Is micro-lending really effective?
Microfinance started in the 1970s in Bangladesh and Brazil. At that time there was skepticism that poor people in developing countries would make good candidates for loans. Early results showed that given the opportunity, people with very low incomes and little to no collateral have very high rates of loan repayment (for GEMS’ projects it has consistently been at or above 95%) with interest. Group lending is often used so that members of the group put pressure on each other to ensure repayment. GEMS of Hope has extensive experience with both group and individual micro-lending models. In GEMS’ experience, micro-lending is certainly effective, as it ensures that women have the necessary means to build their micro-enterprises, purchasing more materials up front for increased savings and stability. However, we have found that the effectiveness of micro-lending is greatly increased when it is integrated with education on topics like sexual and reproductive health and women’s rights, with sk
