Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Microcredit in Burkina Faso: a culture shock

07.02.2007
At the end of the 1990s, when the Mossi central plateau in Burkina Faso was hit by a severe drought, the "project to promote small-scale rural credit" (PPPCR) ran up against repayment problems for the first time. The project was launched in 1986, based on the Grameen Bank set up by Muhammad Yunus, the 2006 Nobel Peace Prize winner.

The specificity of this mutual credit system is that the material guarantees (savings, mortgage, etc) required in the conventional banking system are replaced by mutual guarantees from people who choose to set up a group. However, this period of crisis caused by events outside Mossi society has demonstrated the weak spot in the system: once repayment becomes a problem, solidarity no longer works.

Repayment rates - the sums actually repaid divided by the theoretical amount - fall to 50 or even 30%. What lies behind this? The usual reasons quoted are local market imperfections, for instance lack of access to inputs, but according to Jacques Marzin, economist and Head of the CIRAD "Policies and Markets" Research Unit, the reality lies elsewhere: he suggests that falling repayment rates are in fact due to the contradiction between how the workers employed by the system and borrowers see credit. His study was conducted in a village on the Mossi central plateau.

Jacques Marzin and Moussa Tassembedo, from the Lessokon microfinance organization, surveyed various social groups in Gandaogo village. They based their work on three years of accounts from roughly thirty concessions, representing 90 households or 150 people. They listened to village elders, but also to younger men and women who had benefited from loans.

In Mossi society, loans are intended to prevent social disparity within the community by transferring surplus cash from one family to another with a cash shortage. Western-style bank loans, on the other hand, allow for individual accumulation of capital or immediate consumption. Thus whereas credit is seen as a factor for social cohesion, loans are being granted that enable people to become independent. This results in a divergence of views concerning the system.

Moreover, according to the principles of mutual guarantees, when one person can no longer repay his or her loan, the group takes over repayment. However, in the event of problems beyond the group's control, such as drought, numerous individuals and families are inevitably in difficulty and groups tend to expect the credit system to lighten the repayment burden. The system, on the other hand, often fails to get the message and maintains its usual debt recovery requirements. It is this that leads to disputes. Groups generally react immediately and all their members stop repaying their loans. This "inverted mutual guarantee pressure" leads to a drop in repayment rates.

In Africa, social cohesion is much more important for the Mossi than personal enrichment. Unless it really allows for this, microfinance will not be enough to alleviate poverty. To make the two visions compatible, a share of the interest has to be used as a social "buffer". It may be held in structures such as associations - even informal ones - or mutual guarantee groups. For instance, if the interest on loans is 12%, 10% could go direct to the banking system and the remaining 2% into the village coffers for use in an emergency. This respects the community spirit. Within villages, it is also important to encourage debates aimed at striking new social balances between social cohesion and individual dynamism. In this case, yet again, it is the community that prevails.

Helen Burford | alfa
Further information:
http://www.cirad.fr/en/actualite/communique.php?id=622

More articles from Business and Finance:

nachricht Mathematical confirmation: Rewiring financial networks reduces systemic risk
22.06.2017 | International Institute for Applied Systems Analysis (IIASA)

nachricht Frugal Innovations: when less is more
19.04.2017 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: The pyrenoid is a carbon-fixing liquid droplet

Plants and algae use the enzyme Rubisco to fix carbon dioxide, removing it from the atmosphere and converting it into biomass. Algae have figured out a way to increase the efficiency of carbon fixation. They gather most of their Rubisco into a ball-shaped microcompartment called the pyrenoid, which they flood with a high local concentration of carbon dioxide. A team of scientists at Princeton University, the Carnegie Institution for Science, Stanford University and the Max Plank Institute of Biochemistry have unravelled the mysteries of how the pyrenoid is assembled. These insights can help to engineer crops that remove more carbon dioxide from the atmosphere while producing more food.

A warming planet

Im Focus: Highly precise wiring in the Cerebral Cortex

Our brains house extremely complex neuronal circuits, whose detailed structures are still largely unknown. This is especially true for the so-called cerebral cortex of mammals, where among other things vision, thoughts or spatial orientation are being computed. Here the rules by which nerve cells are connected to each other are only partly understood. A team of scientists around Moritz Helmstaedter at the Frankfiurt Max Planck Institute for Brain Research and Helene Schmidt (Humboldt University in Berlin) have now discovered a surprisingly precise nerve cell connectivity pattern in the part of the cerebral cortex that is responsible for orienting the individual animal or human in space.

The researchers report online in Nature (Schmidt et al., 2017. Axonal synapse sorting in medial entorhinal cortex, DOI: 10.1038/nature24005) that synapses in...

Im Focus: Tiny lasers from a gallery of whispers

New technique promises tunable laser devices

Whispering gallery mode (WGM) resonators are used to make tiny micro-lasers, sensors, switches, routers and other devices. These tiny structures rely on a...

Im Focus: Ultrafast snapshots of relaxing electrons in solids

Using ultrafast flashes of laser and x-ray radiation, scientists at the Max Planck Institute of Quantum Optics (Garching, Germany) took snapshots of the briefest electron motion inside a solid material to date. The electron motion lasted only 750 billionths of the billionth of a second before it fainted, setting a new record of human capability to capture ultrafast processes inside solids!

When x-rays shine onto solid materials or large molecules, an electron is pushed away from its original place near the nucleus of the atom, leaving a hole...

Im Focus: Quantum Sensors Decipher Magnetic Ordering in a New Semiconducting Material

For the first time, physicists have successfully imaged spiral magnetic ordering in a multiferroic material. These materials are considered highly promising candidates for future data storage media. The researchers were able to prove their findings using unique quantum sensors that were developed at Basel University and that can analyze electromagnetic fields on the nanometer scale. The results – obtained by scientists from the University of Basel’s Department of Physics, the Swiss Nanoscience Institute, the University of Montpellier and several laboratories from University Paris-Saclay – were recently published in the journal Nature.

Multiferroics are materials that simultaneously react to electric and magnetic fields. These two properties are rarely found together, and their combined...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

“Lasers in Composites Symposium” in Aachen – from Science to Application

19.09.2017 | Event News

I-ESA 2018 – Call for Papers

12.09.2017 | Event News

EMBO at Basel Life, a new conference on current and emerging life science research

06.09.2017 | Event News

 
Latest News

Rainbow colors reveal cell history: Uncovering β-cell heterogeneity

22.09.2017 | Life Sciences

Penn first in world to treat patient with new radiation technology

22.09.2017 | Medical Engineering

Calculating quietness

22.09.2017 | Physics and Astronomy

VideoLinks
B2B-VideoLinks
More VideoLinks >>>