Kathleen M. Snoddon recently returned from Morocco where she was able to witness microfinance first-hand. This is the third in a five-part blog series about her journeys.
Muhammad Yunus’ model for non-collateralized, small loans consists of the formation of groups or “pods” that serve as a support system to guarantee that any one person does not default on their loan. Groups are formed with women who usually know each other and are, preferably, engaged in different enterprises. This peer system has proven very effective and provides more than just monetary fall back in the case of sickness or an event that interferes with a borrower’s ability to make her loan payments. There is an emotional support system inherent in this structure.