Microfinance in Sudan (3): A Factory Reset

No’man Yousif Mohamed
In the previous two articles, we examined Sudan’s microfinance crisis from two perspectives: the fragility of institutions and the erosion of their capacity, on the one hand, and the crisis of resources and recovery financing, on the other. However, addressing these two challenges cannot be achieved simply by providing fresh funding or rescuing struggling institutions individually, because the root of the problem runs much deeper.
The real question is this: does the microfinance sector today have the institutional architecture to turn resources into strong institutions, effective services, production, income, and employment opportunities?
This is the starting point for my personal vision of redesigning the Sudanese Company for Microfinance Development and transforming it into a National Microfinance Platform — a factory reset for the sector.
The idea is not to establish a new institution or expand an existing bureaucracy. Rather, it is to repurpose an existing entity so that it can play a broader national role, evolving from a development institution with limited functions into an effective and capable national platform that leads the microfinance industry in the post-war period, without managing institutions on a day-to-day basis or replacing the Central Bank in its supervisory and regulatory role.
From managing entities to designing the system
One of the main challenges facing microfinance in Sudan is the multiplicity of roles and fragmentation of instruments. The General Directorate of Financial Inclusion handles policy, regulation, and supervision; the Sudanese Company for Microfinance Development serves as the development and financing arm; and the wholesale microfinance guarantee agency, Tayseer, provides guarantee instruments and supports risk mitigation.
These different arms are not, in themselves, a problem. The problem arises when they do not operate within a clearly defined, integrated framework that specifies each party’s role, prevents overlapping responsibilities, and brings resources, information and capabilities together in pursuit of a common goal.
The proposed vision is therefore based on a simple equation: unified standards without abolishing institutions; coordination without merging roles; and strategic leadership without interference in day-to-day operations.
Under this arrangement, the General Directorate of Financial Inclusion would focus on policy and supervision, while the platform would assume responsibility for development and investment. Guarantee and risk-management instruments would retain their specialised functions, with all parties working together towards a single objective: building a vibrant, inclusive and sustainable microfinance sector.
What does the ‘National Microfinance Platform’ mean?
The proposed platform is not merely an administrative umbrella bringing institutions together under a single name. It represents a new operating model built around four interconnected functions.
First: Investment and capital development
The platform would help eligible institutions strengthen their capital bases through direct or indirect equity participation, or through appropriate capital-financing instruments, depending on each institution’s readiness, performance and governance.
Investment would thus become a means of building viable institutions, rather than simply injecting money into struggling entities in an attempt to rescue them.
Second: Wholesale financing and resource mobilisation
The platform would serve as a national vehicle for mobilising domestic and external resources and channelling long-term financing towards institutions capable of using it efficiently.
This role is particularly important during the recovery phase, when microfinance institutions need stable funding that matches the nature of the productive financing they provide.
The underlying principle, however, must remain clear: financing recovery does not mean refinancing failure. New funding should be tied to a reform plan, appropriate capitalisation, sound governance, risk management and a genuine capacity to resume operations.
Third: Capacity-building and governance
A strong microfinance industry cannot be built on money alone. The platform would therefore provide technical and institutional support in governance, financial management, risk management, product design, technological systems, human-resource development and strategic planning.
Financing itself would become an incentive for improving performance, with access to resources linked to institutional commitment, capacity and results.
Fourth: Data and impact measurement
It is impossible to lead an industry without knowing its true size, the performance of its institutions, the risks they face or the impact they generate.
The vision therefore proposes establishing a national microfinance data platform that provides comparable information on portfolios, clients, loan defaults, liquidity, governance, geographical coverage, and economic and social impact.
Data is not a peripheral technical function. It is one of the most important tools of modern economic leadership.
Three functions that would make the platform genuinely developmental
The vision I propose would measure the platform’s success not by the volume of funds it refinances, but by its ability to fulfil three essential functions in the microfinance industry.
1. Expanding access to efficient and effective microfinance services
The objective is not to increase the number of institutions, but to expand citizens’ and producers’ ability to access appropriate, sustainable financial services.
This means directing resources to priority regions, population groups, and economic sectors, while supporting institutions that can serve them efficiently.
2. Strengthening the institutional capacity of microfinance institutions
A weak institution does not become strong simply by receiving financing. Funding must therefore be linked to technical assistance, governance, risk management, systems development and capacity-building.
In this way, the platform would move beyond being a financier to become a partner in institution-building.
3. Integrating small-scale producers into the economy
This is the most important development objective. Microfinance is not an end in itself; it is a means of enabling economically active small-scale producers to increase production, raise incomes, create employment and integrate into value chains and markets.
The platform would therefore move beyond asking, ‘How much have we financed?’ and address a more important question:
What has changed in the producer’s life, and what has the financing contributed to the local economy?
Who would benefit from the platform?
The vision does not propose restricting the platform to state-level institutions. Subject to clear criteria, its umbrella would also extend to:
State-level microfinance institutions.
Local and rural institutions.
Federal microfinance institutions and companies owned by the private sector and licensed by the Central Bank.
However, joining the platform would not automatically entitle an institution to financing. The model is based on disciplined inclusion, determined by performance and institutional readiness.
The basic admission requirements would include a valid licence, an active board of directors, audited financial statements or an audit plan, acceptance of governance frameworks, and a commitment to sharing data.
Participation could be phased, progressing from operational participation to investment eligibility and then to strategic partnership, depending on the institution’s capabilities and needs.
The red lines are clear: no expropriation of ownership, no day-to-day management of institutions, and no financing without accountability.
How should the platform deal with struggling institutions?
This is a fundamental aspect of the proposed vision. Not every struggling institution is a failed one, just as meeting the minimum requirements does not necessarily mean that an institution is ready to receive additional resources.
Institutions should therefore be classified according to their financial and institutional circumstances into four categories:
Institutions with the capacity to grow.
Institutions requiring recapitalisation and reform.
Institutions requiring restructuring.
Institutions for which an orderly exit may be the best option.
The platform would thus become an instrument of economic restructuring rather than an open-ended bailout fund. The objective is to preserve the developmental function of microfinance, not to keep every entity alive regardless of its ability to remain viable.
The platform would strengthen institutions, not compete with them
For the proposal to succeed, the boundaries between the various roles must be clear:
The Central Bank sets policy, regulates and supervises.
The platform mobilises resources, invests, provides wholesale financing, builds capacity, manages economic risks at the development-system level, and supplies data and impact-measurement tools.
Microfinance institutions deliver services directly to clients and manage their own operations and portfolios.
Guarantee mechanisms mitigate credit risks within their respective mandates.
This division of responsibilities would make integration possible without creating a new administrative centre that dominates the sector.
A 24-month roadmap
The vision does not require many years before implementation can begin.
Phase One: Stabilisation — months 0–3
This phase would involve:
Adopting the vision.
Redefining the company’s role.
Freezing critical areas of functional overlap.
Classifying institutions.
Launching an emergency institutional rescue programme for the most vulnerable cases.
Establishing a high-level coordination mechanism among the relevant bodies.
Phase Two: Development — months 4–12
During this phase, the platform would be activated, eligible institutions brought on board, and the national data platform launched. Minimum systems and standards would be harmonised, domestic and external financing mobilised, and guarantee instruments and partnerships put into operation.
Phase Three: Sustainability — months 13–24
The platform would focus on restructuring non-viable institutions, deepening long-term partnerships, expanding productive financing, strengthening digital transformation, and consolidating its position as a permanent arm of development and financial inclusion.
How should the platform’s success be measured?
The platform’s success should not be measured solely by the number of agreements signed or the volume of money channelled through it. It should instead be assessed against indicators such as:
The number of institutions capable of surviving and growing.
Improved portfolio quality and reduced risk.
Increased access to financing in underserved areas.
Growth in productive financing.
Increases in beneficiaries’ incomes and productivity.
Greater capacity among institutions to attract long-term financing.
Improvements in governance and transparency.
The volume of external financing attracted by the sector.
The economic, social and environmental impact of financing.
Ultimately, impact must be the decisive measure of success, not merely the scale of activity.
Why is this vision important now?
Sudan is entering a period in which reconstruction requires more than major projects. Economic recovery must also begin at the household level, with smallholder farmers, artisans, small traders, service providers, and local enterprises. These are the natural constituency of microfinance.
Rebuilding the microfinance sector is therefore not a narrow banking issue; it is part of rebuilding the grassroots economy itself.
The Sudanese Company for Microfinance Development has an opportunity to redefine its role at this critical juncture, shifting from an entity that performs a limited set of functions to a national platform that engineers integration and drives development.
Such a platform would:
Strengthen institutions rather than manage them.
Empower institutions rather than compete with them.
Help translate policy into tangible outcomes without replacing the Central Bank.
Measure its success not only by what it finances, but by what it changes in institutions, markets and communities.
A final word
Saving Sudan’s microfinance sector will not be achieved through a single measure — whether increasing capital, injecting new resources or establishing additional institutions. What is needed is a carefully designed framework that governs the relationship between capital, resources, institutions, governance, data, markets, and the ultimate beneficiaries.
This is the essence of the proposed vision: redesigning the Sudanese Company for Microfinance Development is not about rebuilding the company for its own sake, but about rebuilding the role that Sudan’s microfinance industry needs, particularly in the post-war period.
If we succeed in establishing an overarching national platform capable of coordinating the sector, mobilising resources, strengthening institutions, expanding access and linking finance to production, microfinance could be transformed from a fragile sector waiting for recovery into one of the instruments that actively drives Sudan’s economic recovery.

Shortlink: https://sudanhorizon.com/?p=19366