samaf at this time operates through two forms of intermediaries:

• Those that are members based Co-operatives Financial Institutions (CFIs) engaged in deposit taking activities as well as lending.
• Micro Finance Institutions (MFIs) who primarily provide a range of pro poor micro credit (no deposit taking) to their clients.

samaf has a mandate to regulate FSC’s who operate within a defined geographic district.

As defined by CGAP, a microfinance institution (MFI) is “an organization that provides financial services to the poor. This very broad definition includes a wide range of providers that vary in their legal structure, mission, and methodology. However, all share the common characteristic of providing financial services to clients who are poorer and more vulnerable than traditional bank clients.

During the 1970s and 1980s, the microenterprise movement led to the emergence of nongovernmental organizations (NGOs) that provided small loans for the poor. In the 1990s, a number of these institutions transformed themselves into formal financial institutions in order to access and on-lend client savings, thus enhancing their outreach.

Specialized microfinance institutions have proven that the poor are “bankable”. Today, formal institutions are rapidly absorbing the lessons learned about how to do small-transaction banking. Many of the newer players in microfinance such as commercial banks, have large existing branch networks, vast distribution outlets like automatic teller machines and the ability to make significant investments in technology that could bring financial services closer to poor clients. Increasingly, links among different types of service providers are emerging to offer considerable scope for extending access”.

Ownership structures of MFIs in SA are member-owned, like the CFIs described below; socially minded shareholders, who operate NGO through Section 21 non-profit enterprises and profit-maximizing shareholders, who have registered Private Limited Companies (PTY) Ltd. The types of services offered are defined in the National Credit Act as developmental finance. Non-regulated institutions are not generally allowed to provide savings or insurance.

samaf provides financial support to community based and the more traditional not-for profit service providers.

The term Cooperative Financial Institution (CFI) incorporates all forms and types of Financial Cooperatives including Financial Services Cooperatives (FSCs), Savings and Credit Co-operatives (SACCOs), Credit Unions and so called “Village Banks”. samaf mandate includes all these models who service the working and enterprising poor, located within peri rural and rural communities.

The definition of a Co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others. Co-operatives principles include voluntary and open membership, democratic member control, members economic participation, independence and autonomy, education training and information, cooperation amongst cooperatives and concern for the community.(www.ica.coop)