The basic argument for and against micro-credits that Banerjee and Duflo make is that they believe that micro-credits can end poverty but with bad credit and poor people it is difficult for people to establish the credit. They believe that if the people of Africa, India, and East Asia can see some light in the situation and get help with financials that they will be motivated to save, get loans and pay their loans off. At the end of Chapter 8 of Poor Economics it says, “Moving the goalposts closer may be just what the poor need to start running toward them.” They are saying that the poor need a little push and motivation to reach their goals of saving and getting out of poverty. They need assistance from their country and for limits to be raised so they can get the help they need. I agree with them and their opinion of micro-credits, the poor are stuck in a hole and don’t know how to get out. They don’t know what to spend their money on and what to save it for. There is no hope and they can’t catch a break most days.
Micro-credits are in Namibia but are stagnant growth. There has been signs of microfinance in Namibia since the 1990’s but there hasn’t been such growth since. “At present, access to financial services by most the Namibians is limited and this constraint has been identified as one of the factors hampering economic growth and poverty alleviation. In particular, the poor segment of the population is excluded from conventional financial services because they lack collateral security and fall short of other requirements of financial institutions” (Mulunga). I do not agree with the limits in Namibia. How are most the population who are poor supposed to even get a start if they are excluded from the benefits of microfinance? With the help of microfinance, they could send their children to better schools, pay for medical care, grow their businesses, etc. With a start and a boost of help Namibians could have a completely different life.
Namibia’s microfinance came after their independence in the late 1990’s. Its growth is from international organizations from donors and independent sources. Micro lenders (cash loans) are the largest form of microfinance in Namibia. People who have been employed use this service most. They are not allowed to take savings as a payment. There is a 27% per annum for loans above N$10 000 and at 30% for loans below N$10 000. ATM pin cards and identification documents are used to make sure payments are made.
There is a group called the Savings and Credit Societies (SACCOS) who are one of the groups in Namibia that increase the growth of microfinance. “Co-opperatives are democratically managed, member based, self-help entities that addressed the social economic needs of members.” The purpose of the SACCOS is to mobilize savings and provide credit to members. This is just one of the groups that are in Namibia. There aren’t many members in the group but every person in the right direction helps and will continue to make Namibia a stronger country.
With microfinance becoming more known around the world maybe that will help countries like Namibia get out of poverty sooner than later. Having this knowledge myself I will look into what I could do that could help countries who struggle with micro credits and having financial limits. More and more knowledge of this topic can only help out countries who need help.
Mulunga, Anna Magano. Factors affecting the growth of microfinance institutions in Namibia. Diss. Stellenbosch: University of Stellenbosch, 2010.
Banerjee, A. V., & Duflo, E. (2011). Poor economics: a radical rethinking of the way to fight global poverty. New York: PublicAffairs.