The limitations of group-based microfinance and ways to overcome them
In group-based microfinance, success in attaining the goals of inancial sustainability and poverty reduction is crucially dependent on the sustainability of groups as organizations. This article argues that as mounting tensions arise between financial sustainability and organizationalsustainability, this produces fundamental instability within groups and a tendency for the system to collapse. What is more, tensions tend to lead to the fracturing of groups and greater exclusion of the poor, creating negative impacts on well-being. The article discusses how tensions between
financial and organizational sustainability can be minimized, and suggests that incentives should be put in place to strengthen groups.
sustainability, this produces fundamental instability within groups and a tendency for the system to collapse. What is more, tensions tend to lead to the fracturing of groups and greater exclusion of the poor, creating negative impacts on well-being. The article discusses how tensions between
financial and organizational sustainability can be minimized, and suggests that incentives should be put in place to strengthen groups.
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