Does Solidarity Pay? The Case of the Small Enterprise Foundation, South Africa

Jens Reinke

Development and Change, 1998, vol. 29, issue 3, 553-576

Abstract: This article argues that the costs of lending through solidarity groups are high. This is explained by the nature of groups: groups are not a forum for contractual exchange, but are costly institutions built on social capital. The costs of group formation and interaction outweigh the benefits of high repayment rates associated with group control. Supposedly sustainable group‐lenders often depend on large injections of subsidized loans or capital from donors. This is usually ignored in mainstream literature which does not pay sufficient attention to the operational costs of credit extension. The argument is illustrated with a study of the Small Enterprise Foundation, South Africa, which shows a contradiction between staff‐intensive, personalized lending technology and sufficient cost‐recovery.

Date: 1998
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://doi.org/10.1111/1467-7660.00089

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:devchg:v:29:y:1998:i:3:p:553-576

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0012-155X

Access Statistics for this article

More articles in Development and Change from International Institute of Social Studies
Bibliographic data for series maintained by Wiley Content Delivery ().