Dissertations / Theses on the topic 'Microfinance Rural development'

Peru's microfinance market is dynamic and is comprised of a plethora of financial institutions that offer numerous microfinance services. With increasingly more institutions adding microfinance to their loan portfolio, and with no interest rate cap on microloans in Peru, what impact will this growing market have on the poor? In the past, microfinance institutions (MFIs) have had clients abuse the system, but increased transparency between microfinance institutions and new managing practices are now used to minimize adverse selection. Yet as the microfinance market expands with more large banks gaining control how are borrowers, particularly the most vulnerable, going to be impacted? This, paper evaluates the dynamics of how microfinance institutions have emerged and evolved throughout Latin America and then introduces an atypical model, the Uniones de Credito y Ahorro (UNICA). Six UNICA programs from rural villages outside Cayaltí are evaluated using both aggregate loan data that measures the frequency of loan use in the village, and surveys with open-ended response questions to bring in UNICA members' perspective. With the data collected this paper attempts to understand the diverse factors that make the UNICA approach different from the traditional Latin American model. And ultimately strives to discover whether the UNICA model provides distinctive benefits to the borrowers and the financial markets that are not provided by traditional Latin American MFI models.

This study looked at the impact of microfinance grants on rural development in the Kavango East Region administered by the Kavango East Regional Council. The Kavango East Region is the poorest region in Namibia, with an unemployment rate that is higher than the national rate. With these statistics as background, the microfinance grant was proposed as a vital tool in alleviating the poverty-stricken region and curbing the high unemployment rate. Poverty alleviation through asset accumulation and food security, financial inclusion through opening of business banking accounts, business growth and diversification were variables considered to indicate rural development. The literature indicates that microfinance has both positive and negative impacts on poor people‟s income by increasing and decreasing their incomes, respectively. Available evidence also indicates minimal proof that microfinance impacts job creation and should, therefore, not be promoted as a means to achieve long-term goals. A qualitative research methodology using the descriptive survey design was used to collect data. The analysis of the study shows that microfinance grants have not positively impacted rural development as anticipated; beneficiaries have not registered growth or diversification in their businesses. However, there has been a positive impact on financial inclusion variable as business banking accounts were opened. Overall, the positive impacts of microfinance grants are very minimal due to relatively small market sizes which reduce chances to accumulate asset from the business operations. The grants have however enabled food security as beneficiaries‟ businesses are more for subsistence than commercial purposes.

Le secteur agricole regroupe non seulement plus de la moitié de la population rurale pauvre des Pays les Moins Avancés (PMA), mais aussi plus de 60 % de la population active. La majorité des ruraux pauvres tire le principal de ses revenus de l’activité agricole. Le développement agricole peut donc être considéré comme un puissant facteur d’atténuation de la pauvreté. Cependant, le problème du financement des petites exploitations familiales dans les PMA reste un problème non résolu.Si l’on considère que la microfinance est un outil de réduction de la pauvreté, quel que soit le secteur d’activité auquel elle s’applique, alors l’effet optimal de sa mise en oeuvre devrait être constaté là où se trouve la plus grande partie de la population pauvre. Le secteur agricole des Pays Moins Avancés devient alors le terrain privilégié de cette expérimentation. Le défi qui s’impose à la microfinance est donc non seulement de fournir le capital aux agriculteurs, leur permettant d’accroître leur productivité, mais aussi de favoriser une agriculture au service de l'environnement.Par conséquent, le rôle spécifique de la microfinance dans l’agriculture, et plus particulièrement pour les petites exploitations familiales des PMA, est donc questionné.La microfinance saura-t-elle se présenter comme une alternative aux problèmes de financement de l’agriculture familiale ou ne restera-t-elle qu’une illusion ?
In the Less Advanced Countries, the agricultural sector is constituted not only by more than half of the rural population but also by over 60% of the active population. The majority of the poor rural people obtain their main resource incomes from the agricultural activities. The agricultural development could thus be considered as an attenuation factor of the poverty. However, the problem of the financial support toward the small family agricultural exploitation in the Less Advanced Countries still remains an unsolved issue.If microfinance is considered to be a tool for reducing poverty in any activity sector where it is used, then the optimal effect of its implementation should be observed in the area where the majority of poor population is located. So, the agricultural sector of the Less Advanced Countries becomes a privileged field of this experimentation. The challenge that the microfinance has to face is not only to provide financial support to the farmers for allowing them to increase their productivity, but also to promote an agriculture contributing to the environment.As a result, the specific role of the microfinance in the field of agriculture, in particularly for the small family agricultural exploitation in the Less Advanced Countries is questioned.Will the microfinance be able to present itself as an alternative for the issue of the financial support toward the family farms or will it be just an illusion?

Thesis (M. Dev.) --University of Limpopo, 2013
Rural areas of Zimbabwe suffered acute shortage of banking services. Conventional banks feared high transaction costs and lack of collateral associated with this market segment. This research aimed at evaluating impact of microfinance on rural farming sector. Finding out the general banking and microfinance situation, appraising scheme impact and making recommendations were the research’s objectives. A descriptive research design was used. A population of 3,400 members constituting 289 Investment Groups (IGs) was used. Quota and purposive sampling were used to select 20 IGs and 154 individual respondents. Sample survey, Focus Group Discussions (FGD) and Key Informant Interviews (KII) were data collection methods. The survey findings showed that the five Department For International Development’s (DFID’s) Sustainable Livelihoods Approach (SLA) asset bases increased more for the treatment than the control groups, signifying microfinance impact. Wealth ranking, meant to triangulate survey results, depicted upward mobility of groups; old ones transcending to rich categories while the new moved into top poor rank, also demonstrating impact. Further, scheme achieved women empowerment basing on their numerical predominance and improved self-confidence, signifying impact. The study recommends that Farmers’ Association of Community self-Help Investment Groups (FACHIG) resuscitated its savings component using the Self-Help Group (SHG) thrift approach to ensure scheme sustainability. In addition, climate change, a phenomenon which increased droughts, could have dampened impact. However, the research did not delve into this area, compelling a future study.

Thesis (PhD)--Stellenbosch University, 2011.
ENGLISH ABSTRACT: Poverty in South Africa’s rural areas is complex and severe, especially among female-headed households. The marginalisation of South Africa’s rural areas over a period of decades resulted in an acute lack of economic opportunities, limited infrastructure and a serious breakdown of social capital. Women living in rural areas are particularly poor in moneymetric terms; they are often illiterate and therefore isolated from economic and social opportunities; and many fall victim to violence in the household. They eke out a meagre existence, based on small-scale agriculture, marginal self-employment or limited wage and remittance income. While such income diversification, combined with the government’s range of development interventions, helps to buffer them against risks such as illness, death and disaster, rural poverty is not just a matter of income and assets. It is also rooted in other disadvantages, such as exclusion, disempowerment and unequal power relations. These all contribute to making poverty a multidimensional phenomenon. The South African government has committed significant resources to poverty intervention over the past 17 years. These interventions, which include social assistance grants, basic municipal services and free water, electricity, schooling and health services, certainly have an impact on the livelihoods of the rural poor, but they do not seem to bring a significant improvement in the standard of living of the most vulnerable people in marginalised areas. There is increasing recognition in the poverty literature that vulnerabilities – of income, health, social exclusion and service delivery – are linked, and that support programmes should focus not only on increasing the poor’s access to resources and assets but also on empowering individuals to use these assets and make decisions. This study investigates the potential of microfinance to address the overlapping vulnerabilities experienced by women in South Africa’s rural areas. It suggests that microfinance has the potential to generate positive shifts in selected indicators of empowerment and well-being among participating women in rural areas. These claims are tested by evaluating data gathered among clients of the Small Enterprise Foundation (SEF) against a conceptual framework. The framework offers a stepwise progression away from vulnerability: acquiring internal skills (empowerment), strengthening social capital, accumulating assets and, eventually, transforming these assets into wealth. Existing datasets, gathered over a period of five years in rural Limpopo and representing both a group that received microfinance from SEF and a control group, were examined. No evidence could be found that the recipients of SEF’s microfinance experienced increased empowerment, but the results did provide evidence that belonging to the group that received microfinance increased the likelihood of experiencing livelihood security and well-being. The findings show that microfinance can, even over the short term, make a difference in people’s ability to smooth their consumption and, as such, provide them with more secure livelihoods. The research also suggests that microfinance assists women in rural areas in constructing and maintaining a portfolio of assets, thus improving well-being among the recipients of microfinance. The scope of the study was confined to measuring the effect of microfinance on selected poverty indicators, and it did not attempt to prove that microfinance alleviates poverty. As such, the research demonstrates that the government’s efforts to reduce rural poverty can be complemented by micro-level interventions such as access to finance.
AFRIKAANSE OPSOMMING: Armoede in Suid-Afrika se landelike gebiede is kompleks en straf, veral vir huishoudings met vroue aan die hoof. Landelike gebiede is vir dekades lank gemarginaliseer en dit het gelei tot gebrekkige ekonomiese geleenthede, beperkte infrastruktuur en ‘n ineenstorting van sosiale kapitaal. Vroue in Suid-Afrika se landelike gebiede is nie net arm in monetêre terme nie, maar ook dikwels ongelettered, geïsoleerd van ekonomiese en sosiale geleenthede, en dikwels die slagoffers van huishoudelike geweld. Hul huishoudings oorleef deur die skamele bestaan wat hulle maak uit bestaansboerdery, gebrekkige besoldiging en trekarbeider lone. Alhoewel die regering se wydverspreide ontwikkelingshulp daartoe bydra om arm mense te help om risiko’s soos siekte, dood en natuurrampe te kan hanteer, gaan landelike armoede oor veel meer as net inkomste en bates, en sluit dit ook ontmagtiging, uitsluiting en ongelyke magsverdeling in. Al hierdie ontberinge maak armoede ‘n multidimensionele verskynsel. Die Suid-Afrikaanse regering het oor die afgelope 17 jaar aansienlike bronne op armoede verligting gespandeer. Die hulp, wat maatskaplike toelaes, basiese munisipale dienslewering, gratis water, elektrisiteit, opvoeding en gesondheidsdienste insluit, het sonder twyfel die oorlewing van die armes in landelike gebiede meer houdbaar gemaak, maar tog lyk dit nie of die lewenskwaliteit van die mees kwesbare huishoudings in die gemarginaliseerde areas verbeter het nie. Die armoede-literatuur dui daarop dat verskillende vorms van kwesbaarheid – kwesbaarheid in terme van inkomste, gesondheid, sosiale uitsluiting en dienslewering – met mekaar verband hou. Daarom is dit belangrik dat hulpverlening nie alleen vir die armes toegang gee tot hulpbronne en bates nie, maar ook die individue bemagtig om die bronne te gebruik en besluite te neem. Hierdie studie ondersoek die potensiaal van mikrofinansiering om die verskeidenheid sosiale kwesbaarhede wat vroue in Suid Afrika se landelike gebiede ervaar aan te spreek. Die studie voer aan dat mikrofinansiering kan lei tot positiewe veranderinge in geselekteerde bemagtigings- en welvaarts-indikatore onder deelnemende vroue. Data wat versamel is onder die kliente van die Small Enterprise Foundation (SEF) word gebruik om hierdie aansprake te evalueer. Die studie is gedoen teen die agtergrond van ‘n konseptuele model, wat voorhou dat armoede en kwesbaarheid oorkom kan word as ‘n trapsgewyse program gevolg word – deur eerstens kundigheid (bemagtiging) te verkry, daarna sosiale kapitaal te versterk, bates op te bou en uiteindelik die bates in rykdom te omskep beweeg die vroue, en hul huishoudings, al verder weg van hulle aanvanklike kwesbaarheid. Bestaande data, versamel oor ‘n tydperk van vyf jaar in die landelike gebiede van Limpopo is geanaliseer. Die data verteenwoordig twee groepe – ‘n groep wat mikrofinansiering ontvang het en ‘n kontrole groep. Geen empiriese bewyse kon gevind word dat die vroue wat mikrofinansiering van SEF ontvang het, bemagtig is nie. Die resultate het wel daarop gedui dat vroue wat mikrofinansiering ontvang na alle waarskynlikheid meer bestaans-sekerheid het en dat hulle welvaart verbeter het. Die bevindinge dui daarop dat mikrofinansiering, selfs oor die kort termyn, ‘n wesenlike verskil kan maak in die vermoë van kwesbare vroue om hulle verbruik, oor tyd, beter te bestuur en sodoende bestaans-sekuriteit te verseker. Die navorsing toon ook dat mikrofinansiering vroue in landelike gebiede kan help om ‘n portefeulje van bates te skep en te handhaaf, wat bydra tot groter welvaart. Hierdie studie het die impak van mikrofinansiering op geselekteerde armoede indikatore geevalueer, en het nie gepoog om te bewys dat mikrofinansiering armoede verlig nie. Sodoende dui die navorsing daarop dat die regering se pogings om armoede te verlig kan baat vind by mikrovlakintervensies soos mikrofinansiering.

There is a significant amount of literature documenting empirical linkages between socioeconomic status and mental health of individuals. While economic studies have found beneficial impacts of anti-poverty programs (e.g., micro-credit programs) on mental and emotional health, non-economic studies have documented the powerful roles of social capital in determining mental and emotional health. In this thesis, we study the impact of a large community-driven development (CDD) women's empowerment program, Jeevika, on mental health. JEEViKA is a rural livelihood program in Bihar, India, which promotes women's livelihood through a network of women's self-help group (SHG). Using data on a sample of 2300 SHG women from matched pairs of 66 high-exposure and low-exposure Jeevika villages, we estimate the causal impact of Jeevika on mental health. The results suggest that mental health improves with increasing age and among socially backward communities in high exposure JEEViKA villages. However, overall both the individual and village level analysis demonstrates no significant impact of JEEViKA on the mental health.

This thesis investigates the determinants of participation in microfinance programmes and its impact on rural welfare in order to suggest improvements to the level of participation and the effectiveness of the programmes. The level of participation by rural smallholders in Botswana is much lower than expected in spite of the availability of schemes and their ease of access. The study uses one of National Development Bank Botswana's credit schemes in Kweneng District to investigate this problem. A field survey was carried out on 112 smallholder farmers, half of whom are scheme participants, to establish what factors affect the probability of their participation in the scheme. The study applied a logit model to determine which variables significantly affected the probability of participation in the credit scheme. The results indicated that some variables like gender and educational status had little effect on the probability of participation. A number of policy variables which include age, previous experience of credit use, respondents' perception of group collateral, distance from the National Development Bank, access to irrigation and total landholding size were found to have a significant effect. On the welfare effect, more than half of participants in the microfinance credit scheme indicated that their welfare improved as a direct result of the programme. As future research, it would be useful if the study could be extended to all districts of the country to enable the generalization of findings and provide valuable information for agricultural and poverty alleviation policy purposes.

Worldwide, poverty remains to be an obstacle to achieve sustainable development and improve the well-being of people. Microfinance has become a popular tool for poverty alleviation and it can now be found in poor countries across the world. Microfinance is based on the principle that poor people can initiate their own development out of poverty, given they have the starting capital to do so. The capital can be invested in income-generating activities and it is assumed that this will lead to a higher income and additional positive effects, like an increase in well-being, will follow. However others argue that the focus on income is only one aspects of poverty, other forms of deprivation and constraints are excluded. This thesis aims to address how microfinance, the provision of credit in particular, has an influence on the well-being of women. A participatory rural appraisal was conducted in order to explore how women define well-being. The perspectives of four women groups from the urban and peri-urban areas of Dar es Salaam, Tanzania were included in understanding the local definition of well-being, the developments in their lives and the changes in well-being they have perceived. The results show that the group loans may contribute to positive changes in the well-being of women, but these changes cannot be attributed to the loans alone. The changes in well-being caused by the loan intertwine with other factors like group dynamics and family life; therefore the results need to be interpreted considering the specific context. Furthermore the results show that the changes in well-being are not necessarily related to an increase in income, thus contesting the assumptions on which microfinance is based.

This thesis examines the varied and contradictory ideas about rural women and their needs that are produced and circulate within development discourses and projects. It pays particular attention to the multiple actors involved in the production of such ideas and the relations of power that determine which ideas gain authority. Based on ethnographic fieldwork in the Kullu District of Himachal Pradesh, India, it looks at women's participation in three different development projects: a women's savings and credit group, a broad-based development NGO, and the women's village organizations (mahila mandals ). These case studies demonstrate how development organizations engage with local gender meanings, often working to reinforce or even exploit inequalities, rather than challenge them. As women are targeted by such projects, they creatively receive, shape, and negotiate the ideas and representations that they encounter about themselves. These encounters limit, and sometimes foster, women's potential for new political identities and agency.

Xue, Cheng.
Thesis (M.Phil.)--Chinese University of Hong Kong, 2013.
Includes bibliographical references (leaves 159-167).
Electronic reproduction. Hong Kong : Chinese University of Hong Kong, [2012] System requirements: Adobe Acrobat Reader. Available via World Wide Web.
Abstracts and appendix also in Chinese.

This study aimed to investigate the experiences of women living in a rural area who participate in a microfinance programme called SaveAct. Microfinance programmes have been established to assist people, financially, living on a low income. Their primary focus is women because of the high level of poverty amongst them. Microfinance programmes seek to promote entrepreneurship in order for people to start income generating activities and to be more self-sufficient. This initiative intends to empower women by making funds available to them, so that these funds can transform into something more sustainable and help them in improving their lives. Semi-structured interviews were conducted with 16 female participants from the rural areas of Richmond and Obonjaneni, KwaZulu-Natal, in South Africa. A thematic analysis showed that women have experienced some change in their lives, as a result of getting access to funds and participating in SaveAct. Some of these changes included increased personal autonomy, self-confidence and business knowledge. These changes suggest that this sample of women has been empowered despite the backdrop of a patriarchal society. Women felt more in control of their lives and had gained some independence in their homes in terms of contributing to household income. Despite these changes more integrated services are still needed so that both genders are equipped with financial information as it affects the household, so that there is more equality in the household economically. More quality financial services are also needed in rural contexts in order for communities to be more knowledgeable about finances and to build businesses that will feed into the economy in the long term.
Thesis (M.Soc.Sc.)-University of KwaZulu-Natal, Pietermaritzburg, 2012.

High population growth rates, shrinking budgets, and urban migration are some of the factors that have led to an increase in demand for jobs in South Africa. This demand cannot be met by the formal enterprise sector and many job seekers have to be absorbed in the informal sector. With many people being unemployed it is important that they be helped to regain their self-esteem by being economically active. When people are economically active it leads to their empowerment and they are able to address their needs. Abbey (1999:3) indicates that strategies to combat poverty must concentrate on ensuring empowerment and creating opportunities for the poor. The informal sector consists of a large mass of the excluded such as women, the illiterate, the voiceless and the unrepresented. The people in this sector tend to lack the infrastructure, technical and managerial expertise or knowledge, financial resources, transportation and information that would make them successful. The informal sector plays a very important role in addressing the unemployment crisis and alleviating poverty for the majority of people in South Africa. Support for the informal sector can be through micro-lenders who can help finance the poor when formal lending institutions are not able to assist them (Kirsten, van Zyl and Vink, 1998:13). Women and children are the most vulnerable groups when it comes to poverty. The informal sector could help them become organised small entrepreneurs to enable them to provide a decent living for themselves and their families. But for many women it is difficult to find credit institutions that can help them to start their own businesses. Some of the reasons could be that they do not have a credit record, are unemployed and do not have collateral when they apply for credit. Micro-lenders can be of help as they are at times able to provide credit to groups of people who are not able to obtain credit from formal institutions to start their own businesses (Russell, 1995:33). This study was undertaken because research on the determinants of rural poverty emanates from the increasing concern to understand the reasons for the failure of development strategies in many Third World countries to reduce mass poverty. The living standards of the majority of the rural population in the Third World have failed to improve. In many countries there has been deterioration in their living standards, especially among the lower income groups. This has happened not only in countries where no significant growth in per capita income was achieved, but also in those countries or areas where growth has been rapid (Elkan, 1988:175). Increased poverty has been accompanied by increased under-utilisation of human labour. Development literature, on the whole, does not provide satisfactory explanations for this phenomenon. This has contributed to a failure to design and implement appropriate strategies and policies (Kirsten, van Zyl and Vink, 1998:11). Economists have been working on economic strategies for decades. The main purpose has been to tackle the issue of poverty by addressing the economic evils of the world. But despite all the impressive efforts by economists, politicians and other experts in different disciplines, the majority of the world's population continues to be trapped in absolute poverty: a condition of life characterised by diseases, illiteracy, high infant mortality, squalid surroundings and low life expectancy (Kirsten, van Zyl and Vink, 1998:14).
Prof. C.S. van der Waal

Magister Artium - MA
According to Professor Muhammed Yunus, Nobel Prize winner in 2006 and the founder of the internationally acclaimed Grameen Bank in Bangladesh, microfinance is a viable solution to poverty alleviation among the poorest people residing in rural areas. Microfinance programs have led to poverty alleviation and empowerment of especially rural based women of developing societies, as they enable the poor to manage their finances and cope with unpredictable shocks and emergencies (Yunus, 2007). This research evaluated the developmental impact of microfinance on poverty alleviation and women empowerment. It assessed the impact of the existing microfinance programmes among the members of the three microfinance Savings and Credit Associations (SCAs) in the rural areas of the Caprivi region of Namibia. This study explored whether microfinance programs have helped their members to minimize financial vulnerability through diversification of income sources and accumulation of assets. The research employed both qualitative and quantitative research designs. Data were collected through different qualitative and quantitative techniques (in-depth individual interviews, faceto- face interviews, questionnaire and questionnaire schedule). Summary findings indicate that the SCAs has positively contributed to the socio-economic improvement in the living standards (contribution to livelihood – increased income, enhanced health, and food status), improved education/healthcare, women empowerment through micro enterprise training and skill development. However, SCAs are still struggling with challenges, such as lack of income, high default rates and unprofitable micro enterprises. This research makes several recommendations, including: MFIs should concentrate on women’s economic empowerment as their main aim, incentives should be provided to the MFIs to encourage savings and investment amongst the poor, and if microfinance is to be used as a promotional tool for credit and saving services for the poor, then the socio-economic consequences of micro-credit lending have to be re-investigated, especially when they negatively impact on poverty reduction.

The first aim of this research was to examine the current financial technologies, outreach and fmancial viability over time (from 1997 to 2002) of four MFOs providing agricultural, microbusiness and consumption credit in KwaZulu-Natal (KZN), South Africa (SA). Understanding the limitations and advantages of these financial technologies could facilitate institutional reform to improve access by low-income people to viable formal financial services in KZN. The second aim of this study was to estimate factors that affect the credit rationing decision and applicant loan default at the MFO providing consumption credit (MFOI), and the factors affecting default on medium-term agribusiness loans provided by MF02 which was one of the agricultural MFOs. These analyses were intended to help to improve client selection procedures and to reduce loan default rates at these MFOs. Study results show that institutions that finance specifically agricultural activities could improve the quality of their services by providing better access to branches and reducing loan approval times through improved screening and administrative procedures. Making financial services (consumption and production loans) available to both non-agricultural and agricultural sectors would also help to reduce portfolio risks resulting from the covariant incomes of small farmers. Savings mobilisation should also be considered, although institutions need to develop appropriate capacity to handle savings before mobilising deposits. The study shows too that the rural poor in SA have the capacity to save (for example, the average number of active savings accounts held by individuals at MF02 rose to 474 052 in 2002). Study results also suggest that the provision of both savings and loan services helps an institution to reduce borrower transaction costs in accessing financial services and means that savings can serve as a form of collateral and borrower information for lenders. Lenders need to charge interest rates that reflect the true cost of lending in order to cover costs, given that small loans to the rural poor in SA are risky and costly to administer. Charging a suitable interest rate, however, is not a sufficient condition for achieving financial self-sustainability. Reducing high arrears through stricter loan contract enforcement will also promote the financial self-sustainability of MFOs in SA. Moveable assets, such as vehicles and equipment, were not effective sources of collateral due to the high costs of attaching these assets in rural parts of KZN. Cessions on sugarcane crops were often constrained by flaws in collection mechanisms, where borrowers could deliver sugarcane to sugar mills on non-borrower quota numbers. Secure and transferable property rights were important preconditions if land was to have value as collateral. Collateral substitutes such as joint liability mechanisms were less effective when lending to large farmer groups (30 - 60 members) compared with small groups (4 - 6 individuals) of micro-entrepreneurs operating in urban areas in SA. Costly legal action to recover debts further undermined borrower accountability for loan repayment and thus did not discourage morally hazardous activities. Reputational capital was an integral part of the financial technology successfully used by MFO1, and could be more effectively developed by agricultural lenders in SA if they strictly enforce the policy of denying borrowers access to future funds if they default on previous loans. Based on data over the period 1998 to 1999, less contactable borrowers that were employed in sectors with a high likelihood of retrenchments, with higher debt-to-income ratios and with more defaults and payment profile arrears, were more likely to be credit-rationed by MFO1 staff. Applicant contactability was another key part of MF01's monitoring intensive financial technology, but constrains MFO1 from broadening its financial services to small businesses if these are not easily contactable. Credit bureau information on previous loan default was critical in this microfinance market where it is difficult to obtain formal collateral. The policy implication is that lenders need to share default information and credit bureaus need to correctly capture this information. Borrowers with higher debt commitments, previous loan defaults, who were less contactable and who worked in sectors where employment was less secure, were more likely to default at MFO1. Low-income borrowers had lower levels of liquidity that reduced their ability to repay debt. The influence of contactability in loan repayment highlights the trade-off between monitoring-intensive and collateral-intensive technologies. Although MFO1 used reputational capital as a collateral substitute, the imperfect nature of this collateral type necessitated intensive client monitoring. Lender MFO1 also needed a well-diversified portfolio across employment sectors to reduce the impact of systemic income risks. The impact of previous credit history on loan repayment suggests again that this information can be an effective collateral substitute if information is shared between lenders, and the rule of not granting credit to defaulters is strictly enforced. Based on data over the period 1993 to 1994, borrowers with smaller loans (lower asset bases and smaller businesses), lower own equity contributions, engaged in contract ploughing and cartage or broiler production ventures, with lower liquidity and with no previous borrowing experience, were more likely to default of MF02's medium-term agricultural loans. Larger borrowers had well-diversified asset bases that enabled them to better withstand negative income shocks and reduced the need to divert funds for loan repayment to current consumption. Improved liquidity generated from other sources of income (such as wage remittances and other business ventures) also improved loan repayment ability. Lenders thus need to focus on all sources of income, not just on the income generated by the investment project for which finance is provided, in assessing client repayment capacity. Ploughing contractors probably need closer monitoring to ensure that equipment is properly maintained and that sufficient income can be generated from the business to repay loans. These contractors could also be encouraged to diversify into contract transport activities that provide more regular income. Given the increased competition and periodic outbreak of disease in the chicken industry when the study was conducted, borrowers should be encouraged to diversify to reduce price risk. Increasing the owner's equity stake in the investment, while a second-best option, may be a suitable alternative where collateral is ineffective in enforcing loan contracts. Borrowers that had an established record with the lender tended to repay their loans, again highlighting the importance of reputation in a borrower-lender relationship.
Thesis (Ph.D.)-University of Natal, Pietermaritzburg, 2003.

This thesis investigates the way in which microcredit programs that form parts of mainstream international development strategies contribute to the transformation of female subjects in rural China. By undertaking a case study in Inner Mongolia, China, this thesis elucidates the nature of the social standards that govern everyday practice of local microcredit programs that targeted primarily at poor rural women. Qualitative research methods, including participant observation, in-depth interviews and textual analysis, were employed in order to uncover the specific social standards that are embedded in the programs and the way they function in the particular local settings. The results of this research indicate that microcredit borrowers are not selected according to neutral, inclusive economic criteria, but according to “capacity to repay”. The measurement of the capacity to repay relies heavily on social criteria that are intimately connected with the borrowers’ personal attributes and the way these are perceived by the lending institution and the borrower peers. Both the local microfinance institution and the women borrowers actively participate in the creation and enforcement of these social standards. The social standards function as social norms that shape and control the lives of rural women and by doing so transform the poor rural women into self-disciplined rural subjects and proper and reliable microcredit clients.

Access to loans and credit facilities has been, and still is, a major problem for a large portion of the South African society. The problem is particularly significant in the disadvantaged and rural areas where the majority of people do not have access to formal banking services. Against this background the government further exacerbated the problem by prescribing legislation, which is thought to protect borrowers from perceived usurious rates. This particular law in contention is the Usury Act (No.73 of 1968). The Act imposes interest rate ceilings on loan finance provided by money lending institutions. The objective of this study was to examine the impact that interest rate ceilings will have on the micro lending market. This was done through looking at a case study based on information obtained from a micro lender. Firstly the study undertook the financial impact analysis on a micro lending business to determine the effect of a change in the maximum interest rate that could be charged by the micro lenders. This process was conducted to help understand the costs, revenues and profits of a micro lending business. The data, which were based on the micro lender’s financial statements, were analysed and evaluated on the basis that the statements reflect the financial position of the micro lender charging an interest rate not exceeding 30 per cent. Calculations were then made to reflect their financial position in the event of them being allowed to charge a maximum rate of 20 per cent, 12.08 per cent and 10 per cent per month. The results showed that micro lenders could make a profit when charging rates of between 30 and 20 per cent. However when the interest rate is reduced to 10 per cent the micro lender start to lose. The bottom line for micro lenders is greatly influenced by their turnover, as large portions of their costs are fixed. Therefore one micro lender might earn economic profits at 12.08 per cent per month, while another might just break-even. Simple and multiple regression techniques were used to analyse the data pertinent to the study. The analyses were performed to show the impact, which ceilings on the interest rate have on the market structure, company size and on the characteristics of loan services. The results were evaluated according to their significance. The findings showed that interest rate ceilings can have positive significant effect on risk and the market structure. Based on the findings of both methods applied to this study, it is evident that the interest rate ceilings could act as a constraint to the provision of credit to low-income earners and operators of small and micro enterprises. The micro lenders offer small amounts of credit to a large number of people, therefore interest rate ceilings may not only ration consumers out of the legal market, but also drive smaller lenders from the market and thus diminish competition.
Dissertation (MSc (Agricultural Economics))--University of Pretoria, 2007.
Agricultural Economics, Extension and Rural Development
unrestricted