How to Lend Like Mad and Make a Profit: A Micro-Credit Paradigm versus the Start-Up Fund in South Africa

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Periodical article

Title:	How to Lend Like Mad and Make a Profit: A Micro-Credit Paradigm versus the Start-Up Fund in South Africa
Author:	Reinke, Jens
Year:	1998
Periodical:	Journal of Development Studies
Volume:	34
Issue:	3
Period:	February
Pages:	44-61
Language:	English
Geographic term:	South Africa
Subjects:	credit informal sector Economics and Trade
External link:	https://doi.org/10.1080/00220389808422520
Abstract:	In current debates about micro credit, joint-liability schemes are often viewed as the only viable way to uncollateralized lending, and are thus seen as almost synonymous with micro credit. The present article reports on an alternative, nonparticipatory approach to micro credit. Prompted by the apparent inability of group credit schemes to rein in lending costs, it 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. Analysis of the Start-Up Fund, a 'mass-minimalist' micro-credit institution located in Durbanville, near Cape Town in South Africa, supports the argument. Bibliogr., notes, ref., sum.