9. Same planets, different worlds

Microcredit markets of various countries

Authors: Peter Futo, Marton Gosztonyi, Mehdi Hasan

Embeddedness of microcredit markets into traditions and politics. To understand the differences among microcredit markets of different countries, it is important to understand its culture, saving practices, the social norms, state regulations, policy environment and institutional settings.

Small market, many small microfinance projects. In certain countries the microcredit market is small, and there is a wide range of small, decentralized projects with microcredit components, most of them being implemented by some non-governmental organisations. Mozambique is a country in South East Africa, with 25 million inhabitants, and a high percentage of poor households. Mozambique is a good example for such a country, where microcredit appears frequently as the financial component of some agricultural projects.

Big market, some big and many small microfinance projects. In other countries the microcredit market is huge, there is a well developed culture of microfinance, and there are some large and many small microcredit organisations. Bangladesh is a country in South Asia, with more than 150 million inhabitants, and a high percentage of poor households. Bangladesh is the birthplace of modern microcredit. Besides Grameen Bank and some other big microfinance institutions there are thousands of small, medium and large organizations are working in this field covering tens of million people. The Government also adopted microcredit to its development policies and implements programs using it as one of the important tools of socio-economic change.

Big market, a few big microfinance projects. In some other countries the microcredit market is huge, completely dominated by a few large, highly centralized microfinance organisations. Tunisia is a country in North Africa, with 11 million inhabitants. In Tunisia, a Government owned state bank finances social microcredit. This credit is administered by local associations and reaches hundreds of thousands of households, farms and businesses. On the other hand this country also has a huge commercial microcredit organization with many clients.

Microcredit and local communities. Microcredit institutions have a special role in community development, in the establishment of solidarity groups and in village organizations. Loan officers typically establish a close relationship with borrowers and understand both the proposed use for the capital and the borrowers’ sources of income. Groups are organized for discussing entrepreneurial issues. In certain models group members take responsibility for the repayment of each other’s loans. Program workers assist in establishing a simple accounting system and help borrowers to form a mechanism for group decision-making. Group members are typically motivated to enroll their school-age children in regular classes. This in turn helps bring about social change, and educates the next generation.

Discussion points:

• How would you characterize the microcredit market of your own country?
• In your country what kind of entrepreneurial projects receive / should receive microcredit?

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Reflexión sobre la diversidad (ESP)

A különböző országok mikrohitel piacai (HUN)