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 women can’t 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?
This was the agenda given to us a month ago: finding the causes and making recommendations to prevent defaults in the future. Continue reading