Microcredit is the extension of small loans to enterpreneurs too poor to qualify for traditional bank loans. It has proven an effective and popular measure in the ongoing struggle against poverty, enabling those without access to lending institutions to borrow at bank rates, and start small business.

  • size - loans are micro, or very small in size
  • target users - microenterpreneurs and low-income households
  • utilization - the use of funds - for income generation, and enterprise development, but also for community use (health/education) etc.
  • terms and conditions - most terms and conditions for microcredit loans are flexible and easy to understand, and suited to the local conditions of the community.

    • But there are some flaws with Microcredit like:

  • Turning a profit on the loan
  • Inability to reach the poorest of the poor
  • Microcredit dependency
  • Durability of poverty reduction
  • Excessive political interference to gain a vote bank

    •