareness campaigns radio. Different institutions also focused on offering prevention supplies for the betterment of public health.
In the context of Liberia, there was also Foundation for Women which was also a microfinance foundation that offers advice to the entire community on how they can fight against this virus. This came after the top five resources of 2013 on the financial inclusion of women.
Frequently Asked Questions (FAQs)
Q1. What was the economic burden of Ebola?
The Ebola virus mainly affected the transportation process of agricultural goods. As a result, most of the workers refused to go to any contaminated area which in turn decreased the number of traders. In the Western part of Africa three countries like Sierra Leone, Liberia, and Guinea most of their GDP rates have fallen due to the bad effects of Ebola.
Q2. What economic factors did Ebola have?
Ebola outbreaks have negatively impacted the GDP rates of certain countries. Apart from these it also slowed down the overall economic state of the countries. The workforce of the country has also decreased especially in the healthcare sector which resulted in the absence of services for critically ill people.
Q3. What are some of the most impacted African countries by Ebola?
Some of the most impacted counties by Ebola were the Western part of Africa. Some of these places were Sierra Leone, Liberia, and Guinea. In most of these countries, there was more than a 9%-12% decrease in the overall GDP rates due to the Ebola virus.
Q4. Can Microfinance institutions help the Ebola-affected countries?
Microfinance institutions have already helped in the case of these three African countries after the ill effects of the Ebola Virus. Some of them like BRAC Sierra Leone have offered health awareness campaigns so that the entire community can come together to fight against this virus.
The overall impact of the Ebola epidemic has reached developed countries like the U.S. as well as Obama had announced(back then) a major increase in response to fighting this epidemic in these three African countries. The country has sent more than 400000 kits for emergency families in Western Africa. This move was mainly made for the sake that it can awaken a greater global cation from other countries as well. As more than 2400 people have already succumbed to this virus the time has come for combined effort worldwide to mitigate this issue.
- Jonas Taylor is a financial expert and experienced writer with a focus on finance news, accounting software, and related topics. He has a talent for explaining complex financial concepts in an accessible way and has published high-quality content in various publications. He is dedicated to delivering valuable information to readers, staying up-to-date with financial news and trends, and sharing his expertise with others.
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