Comments on: Microfinance – and why it may not work

By: osei-kissi john

osei-kissi john — Wed, 16 Nov 2011 08:05:55 +0000

From a personnal point of view, micro finanace has brought to ghananian women traders who form a greater percentage of beneficiaries more financial worries than help aliviate poverty.The high interest charges, lack of training on the path of credit officers,combersome repayment procedures, difficulty on the side of clients in obtaining securities for the facility are but a few of the burden micro finance has presented to the ghananian woman.The objective of micro finance if to be achieved requires resructuring in the folowiwng areas : 1.credit officers needs to be specially trained in executing micro finance granting in order to distinguish it from other forms of loan disbursement as most treat all the same. 2.repayment processes needs to be simplified as most clients belong to the illiterate class.Example, the reducing balance method if possible must be replaced by the straight line so that the mostly uneducated client may know that i am to pay a specifed amount for a stated period.3.reduction of interest rate on microfinance if possible should be considered.This is just a few of my views. OSEI-KISSI,GARDEN CITY UNIVERSITY COLLEGE, KUMASI,GHANA.

By: Is Microfinance Truly the Answer? « thenewphilanthropy

Is Microfinance Truly the Answer? « thenewphilanthropy — Fri, 20 May 2011 00:57:29 +0000

[...] [vii] Chanana, D. (2006). Microfinance – and why it may not work. http://www.planetd.org/2006/04/26/microfinance-and-why-it-may-not-work/. [...]

By: Mike Blondino

Mike Blondino — Sat, 25 Apr 2009 07:17:58 +0000

I don’t like the idea of being negative on microfinance but the sheer interest alone has kept us looking for other alternatives. Please please keep the awareness of the challenges to microfinance in front of donors. In our work, we charge no interest, and we require no collateral. We allow people to work their way into business ownership. We generate our revenue from marketing product, and always allow our partners to gain as much of added value as they want. It is profoundly effective. If anyone of you has done or is doing research on microfinance I have a number of questions. One is, what is the accounting of payback, not the percentage of loans, but the actual cash paid to cash borrowed? Is the 98% rule reflect a capital loss for funds lended? Also what is the median annual percentage interest paid by a borrower? You can contact me through our website. Thanks so much, Mike.

By: JAMES ATTA PEPRAH

JAMES ATTA PEPRAH — Wed, 18 Jun 2008 10:02:35 +0000

I believe that microfinance will always work. Wether it will work or otherwise depends on a host of factors. Government should not directly get involve in lending as it is happening in Ghana now. The sub-sector needs to be regulated since most microfinance institutions mobilse deposits. The model should be demand driven and not supply driven. Practitioners should really identify what their clients need. there should also be monitoring and evaluation. Not just credit but there should be other services to supoort the credit.

By: ferdinand Brown

ferdinand Brown — Mon, 28 Apr 2008 12:02:56 +0000

i am student at the University of Education,Winneba and doing my project work.i have this topic

By: Rubaaho

Rubaaho — Sat, 23 Jun 2007 13:36:40 +0000

I am working in the field of micro credit and from my experience (modest) i think microcredit benefits the lenders and merely keeps the micro borrowers busy generating income for the MFI’S. i think its the latest form of slaverly where the slaves (borrowers) are willing participants. Of course we know they do not have any other option other than accepting the loan. I visited one Sacco in Kampala yesterday and found a woman who wanted to borrow sh. 100,000 or US $60. She was asked to open an account with $12 and save collateral of $20. The net loan is $28 and she will pay $100 in the next 4 months.What is the actual cost of borrowing? This Sacco claims to lend at 1%pm but the real rate is above well above 15% per month.

By: Nabuli Miriam Lumu

Nabuli Miriam Lumu — Fri, 04 May 2007 10:01:57 +0000

Dear Sir/Madam,

Please avail me with information concerning the” Lending activities and Finacial Performance of Microfinanace Institution in Uganda.

Kind Regards,

Nabuli Miriam Lumu

By: Microfinance as Business, Faults and All at The Discomfort Zone

Microfinance as Business, Faults and All at The Discomfort Zone — Fri, 03 Nov 2006 15:11:05 +0000

[...] I have been a long-time skeptic of Microfinance and my posts on the subject receive more than average traffic for this modest blog. I am disappointed, therefore, to have missed a CGD report titled “Microfinance as Business“, that seems to support, at first, my skepticism. [...]

By: Dweep Chanana

Dweep Chanana — Mon, 16 Oct 2006 16:20:32 +0000

Marie, See http://en.wikipedia.org/wiki/Microfinance for an introduction to microfinance.

Sunil, thanks for your comments. I particularly appreciate your comment that repayment is no development, a fact few people in the development field appreciate. Far too many times I have heard people say that since people are repaying money, it must be good for them.

However, I would not go as far as saying that formalized microcredit is looting, any more than traditional money lending might be. If anything, the oversight and attention MF gets is likely to reduce chances of egregious exploitation (see NextBillion). The benefit of formalized credit is that it can be managed and regulated better, and has more access to capital to expand availability, if necessary.

I suspect both mechanisms have pros and cons. However, what do you mean by ‘management by the poor’ of informal financing mechanisms? How is that different from community credit unions?

By: Sunil Daniel

Sunil Daniel — Mon, 16 Oct 2006 13:50:32 +0000

I do agree with many of the points here especially about ‘formalised microcreidt’. Formalised microcredit especially as done by NBFCs and MFIs are actually looting the poor in the name of development. For them repayment is enough, and they think that is development. I actually do not fully write off microcredit nor do I say it is a ‘saviour’ but I certainly feel that if microcredit is still done in the informal way, where the management is by the poor and not by an outsider who taps the interest, I feel that leads to sustaibnable development of the poor. I am doing it. I dont believe in a assocsiation like BRACs controlling the show and take service charges or whatever. The poor should do it by themselves. I still appreciate the concept by Dr. Yonus but do not agree to his way of the structure of functioning.