Guaranteeing development: an approach to financing economic activities

Increasing numbers of local development organisations are approaching banks seeking credit. Their success has often been limited, due in part to the organisations' unfamiliarity with banking concepts and lack of investment resources, and also to banks' attitudes towards lending to `self-help' groups, and small returns on small loans. In 1985, a group of development practitioners set up RAFAD (Research and Applications of Alternative Financing for Development), a Swiss-based organisation, which provides guarantees, underwriting loans to finance local economic activities in the South. The author discusses the difficulties faced, successes achieved and ways to expand the service.
Author: