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Basic primer on microcredit
Category: Microcredit | By CMC-2011, 27-Sep-2011 | Viewed 3871  Comments 0
184_457163651_4.jpgWhen the Calgary Microcredit Conference planning committee began to look for a basic primer on microcredit we were confronted with a variety of references, not all of which were being used consistently. We asked ourselves, if we were having trouble with terms of reference and we were steeped in the content of our microcredit conference planning materials, what were other faced with?  Our research led to several helpful documents that we thought we would share. These two documents came from highly creditable sources and dealt with material that was at the core of what is happening in the microcredit movement. Microcredit is but one part of microfinance but it remains the generic name for the movement, probably because it came before the general use of other terms.

In the first article from the Consultative Group to Assist the Poor (CGAP) - http://www.cgap.org, there are 11 points considered the basic Principles of Microcredit. Some of the topics include:
  • The poor need a variety of financial services, not just loans.
  • Microfinance is a powerful instrument against poverty.
  • Microfinance means building financial systems that serve the poor.
  • Approval for the content of this two page compendium has come from no lesser a world force than the Group of Eight (G8) countries - the main economic council of the wealthy nations.

184_671356360_4.jpgA second instructive document was found on the site of Canadian International Development Agency (CIDA). It was helpful because among other factors it contained a handy glossary microcredit terms. Other article information included the CIDA rational for supporting microcredit.

In the preface to it's multi-page article CIDA says that their long term commitment to microcredit includes providing enabling access to financial services, such as credit, savings, insurance and payment services. CIDA reports that their goal is to ensure the permanent access to financial services by the poor, in particular women, by developing sustainable microfinance sectors. Note that microcredit is but one of microfinance services which in combination help the poor plan for future and cope with emergencies. Straight from the Government of Canada sources the, CIDA site says:

"Microfinance has proven itself to be an effective and powerful tool for alleviating poverty and reducing the vulnerability of poor women and men, and underpinning their ability to achieve the Millennium Development Goals on their own terms, in a sustainable way."

Returning to the glossary of terms that we found so helpful, some examples of the headings are as follows:
  • community-based financial groups
  • financial self sufficiency
  • social performance
  • solidarity lending groups

To be sure the perspectives of the donor and the borrower plus all in between are free to use their own definitions.

This information is offered as a point of departure. Readers on this site now have more tools to extract the maximum goodness from the range of constructive articles posted herein.
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