The Impact of Microcredit

Source: Microcredit Works

You may ask yourself if microcredit works and if it is really worth lending small amounts of money to micro-entrepreneurs in developing countries. The answer to that is, yes. Although we don't think about how microlending effects micro-entrepreneurs other than that it could improve their lifestyle, there are other positive effects to them receiving micro loans.

When micro-entrepreneurs receive loans, they are forced to take responsability. The money lent is not free so there is an understanding between the micro-entrepreneurs and the organisation they are borrowing from that it must be paid within a chosen time period. The money is repaid with interest and that is why it needs to be repaid through and organisation, which caters to helping people in developing countries.

Microcredit also provides an incentive to micro-entrepreneurs. They can create real value to their lives rather than just working for somebody else.