Comments on Microcredit for the Poor

Publication Date: 2004
Document Type: Paper

View this Document   Email this Document

Does lack of cooperative education result in failure of savings and credit groups?

This paper views microfinance as one side of the ‘triangle of production’, the other sides being inputs and markets. It highlights that:

• The biggest problems of credit allocation is related to credit reimbursement.
• Lack of education about cooperatives is the major reason for failure of savings and credit co-operatives.
• Microcredit should aim at the creation of Non-Agricultural Employment (NAE) by the promotion of small scale enterprises in the rural areas alongwith the advancement of agriculture.
• Poor may be enabled to acquire credit through construction of an efficient technique, which enables them to obtain credit and repay it.

The paper concludes that allocation of credit to the poor by itself is not sufficient to create the appropriate conditions. The microcredit project should contain the following components:

• Production and production management knowledge as well as extension and cooperative education work.
• The production stage should be followed by the credit and saving stage, then supply of inputs stage followed by marketing stage.