'Why Can’t Women Repay Their Loans Sometimes?' – ACCION Ambassadors Blog the World – October 25, 2011

> Posted by Center Staff
“Why can’t women repay their loans sometimes?” This is a question whose answer has industry-wide implications, not least against the backdrop of the Smart Campaign’s focus on over-indebtedness.
Aurélie Dagneaux and her colleagues are putting this question under the microscope while at Fundación Paraguaya, where she’s visiting as an ACCION International Ambassador. The Ambassadors, who have been deployed around the world in 2011 to look into the industry “on the ground,”  have a blog you can find here. You can also subscribe.
Besides a previous post from Dagneaux, the Center blog has also showcased reports from Ambassadors Nirav Chheda, Pamela Chang, David Firth Bard, Stephen Matthew Lee, Jason Loughnane, Wei Wei Pan, and Leah Vinton.
Dagneaux’s post “Why Can’t You Repay Your Loan?” begins:
Together with Mary Helen, another ACCION Ambassador, and along with 3 interns from Fundacion Paraguaya, we are conducting a study to determine “causes of arrears among women’s committees”.
In simple words: “Why can’t women repay their loans  sometimes ?”
1.       The problem

The portfolio at risk (PAR30 for the experts) [that is the part of Fundacion Paraguaya’s loan portfolio that is at risk of not being repaid by the clients] is currently very low among group lending’s clients (women who borrow in groups of 15 to 30): less than 1%. That is particularly low compared to the 4% of individual lending. Yet, this percentage has recently been increasing. And worrisome, defaulting on a loan (ie not being able to repay it) now happens to women who are in their very first loan cycle, after only 1 month of taking out a credit.

So, is there something wrong with women themselves? Is the Paraguayan economy the one to blame? Is there something wrong with Fundacion Paraguaya’s credit methodology (be it the selection process or the groups’ follow up)?  Is there something wrong with microcredit in general? And what can be done to prevent it?
To read the rest of this post, and check out the other Ambassadors’ reports, you can click the link “Why Can’t You Repay Your Loan?”
Image credit: bdesham
Have you read?
Consequences of Over-indebtedness: Lessons from India
Peruvian MFIs Advance ASOMIF Initiative Targeting Over-indebtedness
‘We Need to Keep Learning About Over-indebtedness’ – Beth Rhyne on CGAP Microfinance Blog