Rural Credit for Resource-Poor Entrepreneurs: Lessons from the Eritrean Experience

Developing countries' small-scale farmers lack access to financial services. In the Eritrean Savings and Micro- Credit program (SMCP), solidarity groups are jointly responsible for individual members' loans; this reduces transaction costs, improves repayment and substitutes for collateral. Performance of SMCP (1996 to 2002) indicates low arrears and good repayment, but not satisfactory saving mobilization. SMCP service reached many people previously without access to financial services, thus materially improving individuals' economic self-confidence and independence, cash holdings and household living standards. It has had favourable social spin-offs; a well-designed village-banking model can help solve economic problems of the poor.

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 Record created 2017-04-01, last modified 2020-10-28

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