Rural Credit for Resource-Poor Entrepreneurs: Lessons from the Eritrean Experience

Yonas Bahta and Jan A. Groenewald

No 25607, 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia from International Association of Agricultural Economists

Abstract: Developing countries' small-scale farmers lack access to financial services. In the Eritrean Savings and Micro- Credit program (SMCP), solidarity groups are jointly responsible for individual members' loans; this reduces transaction costs, improves repayment and substitutes for collateral. Performance of SMCP (1996 to 2002) indicates low arrears and good repayment, but not satisfactory saving mobilization. SMCP service reached many people previously without access to financial services, thus materially improving individuals' economic self-confidence and independence, cash holdings and household living standards. It has had favourable social spin-offs; a well-designed village-banking model can help solve economic problems of the poor.

Keywords: Agricultural; Finance (search for similar items in EconPapers)
Pages: 13
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae06:25607

DOI: 10.22004/ag.econ.25607

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