It gives us a good feeling that microfinance is reaching out to poor women but some say that the same may not apply in case of teens. A number of those related to this field feel that microfinance to teenage girls could make them more vulnerable. Since the eighties when microfinance started spreading its wings it has helped many people come out of the shadows of poverty. Ninety percent of the loans are given to women where interest rate for income generation activity can be as high as 20%.
You must be wondering how come teens are eligible for microfinance? You are absolutely correct as most of the countries do not permit contractual loan agreement with anyone under the age of 18 but despite this a few microfinance organizations still lend to teens. So this implies we have a segment of borrowers between the age of 16 and 24. Under microfinance scheme, the person participating in it has to offer some percentage of the loan as collateral and even if they manage it they are not able to repay it back or fail to pay their installments on time leading to intense pressure on them. Such kind of pressure at young age is uncalled for and definitely running business in your teens is not a child's play. As a result many of the girls tend to get into activities like prostitution, drug racket to pay back their loans since running a new business tends to be challenging and for a teenager it becomes even more difficult. This makes them vulnerable to diseases and other ills hence spoiling their future pretty early on life.
Giving loans to teenager is like committing a crime since at that age they can't distinguish between loan and grant and as most of them don't have any kind of business experience it puts them under intense pressure to pay back the loans and they end up doing things which they shouldn't be doing at an early age.
I was seriously shocked to read this post and I am surprised to see your reaction on microfinance towards teens. May I inquire which model or business specifically you are referring to? As I work with a social entrepreneurship network which involves microfinancing, I must say that while the “industry”, and perhaps the “practice” of lending to teens is still only on the rise (as you know many microfinances operate primarily with adult women), there has been and there are ongoing success stories with lending to teens. Implying that teens borrowing money is simply irresponsible for the organization’s part is jumping to conclusions. Keeping in mind, people from all age range have problems with credit. Teens aren’t necessarily any less-informed, and if anything the danger lies with the ones who are more involved on how to jump loopholes!
Many microfinance these days works with local, on-site organizations, or, within their own organizations, have trainers, people who work with the target audience to go with them every step of the way in building up a business, ensuring credit-return over due time, and monitor the process. Obviously one can always pose the question whether these monitoring processses or even people doing the monitoring are all just and fair and; but isn’t it rather condescending to mention that teens cannot do it? Acreditar in the state of Pernambuco, Brazil, is one example that “lending to teens” is clearly working. Check Banco Palmas. Check Qifang. Banco Perola. They might not be so well-known, but they work with teens, and it’s working.
I don’t know what exactly are/were the problems they face while working with teens, and I imagine there will be challenges along the way. But I think it is important to come up with some stats and a bit more facts to back up this claim you have listed here.
a friend suggested your blog; thanks for what you do
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josh tetrick
blog.33needs.com
blog.33needs.com
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