International conference on African culture and development edition:1 date:21-26 April 2008
Based on long term anthropological research and from an actor-oriented approach this paper investigates the outcomes in terms of social and institutional change of the introduction of rural microcredit services in Tigray (Ethiopia) about ten years ago. It shows how farmers’ sidetracking in and appropriation of development programmes that provide microloans to their beneficiaries to invest in productive asset building, cause endogenous institutions - defined as regularised patterns of behaviour between individuals and groups in society - to alter in significance, function and meaning.
Contrary to microcredit providers’ intentions, farmers in the research area use (parts of) their loans to bridge seasonal food gaps and meet deficiencies in seed and draught power. This depresses a number of long-standing informal institutions that regulate seasonal grain and money lending and sharecropping between households with differential access to resources. On the other hand due to microcredit borrowers’ immediate large cash needs to pay off their debts, short-term informal money lending (e.g. bridging credit between successive microloans) and one-year land lease have gained importance. Existing informal social security institutions have been adapted to take care of unlucky microcredit borrowers.
The impacts of the introduction of rural microcredit services are complex and cannot be fully understood without taking into account the history, functioning and adaptability - through human agency in answer or not to external intervention - of existing socio-culturally embedded institutions. If we want microcredits to help genuinely enhance rural poor people’s livelihoods attention to the interactions between microcredits, farmers and informal institutions is imperative.