The microcredit consists of the allocation of small loans to entrepreneurs or artisans who can not access conventional bank loans. Microcredit is developing mainly in developing countries , where it helps to achieve microprojects, promoting activity and wealth creation, but is practiced in both developed and transition countries.
According to the NGO The Microcredit Summit Campaign , microcredit accounted for $ 11 billion 1 , and had 190 million clients at the end of 2009. Among them 140 million women (74%), or 128 million poorest clients, among whom 105 million poorest women (82%) 2 , 3 , 4 . In France, 12,000 microcredits were granted during 2010, for loans of up to 6,000 euros, with an interest rate of around 9.7%, and a repayment rate of 94% 5 . Companies created through microcredit would record a success rate equivalent to the national average, 68% still in business two years later 5. In 2012, microcredit distributed by more than 3,000 microfinance institutions (MFIs) in the world accounted for $ 90 billion of outstanding credit ($ 25-30 billion for savings) and had 200 million clients 6 . According to the latest Microcredit Summit Campaign (CSM), at the end of 2013, the latest available data, the number of borrowers reached the record of 211 million for a cumulative of 3,080 microfinance institutions (MFIs) in the world . 7
The United Nations has declared 2005 the International Year of Microcredit . Microcredit is part of a more comprehensive sphere that includes other financial tools, such as savings, microinsurance and other products that make up microfinance . On October 13, 2006, the establishment and wide-scale development of this system was rewarded by the Nobel Peace Prize awarded jointly to Bangladeshi Muhammad Yunus and the bank he created, Grameen Bank .
The origin of microcredit
We can find a history of microcredit in the practice of pawnshell at low or zero rates of pawnshops , tontines in emerging countries , agricultural credit mutuals , banks popular, created in Europe at the end of the year. xix th century .
The anarchist writer Piotr Kropotkin , in his book L’Entraide, a factor of evolution published in 1902, refers to one of those micro-credit experiments attempted in Europe, the “Fond des Petites Marchands de Fleurs et of Cresson “, created by Anthony Ashley-Cooper (7th Earl of Shaftesbury) (see Chapter VIII, note 22 ):
“[In this collection, we made loans of one pound (25 francs) and sometimes two pounds, to allow young girls to buy a basket and flowers in winter when they are in dire need. . the loans were granted to girls who had “not a six-pence” (60 cents), but that never fail to find some other poor lends to stand surety for them. ” of all the works which I I found myself involved, writes Lord Shaftesbury,I consider that of the little Merchants of Cresson, as the most successful … We began in 1872; we paid out 800 to 1,000 loans, and we did not lose 50 pounds during this whole period … What was lost – and it was very little in these circumstances – was because of death or of illness, not by fraud. »
However, during the nineteenth century, the organized labor movement is particularly conducive to mutual credit practices. It is notably the socialist militants impregnated with the ideas of Pierre-Joseph Proudhon who implement them. One example among many others, in the Swiss Jura, in the second half of the 1860s:
“The loco workers thought that the producers (the workers) had to be put in possession of the tools of work, and that the exchange of the products had to be made on the basis of the cost price.” Although partisans of the theory of the collective property they had Proudhon in high esteem, and they soon founded a mutual credit society, of which each member was required to pay a small benefit in order to be entitled to borrow interest-free loans. […] Similar companies already existed in La Chaux-de-Fonds, Saint-Imier, Sainte-Croix and Moutier.The funds of the credit society loclois being too scarce, “the workers Father Meuron “confined themselves to making joint purchases […].”8
In the last third of the twentieth century, the system is taken over and developed by economics professor Muhammad Yunus . In 1976 , the P r Yunus created the Grameen Bank , an organization that provides loans to the poorest of Bangladesh 9 . At the end of March 2011, the Grameen Bank has provided approximately $ 10 billion of loans to more than 8.3 million members 10 . Yunus received the 2006 Nobel Peace Prize.
During a session of practical work of an investment course, Muhammad Yunus proposes to his students to question the manufacturers of bamboo stools of the nearest villages. The 42 women artisans need a total of 27 dollars to develop their business. But all the banks refuse to finance this too small amount to customers a priori insolvent. Yunus claims to be ashamed of this situation and lends money from his own pocket. By allowing farmers to buy beforehand the bamboo without suffering significant price changes, they manage to create jobs and to repay Yunus 11 .
Since 1999 , the credit methodology adopted by microfinance institutions has increasingly taken the form of a flexible individual product, more closely resembling traditional banking products. The form originally chosen was based on the collective credit methodology, using local savings and joint surety mechanisms and peer supervision to cover credit risk. Quickly added external financing based on a securitization system of credit portfolios.
The World Bank has identified 10,000 microfinance institutions in 85 countries, serving 130 million people with outstanding loans of 30 billion euros. In November 2002, a summit was held in New York on this subject, which brought together 2000 delegates from more than 100 countries.
Established in 1979, the International Credit Mutuel Center is an association that organizes and establishes cooperative microfinance networks in Africa and Asia. It is particularly present in Senegal, Niger, Congo, the Central African Republic, Cameroon, Cambodia and the Philippines. In France , the main operator is the Association for the right to economic initiative . It delivers 10,000 to 13,000 microcredits per year to unemployed or unemployed people creating their own jobs, or to the working poor. The association has more than 130 agencies throughout France.
France is also seeing the development of personal microcredit but with a limited impact. The purpose of the latter is to promote the social, professional or physical or moral well-being of the applicant. It can finance projects or needs such as professional training, the purchase of a vehicle, housing equipment, health costs … The main operators for personal microcredit are referenced on the website www. france-microcredit.org. In the Ile-de-France region, personal microcredit is essentially developing thanks to a system put in place by the Crédit Municipal de Paris . A network of financial institutions, social services, associations and General Councils was formed around the Crédit Municipal de Paris for the accompaniment of the applicants and the instruction of their files.
In Belgium , two institutions dominate this sphere at the national level, the Participation Fund and the Crédal cooperative . In Switzerland , one of the best-known institutions is the Swiss Solidarity Microcredit Foundation (formerly ASECE). We can also mention the Aga Khan Agency for Microfinance , managed under Swiss law, established in Geneva .
While on the European scene, microcredit remains marginal and depends largely on public subsidies, at the international level, much larger volumes are deployed with microfinance institutions active in developing and emerging countries. The leaders in the refinancing of microfinance institutions are the Swiss companies (ResponsAbility, Symbiotics and BlueOrchard). Dutch companies (Triodos, Triple Jump, Oikocredit) and Belgium (Incofin, Alterfin) are among the other key players in the field of private investment in microcredit institutions with generally positive results.
The , a report from the World Bank has made a positive assessment. The number of beneficiaries is estimated at 500 million (out of the 3 billion poor people). The Asia and the Pacific account for 83% of accounts in developing countries, representing 17 accounts per 100 inhabitants. In Cambodia , 400,000 people are affected, and 18,000 new accounts are opened each year in Kenya . It is however in Latin America and in particular in Bolivia that the system is experiencing its greatest growth, making this country one of the most advanced and most competitive microfinance [ref. necessary] . According toKofi Annan , microcredit has proved “an effective weapon against misery and hunger” 12 . The organization declared 2005 the International Year of Microcredit , as part of the Millennium Development Goals . On October 13, 2006, the Nobel Peace Prize was jointly awarded to Muhammad Yunus and Grameen Bank. “A lasting peace can not be achieved without a significant part of the population finding ways out of poverty,” said Ole Danbolt Mjoes, chairman of the Nobel Committee. In France, the President of Adie and the European Microfinance Network Maria Nowak welcomes the award of the Nobel Peace Prize to Muhammad Yunus and welcomes the recognition given to microcredit.
Progress made possible by microcredit
A purpose oriented towards local development
The microcredit activity encourages microprojects at the local level. This allows to induce mutations “at the base”. These are often more effective and have a greater ripple effect – creating an economic network in the country – than some infrastructure or large industrial projects that rarely benefit the poorest. This leverage makes it possible to act effectively with those who take initiatives by personally committing themselves, that is, entrepreneurs or craftsmen.
But beyond the simple financial aspect, microcredit programs also have an impact on local development. Indeed, they affect sectors as diverse as agriculture (village groups, farmers’ cooperatives, professional agricultural organizations), crafts (groups of craftsmen, women’s craft associations), the financing of the social economy (mutual insurance companies). savings and credit, village banks), social protection (mutual health, primary health funds) or education. For example, they help improve access to basic social services, health care, family planning services and clean water.
Often female beneficiaries
In Bangladesh, 97% of the direct beneficiaries of Grameen Bank loans are women, compared to 74% globally. Affecting weakly capitalized sectors often employing a female workforce, microcredit could be presented as a lever for revaluating the status of women in developing countries, directly improving their lot (and that of of their families) and as a factor of profound evolution of societies by the rebalancing that it induces between the sexes.
According to the anthropologist Aminur Rahman, cited by Gilbert 13 , women interviewed in 1999 in Bangladesh attributed this gender preference to behavioral differences, women being supposed to repay better than men for questions of honor, while the reason advanced by the country’s MFIs was aimed at promoting their emancipation. He noted, however, the double discourse of the Grameen Bank, which on the contrary employed mostly men, because of a belief of male employees that they would be less competent. Gilbert reports that later studies, notably Fernana Naz’s, show progress towards emancipation, although Naz is aware that “if these borrowers are on their way tothere is still some way to go ” 13 .
Another feature of this movement is that it relies on relatively effective traditional insurance and solidarity networks that promote regular repayment of loans. The establishment of these programs also offers the opportunity to conduct training activities, particularly in terms of community development and business management.
An equally relevant tool in developed countries
Microcredit is one of the means to fight against banking and social exclusion in developed countries.
In France, microcredit is present in two forms:
- the personal microcredit
- the microcredit professional is a loan generally less than 25 000 € intended for people wishing to create or take over a business but whose resources are insufficient to qualify for a conventional loan.
To benefit from a microcredit, the borrower must be accompanied by a specialized and competent support network such as: France Active, ADIE, France Initiative, the Crédit Municipal de Paris , BGE Boutiques de Gestion, the CRESUS association or the Foundation 2 e lucky. These networks will help him to set up his project, to investigate his request for financing and to develop his activity.
The problems of microcredit
High interest rates
Micro-credit stock borrowing rates, which average global average is 37% 14 , are on average higher than traditional borrowing rates, while repayment rates are 95%, institutions micro-finance justifying them by high operating costs in view of the vulnerability of the clientele. According to Muhammad Yunus, the interest rate should be 10% to 15% higher than the cost of raising funds, beyond which it would be located “in the” red zone “wear” 14 .
However, assets that use microcredit do not have other access to credit. With rates typically in the range of 10 to 30 percent per year, microcredit organizations provide access to credit that can be mastered by active entrepreneurs in developing countries. The high rates are attributable, depending on the case, to the costs of the large labor force (necessary for the selection and monitoring of customers living in sometimes remote areas) and the cost of refinancing the institutions, reinforced by inflation rates. important. Finally, the need for computer equipment and other goods (office equipment, vehicles), often imported, inflates operating costs. Loans granted are accompanied by psychological support, social and technical costs are recorded in the operating section. Moreover, microcredit interest rates fell every year between 2006 and 2011, thanks to the productivity gains of micro-finance institutions.3 .
Effects of microcredit on development
Some microcredit actors denounce an activity that would consist of NGOs using microcredit as a source of funding 15 .
The microcredit actions have also been accused of diverting donations to humanitarian programs. Yet they are financed by solidarity savings and therefore do not “compete” directly with other types of sustainable development actions, although it is often desirable to link microcredit to other development two tools being more complementary than substitutable. Some studies consider that microcredit makes it possible, at best, to improve an existing economic activity, but that the creation of micro enterprises ex nihilo are very rare. The lack of credit would ultimately be a constraint often secondary in business creation, even of very small size and even in environments where informal activities dominate: the16 .
Regarding the effects on women, many studies have shown that the effects were much more limited than what is generally advanced. Some very critical approaches consider that microfinance only reinforces exploitation and male domination 17 . Other approaches are more nuanced: they highlight the diversity of effects depending on the context 16 , the way in which women reclaim microcredit, the unexpected effects that result 18 . Although the final structural conditions of oppression of women is not changed 19 , microcredit can give them little room for maneuver 20Providing, however, not to push them into debt 21 .
Difficulty in measuring the actual effects of microcredit
The impact of microcredit on the situation of the poor is difficult to perform 22 . While there are many examples of individual successes due to microfinance, it is difficult to generalize the effectiveness of microfinance for several reasons: how do we know if the beneficiary could not have access to the credit market locally without the aid? an MFI? (selection bias) If this is the case, success is not due to microfinance. How do you know if the money is invested in value-added projects? How would you know if it would not have happened anyway viainformal savings? (fungibility of the aid). Comparing the respective situations of people with similar socio-economic conditions who have not contracted micro-loans reveals certain indications, but has a bias that corresponds to this difference in credit behavior. A study of 1,800 families in rural Bangladesh thus established an enrollment rate almost twice as high among Grameen Bank borrowers. This considerable difference, however, must be qualified by the fact that decisions to send children to school and to resort to microcredit can be correlated to the same attitude towards the future 22 .
Finally, some people think that microcredit is more a means of saving and insurance and not a source of investment. Households would build a kitty, a buffer of financial protection, thus smooth their incomes, and would not invest in an income-generating activity, thus diminishing the potential for job creation and the expected side effects . Microcredit, however, has perceptible effects. A study by the Poverty Action Lab 23 from MIT on borrowers slumsin India has shown that if consumption had not increased, at least one-third more business was created, perhaps a reduction in consumption for the purpose of economic development, not showing Poverty reduction effect in the short term but potentially generating longer-term wealth 22 .
The excesses related to microcredit
Microcredit has generated a general enthusiasm, it has also attracted new financial players, often former less scrupulous usurers (commercial practices focused on microcredit consumer , interest rates even higher). In some situations, microcredit overloads customers. Following several crises of over-indebtedness, the image of the sector has been seriously tarnished 24 , 25 . The sector is trying to regulate this phenomenon with the central banks and through self-regulation (adoption in 2012 of “Universal Standards for Social Performance Management in Microfinance” 26, a global call in 2012 for responsible microfinance, signed in 2013 by 600 organizations and 2,500 individuals who recall the ethical values and social orientation that should inspire all microfinance institutions 27 ).
The aura of sanctity of microcredit serves as a cover and label to lenders practicing abusive rates no longer seeking economic development but financial profitability. These abuses are found at three levels: that of the borrower who accumulates loans at increasing rates to pay back the precedents, that of a microfinance institution (MFI) that fools its customers, and at the level of a country where can observe a rising interest rate competition for capital attraction.
At the level of borrowers, loan sharks infiltrated the microcredit networks lend money to borrowers who are unable to repay when due. These “microcredit pirates” 28 practice wear rates with repayment terms ranging from a few days to a few weeks. It is not really a failure of microcredit, but a manipulation masked in fine by high repayment rates hiding an unsustainable debt, until the collapse of the contractor (s). On a large scale, these manipulations can generate confidence and distrust and therefore instability on the financial markets 29 .
At the level of microfinance institutions, the progressive image of microcredit is used as a label of trust to deceive creditors and large-scale borrowers 29 , 30 . The (LAPO), the leading microfinance institution in Nigeria , has benefited from the support of international investors such as the Deutsche Bank and the Calvert Foundation, and from a very good rating by Microrate [ archive ] on Microplace, a subsidiary of eBay , while practiced rate 126% 14.
At the state level, the practice by large, high-interest microfinance institutions not seeking economic development but profit can pull competition towards higher rates, in a vicious circle of capital attraction , while the demand for microcredit is high. Such a situation is characteristic of highly populated developing countries, where the demand for small loans is very numerous compared to the available capital. In Mexico, where the main microcredit institutions such as “te creemos”, which has rates of 125%, or Compartamos, the leader of the Americas, rates of 82%, the national average is 70% against 37% on the international plan 14. Similarly, microcredit rates are 74% on average in Nigeria, where the leader, (LAPO), practices forced savings, consisting of keeping part of the loan on which the borrower pays interest, under the pretext of educate poor people to savings, thus achieving a hidden rate of 126%. “Microcredit should be seen as an opportunity to help people out of poverty through the market, not as a way to make money on the backs of the poor. ” 14 said Muhammad Yunus about it.
The accumulation of consumer credit
The scenario of excessive development of microcredit, whose high interest rates vary between 20% and 40%, is criticized as being able to generate bubbles. Highly profitable and deemed low risk, microcredit is a priori competitive on the financial markets, and should interest a growing number of banks 31 , 14 , while the controls imposed by law are weak. Repeated recourse to microcredit used as consumer credit by insolvent households 28 then promote the formation of bubbles similar to that which led to a real estate crisis in 2006 in the United States 32 , 29. The remarkable success of microcredit is measured at exceptional rates of reimbursement by households deemed insolvent 33 , this scenario is not legitimate, but must be considered among the possible risks of drifts 14 that risked any craze on the financial markets. Between 2008 and 2010, several regions of the world experienced crises, recording massive delinquency rates and experiencing a sharp decline in their activities. This is notably the case of Morocco, Pakistan, Nicaragua and Andhra Pradesh in India [ archive ] 34 .
According to the Special Envoy survey 32 country poverty confers a powerful appealing power to credits. The money is lent easily to be used for consumption. According to the survey only 22% of borrowers manage to develop an activity and repay their debt. The remaining 78% accumulate debts, resell their property, their land, their jewels. Some will go to suicide. The survey 32denounces the ease with which large sums (€ 250 in a country where per capita wages per day are € 1) are put in the hands of millions of people who can not refuse them. According to this survey, banks would close their eyes by denying the existence of the abuse of these practices and their misuse given the large market that this represents. Other studies confirm the fact that a very large number of micro-credits, on average more than half, much more in certain contexts, are used primarily for consumption 35 .
A study published in 2015 and relayed by Science 36 and Nature 37 was one of the first randomized controlled trials of a large scale aid program (11,000 of the poor households concerned). It focused on modest but encouraging aids for people living on less than $ 1.25 a day) 36 . She concluded that a more interesting solution for getting out of poverty is not lending money, but donating without a request for a small amount of money (in cash) and / or donating cows, goats, or other farm animalsand service (eg beehive), with accompaniment by the beginning of the food program, health care, and training in basic financial skills, which to start a savings process 36 . This method compared to microcredit has resulted in families healthier and do better 36 . The study covered nearly 11,000 of the poorest households in 6 poor regions of different countries ( Ethiopia , Ghana , India , Pakistan , Peru and Honduras) found this positive effect everywhere, maintained after 2 or 3 years (duration of the survey), except in one case, in Honduras where an NGO offered chickens to 800 poor households, but these birds almost all died quickly from disease. In other cases, the return per dollar invested is, according to the authors, significantly higher than with microcredit (although varying significantly between countries) 38 .
Such studies had so far been avoided for reasons ethical (because they compare a population helped another (control) somehow deliberately non-aided 36 . One commentator judge he would have to analyze this feedback on a period of more than 3 years 36. It is unanimously recognized that livestock can help the lives of local populations, 39 but it should be verified in the long term that poultry or herbivores do not contribute to overexploitation of natural resources in arid zones in particular; risk that some training / awareness devices may help to avoid this.