There is limited access to loans in South Sudan. Commercial banks are the major loan providers, with only a few providing these loans. Banks are predominantly found in urban areas, and lending is based on credit worthiness of the borrower. Most loans are given to large firms, as such, lending policies are discriminatory in nature. Vehicle and housing loans are available by these banks, but not large loans such as agricultural and start-up capital. In terms of infrastructure, there is lack of well-trained staff, and those who are professionals are expensive to obtain due to high salary amounts.
Commercial banks and micro-finance institutions are the chief official loan providers in Afghanistan. Loans are available for both small and large businesses, up to 3 years. Some commercial banks give loans with collateral, while others do not. Sometimes loans are given based on the reputation of the borrower, which places low income people at a disadvantage. A non-record keeping form of borrowing called "Hawala" is also used to obtain loans. In this system, money is transferred (without actual movement) based exclusively on trust. Unstable power supply and well-trained staff are some of the infrastructural problems, although small improvements have been observed over the years.
Access to loans in general is very limited in Sierra Leone, especially in the case of business and agricultural loans. Micro-finance institutions provide assistance to people in rural areas. Informal credit facilities such as "Osusu," where savings are alternated among members, is also one of the methods of borrowing in this country. Some of the problems facing Sierra Leone's banking sector include under-staffing in relation to the number of customers being served, a lack of proper education of staff, and a poor state for banking and financing infrastructure.
Democratic Republic of the Congo
Obtaining a loan in the Democratic Republic of the Congo is difficult. There are micro-finance institutions available to help small and medium businesses, but they are cautious in lending, hence obtaining loans remains a huge problem. The majority of loans are available to large businesses, depending on assets and the availability of a guarantor. In terms of infrastructure, Congo has only a small number of banks, some of which are barely in good condition. According to the World Bank, the Democratic Republic of Congo is one of the most unsuitable environments for business.
Most of the Sudanese banks employ traditional Islamic standards in their activities, such as the elimination of interest on loans. Commercial banks provide loans for trade, construction, and other related areas, but hardly for agricultural activities. The major loan providers, especially for the poor, are nongovernmental organizations (NGOs). Some problems facing the Sudanese banking sector include a lack of trained professionals, the small size of banks (most of which are concentrated in urban areas), and the lack of capital flowing in and out of banks.
Lending in Palestine is highly conservative due to the high rates of poverty seen there. Commercial banks offer loans, but primarily to public sector workers. The chances of obtaining loans depend on a number of factors such as currency and assets of the individual or company demanding the loan. Non-bank services such as money lending is also one of the ways of obtaining loans. Some loans that are taken out include business and mortgage loans. Interest rates are not fixed. Outlook on infrastructure is generally positive, especially in the area of communications between financial institutions and customers.
The finance sector in Iraq is underdeveloped, and therefore obtaining a loan is very difficult. Very few of the populace have ever received a bank loan, and micro-finance is just starting to grow. However, majority of the banks have good performances, although there is need for expansion of the banking system which is relatively small. Interest rates are fixed, and short-term loans are more available for trade, than they are for real estate. Some of the major problems of the finance sector include, poor auditing skills and monitoring procedures for paying back loans.
Access to loans is problematic in Chad. Although commercial banks offer loans, they do so mostly to large corporations in big cities. Connections and level of familiarity with financial institutions plays a key role in obtaining finances. Some banks are reluctant to give loans because of the weak monitoring procedures for potential borrowers. Loans for real estate are available, but are again limited to large businesses and the wealthy. Micro-finance institutions are also available, but are not strong as some are reliant on donors. Financing to rural areas is also very limited. Credit reporting infrastructure such as collateral registries and credit bureau absent.
Guinea-Bissau has a weak and underdeveloped financial sector, due in part to the effects of the recent civil war. Short and medium-term lending to small and medium businesses is high, but private sector lending is very limited. Most of the loans are provided to finance cashew farming, as this is the country's main cash crop. Finance is also available for import and export trade. Micro-finance institutions are developing and not very efficient. In terms of infrastructure, bank penetration is very low and ATM machines limited in number.
Access to loans is difficult in Malawi, especially in its rural areas. Formal institutions such as Commercial banks offer loans to individuals and large business enterprises. Informal credit institutions such as money lenders and NGOs are also available and more readily accessible to the poor. High illiteracy rates especially in rural areas affect chances of obtaining loans. Poor infrastructural components, such as bad roads and inadequate electricity access, affect the functionality of the finance sector in Malawi. High interest rates of financial institutions and debt forgiveness also affects the finance sector.
Downsides of Low Levels of Private Credit
- Slows economic and social growth.
- Lack of competition between the public and private sector allowed to prevail.
- Discourages diversification and division of labor.
- May lead to increases in poverty rates.
Positive Effects of Low Levels of Private Credit
- Reductions in monopolies.
- Risks of default in paying back loans is reduced.
- Reductions in debt levels.