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

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.