Posted on August 26, 2008 - by James

Bangladesh: First sign of food prices affecting repayment rates…

Rising Food Prices Affecting Loan Repayments in Microfinance Programs in Bangladesh

Originally reported by Bangladesh’s The Financial Express, it appears that an increasing number of MFI clients in Bangladesh are not utilizing disbursed microloans to support planned microenterprises, instead using loans to cover the rising cost of food. A product of the 2008 world food shortage, in many countries rapid increases in food prices have not been accompanied by a comparable increase in wages, causing MFI clients to fill their budgetary gaps with microloan funds.

“We disburse credit to small borrowers to invest in different income generating activities like poultry, dairy, agriculture and small business. But they are spending a major portion of their loan… [click here to read the rest of this article...]