3 ms·
The problem is lending is extremely expensive. The amounts people want to borrow are tiny, so the logistics involved themselves become a huge expense. Further,
by thawaway1837 7y ago
The problem is lending is extremely expensive. The amounts people want to borrow are tiny, so the logistics involved themselves become a huge expense. Further, in many places where micro finance took off, there is a lack of ids, digital tracking, or even phones and addresses you can either contact or identify the borrowers by.
Micro finances genius was to offload enforcement costs to the community at large, and to focus lending to women.
Today where everyone has cellphones, a lot of the original expenses with lending to small scale borrowers have disappeared, and the cell phone itself becomes an ID.
- cookie_monsta 7y ago> Today where everyone has cellphones, a lot of the original expenses with lending to small scale borrowers have disappeared, and the cell phone itself becomes an ID. yeah... not so much in places where you can get a prepaid SIM card with no ID from the corner store for pennies. I agree with your other points, though - only lending to women and only forming groups consisting of women from the same village/community are absolute bedrock requirements for getting microcredit to work
- 9nGQluzmnq3M 7y agoYou can't get a SIM in China without showing & registering your ID, and you can't get access to payment facilities without additional verification (link to bank, referral from user, etc). There are of course ways around this, but they're non-trivial.