How to lend like mad and make a profit: A micro-credit paradigm versus the start-up fund in South Africa

Jens Reinke

Journal of Development Studies, 1998, vol. 34, issue 3, 44-61

Abstract: In current debates about micro-credit, joint-liability schemes are often viewed as the only viable way to non-collateralised lending, and are thus seen as almost synonymous with micro-credit. This article reports about an alternative, non-participatory approach to micro-credit. Prompted by the apparent inability of group credit schemes to reign in lending costs, the article sets out the institutional requirements for cheap, 'mass-produced' credit. It argues that such credit can be viable if mechanisms are in place enforcing the self-selection of potential borrowers and self-motivation of existing borrowers. The analysis of a 'mass-minimalist' micro-credit institution from South Africa supports the argument.

Date: 1998
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DOI: 10.1080/00220389808422520

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