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Microcredit regulations, challenges, and operations in cape verde (effects of microcredit in fostering financial inclusion in cape verde
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As an individual component, this paper investigated the various microcredit regulations,
challenges faced by these small and medium sized businesses, and key characteristics on their
operations through field interviews that was conducted in Cape Verde on some of the key
stakeholders (representative of the Central Bank of Cape Verde and the Ministry of Finance).
Cape Verde is an archipelago country composed of 9 inhabited islands with a combined land
area of about 4,033 square kilometres. It is ranked 110 out of 137 countries in terms of its
global competitiveness, and has one of its most problematic factors for doing business as access
to financing facilities for entrepreneurs. This has mitigated the expansion of small and medium
sized business structures (SME´s), and contributed to significantly to the predominance of the
conduct of economic activities by informal SME´s which are dispersed across the nine
inhabited islands.
This study found that the microfinance offices at the Central Bank (BCV) started operation in
the year 2019, although its regulations have been in place since 2016. The study found that one
of the core advantages of the microcredit in Cape Verde which makes it desirable by the
members of the public and businesses is its ease of accessibility with no collateral facilities.
In terms of financial transaction, a majority of transactions are done in cash.
Furthermore, the study equally found aside from absence of basic finance facility, financial
literacy, and the absence of coordinated social data, and a centralized information access
system where both the public, the Central Bank, and the various MFI´s can access useful
information that contains key indicators, interest rates, and repayment mechanisms a strong
concern. In other to provide the credit applicant with basic financial skills, the respective MFI
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Financial inclusion Microcredit Cabo verde Msmes