Microcredit loans have taken a beating in the press lately, with reports claiming in India, farmers are committing suicide after facing defaults in their loan repayments. In India, microcredit finance is becoming increasingly privatised and perhaps that is the biggest problem with microcredit loans in that situation.
When microcredit is given with a purpose of making a profit, the loan becomes just another variation of finance given by the private sector.
The Wupuni microcredit group in Tamale, Northern Ghana
Microcredit is an important fiscal source because it is more accessible for the poor, as well as having a focus on women being the main recipients of microcredit. Women are often vulnerable due to lower socio-economic standing in many countries and microcredit provides an avenue of empowerment for women.
ActionAid runs many microcredit programs that are non-proft; so any profits that are made get re-invested or used for other projects. One example is the Wupuni microcredit group in Tamale, Northern Ghana. Twenty two women work together communally, promoting members wellbeing while financially supporting them with small loans. The members are involved in farming, sheabutter and dawadawa processing and petty trading.
ActionAid began supporting the group in 2009 and the scheme has been successful to the extent that ActionAid’s help is no longer required.
