Print ArticleSome governments guarantee employment or payment in lieu. Some governments guarantee children education. Government offer farmers guaranteed prices for the produce their fields. But so far no government has guaranteed credit.
All that is being asked for is a framework so that if a person wants to buy a goat, credit at very low interest is made available, at present there is no such facility widely available.
Prachanda Nepal´s prime minister had earlier told farmers to stop repaying loans which were less than Rupees 200,000. It is only a relatively better of farmer who could have availed of such a loan in the first place. In contrast how many goats could be bought for Rs. 200,000, how fast would they have multiplied? How many really poor could have been supported?
When we talk of micro credit the beneficiaries are landless people and ´tiny´ farmers. The present thinking of Communists that by giving people land they are going to solve problems is an archaic solution.
The problem with current delivery of credit is that it favours giving big loans, which the poor do not have access.
The development cycle is now provide credit which results in buying of productive assets provide skills / education / knowledge this enables them to improve their current living place or vote with their feet and go to towns in Nepal and India to find work.
Why is micro-credit almost becoming a mantra? Is it becuase groups are formed, and they take joint decisions? Are the able to raise capital by and large internally? Is it because members push each other into greater efforts? Is it because women are the motive force? Is it because micro credit is not only about credit but also other inputs like education?
First and foremost women who bear the brunt of rural responsibility take decisions.
This in itself turns the development model upside down. This one fact is probably the most important in the success of micro-credit in the rural sector.
One of the requirements about this model is that it needs back up support. To take the example further a woman decides that buying a pair of goats is going to improve family income. It may well be that by spending more it is possible to get a milk yielding goat. If credit is directed in such a way that a large number of people in an area keep these goats, it is possible for them to convert the goat milk to cheese. To make cheese is not a simple matter and would require much higher technical inputs.
In case of certain goats their hair is useful, the hair from their bellies is stupendously expensive and so on. They eat almost anything. A full case can be made as to why a poor rural economy should rear goats instead of cows.]
Similarly, raising chickens is not all that simple as it appears. So further inputs are required. It is important for micro-credit providers to have access to practices prevalent in other parts of the country and the world.
Beekeeping can be similarly productive and (as pointed out in another article) can be hugely productive for all farmers of the region.
There are many other examples.
So if a plan is made for a particular area it will be possible to channel mirco-credit to support certain activities. Thus a sub unit of a district could be declared as where 100 per cent micro credit is delivered.
The challenge is 1. to train advisers in micro credit 2. Take the plunge.
Two potential segments which can be trained as advisers are school teachers and groups from the 15,000 plus army of communist combatants who are on standby earning Rs 3000 per month for doing nothing.
The best international collaboration it can receive is from BRAC or Grameen bank in Bangladesh.
Providing a guarantee of micro credit in a phased manner would go down much better with all concerned and the World Bank could well fund part of it since the amounts are so small.
The fear of losses is low in such schemes because it has been an empirically observed fact seen from India to USA that it is the rich who default on loan payments, the poor are generally more honest.
All that is being asked for is a framework so that if a person wants to buy a goat, credit at very low interest is made available, at present there is no such facility widely available.
Prachanda Nepal´s prime minister had earlier told farmers to stop repaying loans which were less than Rupees 200,000. It is only a relatively better of farmer who could have availed of such a loan in the first place. In contrast how many goats could be bought for Rs. 200,000, how fast would they have multiplied? How many really poor could have been supported?
When we talk of micro credit the beneficiaries are landless people and ´tiny´ farmers. The present thinking of Communists that by giving people land they are going to solve problems is an archaic solution.
The problem with current delivery of credit is that it favours giving big loans, which the poor do not have access.
The development cycle is now provide credit which results in buying of productive assets provide skills / education / knowledge this enables them to improve their current living place or vote with their feet and go to towns in Nepal and India to find work.
Why is micro-credit almost becoming a mantra? Is it becuase groups are formed, and they take joint decisions? Are the able to raise capital by and large internally? Is it because members push each other into greater efforts? Is it because women are the motive force? Is it because micro credit is not only about credit but also other inputs like education?
First and foremost women who bear the brunt of rural responsibility take decisions.
This in itself turns the development model upside down. This one fact is probably the most important in the success of micro-credit in the rural sector.
One of the requirements about this model is that it needs back up support. To take the example further a woman decides that buying a pair of goats is going to improve family income. It may well be that by spending more it is possible to get a milk yielding goat. If credit is directed in such a way that a large number of people in an area keep these goats, it is possible for them to convert the goat milk to cheese. To make cheese is not a simple matter and would require much higher technical inputs.
In case of certain goats their hair is useful, the hair from their bellies is stupendously expensive and so on. They eat almost anything. A full case can be made as to why a poor rural economy should rear goats instead of cows.]
Similarly, raising chickens is not all that simple as it appears. So further inputs are required. It is important for micro-credit providers to have access to practices prevalent in other parts of the country and the world.
Beekeeping can be similarly productive and (as pointed out in another article) can be hugely productive for all farmers of the region.
There are many other examples.
So if a plan is made for a particular area it will be possible to channel mirco-credit to support certain activities. Thus a sub unit of a district could be declared as where 100 per cent micro credit is delivered.
The challenge is 1. to train advisers in micro credit 2. Take the plunge.
Two potential segments which can be trained as advisers are school teachers and groups from the 15,000 plus army of communist combatants who are on standby earning Rs 3000 per month for doing nothing.
The best international collaboration it can receive is from BRAC or Grameen bank in Bangladesh.
Providing a guarantee of micro credit in a phased manner would go down much better with all concerned and the World Bank could well fund part of it since the amounts are so small.
The fear of losses is low in such schemes because it has been an empirically observed fact seen from India to USA that it is the rich who default on loan payments, the poor are generally more honest.
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