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Micro-credit schemes

Microcredit schemes are schemes that lend small amounts to the poor in a developing country. The loans may be as low as $1, but they are directly targeted at the needs of those people and reflect the circumstances they operate in. These loans are often offered by Non-Governmental Organisations (NGO's) as the commercial financial institutions are not prepared to work in this way. They generally regard the poor as high risk, as they cannot offer any security for the loans.

Many people have argued that these loans are an excellent way to promote growth and development as they are directly targeted at the people who need them the most and help to promote an entrepreneurial culture from the 'bottom-up'. However, whether they are sufficient to boost an economy significantly is very debateable and they are likely to be most effective when combined with other development strategies.

For an excellent summary of microcredit, with examples, why not have a look at the Christian Aid section on this on their web site. You can do this in the window below: