Microcredit and rural development a case

Early Beginnings[ edit ] Ideas relating to microcredit can be found at various times in modern history, such as the Starr-Bowkett Society. Jonathan Swift inspired the Irish Loan Funds of the 18th and 19th centuries. Khan used the Comilla Modelin which credit is distributed through community-based initiatives. The origins of microcredit in its current practical incarnation can be linked to several organizations founded in Bangladeshespecially the Grameen Bank.

Microcredit and rural development a case

However, much of the literature on microcredit comes from advocates who are hastily enthusiastic about its potential to reduce poverty, mitigate gender inequities and improve the overall healthiness of impoverished communities in poor countries.

As such, a great deal of the literature on microcredit is promotional. Many are anecdotal stories of individual women and men working to build opportunities to empower and enrich themselves despite difficult circumstances and meager resources.

Since childhood, she has known about a terrible disease called malaria, but she and her neighbors did not know how it was spread, how to protect themselves, when it would strike, and what kind of medicine would help.

Malaria, a ruthless killer, swept through her village repeatedly, stealing the lives of countless children. Fatoumata feared for her children, but she had no idea how to protect them. She obtained a microloan along with information about nutrition and malaria from Freedom Hunger.

She used the loan to buy nuts and potatoes to sell. She increased her income enough to buy medicine, insecticide-treated mosquito nets, and nutritious food for her children. With her loans, she was able to get a wagon, which further increases her profits.

Fatoumata shares her wagon and new knowledge with her neighbors so they too can improve their incomes and health. Academic research on microcredit is burgeoning in the fields of economics, development and demography.

Since the early s, there has been spate of theoretical and empirical articles on microcredit. Likewise, Goetz and Guptap. To date, most of the research on microcredit focuses on Asia and Latin America. Too few studies explicitly examine theses processes in Africa, and even fewer in rural Africa.

It is unclear if patterns revealed in Asian and Latin American will hold in Africa. The goal of this study, therefore, is to build on the few formal studies of informal banking systems in Sub-Saharan Africa. Microcredit operations have a long history in Ghana.

By Arundhati Pal

They date back centuries and are believed to have come to Ghana via Nigeria Asiama There are three categories of microfinance in Ghana. First are formal banking institutions that provide savings and loans to a small minority of wealthy, usually urban, individuals with high net worth.


Clients of these financial institutions are usually required to meet a high minimum deposit and provide proof of steady employment. Banks in this category are registered but are not licensed by the Bank of Ghana. And third are informal financial systems locally referred to as esusu. As discuss later, esusu are informal banking clubs or rotating saving and credit associations ROSCAs that provide credit, savings, loans and insurance to those with little or no financial collateral and net worth.

Microcredit and rural development a case

Informal banking institutions play a very important role in Ghana. According to Steel and Andah Women, particularly those in rural communities, often turn to informal banking clubs, like esusu as a means of savings, loans, and credit for self-employment ventures, social insurances for wedding, births, and funeralsand to help meet basic household need and schools fees.

Lastly, Ghana is an important focal point for the discussion of economic growth because it continues to outpace other West African nations en route to development.

In theGhana was the first sub-Saharan African country to win its independence; and in was the first West African nation to outline a public policy that addressed population and development goals.

In some parts of West Africa, these informal banking projects are locally referred to as esusu. Improving women status and personal empowerment is viewed as being crucial for achieving development goals.

Yet, disparities in education, health, earnings, employment and political participation prevail in spite of efforts to reduce these inequities. Microcredit and Social Capital Part of what makes microcredit so successful is its implicit and explicit embodiment of social capital.

For example, James Coleman S discusses rotating credit groups as social capital. For Coleman, social capital operates at an individual level and involves three shared components: Using microcredit rotating credit and saving groups as an example, Coleman explains that social capital is fundamentally about reciprocity.

Individuals of like status and shared norms come together in social relations to engage one another to negotiate for small monetary loans and credit. One is given a loan that establishes the expectation and the obligation on the part of the other to repay the loan.

Women's Empowerment and Microcredit: A Case Study from Rural Ghana

The obligation, according to Coleman is like a credit slip. The lenders, in this case the rotating credit group, provide financial capital to its members on the basis of trust that the obligation will be repaid in full.This paper examines the influence of informal banking club participation on family planning practices in rural Ghana.

Research from Asia suggests that family planning practices are improved by club participation. This study examines this thesis in an African context, using rural Ghana as a case study. A sample of women (19 years and .

Keywords Family planning, Ghana, microcredit, population and development Amin R., Hill RB and Li Y. () Poor women’s participation in credit-based self employment: The impact on their empowerment, fertility, contraceptive use and fertility desire in rural Bangladesh.

Microcredit and Rural Development a Case Study of Khushhali Bank Essay Introduction of Microcredit and Rural Development 5 ) Background of Microcredit 7 ) Microcredit and Poverty Alleviation 9 ) Some Examples of Microcredit 10 2).

Adding Value to Randomization with Qualitative Analysis: The Case of Microcredit in Rural Morocco.

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s indebtedness is low because households are highly credit constrained and that there is a strong potential for the development of microcredit (Crépon et al., ).

But borrowers’ testimonies in fact reveal that the demand is weak, simply. Microcredit and Grameen Bank. Helping to alleviate poverty is the key aim of any individual or group involved in development.

The classic diagram of the poverty trap is frequently used to explain why it is so difficult to break out of the cycle of poverty. microcredit on rural livelihoods: Case study from Ethiopia”, International Journal of Development and Sustainability, Vol.

1 No. 3, pp. * Corresponding author.

Microcredit - Wikipedia