From the ‘agricultural credit era’ (1950s–1970s) through the ‘microenterprise era,’ institutional arrangements and product designs that characterized financial services to the poor were underpinned by a dominant image of the poor. First, the image of the poor as small and marginal farmers drove the disbursement of agricultural loans from special, often governmental, institutions using foreign grants and soft loans. Subsequent views of the poor as women entrepreneurs resulted in the delivery of increasingly large working capital loans by mostly voluntary organizations to poor women organized into groups offering joint liability.
Whatever the strengths and weaknesses of these approaches–and experience has taught us many lessons–the arguments which supported them were clear, even though they may now appear simplistic. Farmers need crop loans. Poor businesswomen need a steady supply of easily repaid loans which grow with their businesses.