How to lend like mad and make a profit: A micro‐credit paradigm versus the start‐up fund in South Africa

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Abstract
In current debates about micro‐credit, joint‐liability schemes are often viewed as the only viable way to non‐collateralised lending, and are thus seen as almost synonymous with micro‐credit. This article reports about an alternative, non‐participatory approach to micro‐credit. Prompted by the apparent inability of group credit schemes to reign in lending costs, the article sets out the institutional requirements for cheap, ‘mass‐produced’ credit. It argues that such credit can be viable if mechanisms are in place enforcing the self‐selection of potential borrowers and self‐motivation of existing borrowers. The analysis of a ‘mass‐minimalist’ micro‐credit institution from South Africa supports the argument.