Abstract:
This paper contributes to the scholarly debates that question the
efficacy of microcredit schemes in development programming.
Dominant political economy debates posit that microcredit schemes
have failed to achieve the envisaged financial inclusion and small
scale enterprise development outcomes because the nature of the
intervention itself is an imposition by neoliberal promoters on global
south economies. It is also argued that local political elites use
microcredit programmes as a tool for advancing patronage.
Motivated by this foregoing school of thought, we contend in this
paper that informal credit management rules that dominate the
administration of these schemes, at the expense of clearly spelt-out
formal rules made known in the public domain, also contribute to
this mission drift. Thus, our aim was to assess how prevailing
microcredit-lending rules contribute to non-achievement of
development outcomes. Guided by Douglas North’s
conceptualisation of rules of the game as our analytical framework,
we employed Q methodology to generate key themes that emerged
from primary qualitative data collected through in-depth interviews
with purposively recruited microcredit clients of the National
Economic Empowerment Fund, a public microcredit scheme in
Malawi. Findings revealed that microcredit schemes were
dominated by informal rules regarding turnaround time, credit
appraisal processes, political interference, and misplaced borrower
perceptions about the objectives of microcredit schemes. These rules
were misaligned to what was promised to potential microcredit
borrowers as reflected in the public microcredit’s credit management
procedures. We concluded that unless the apparent pervasion of
these substitutive informal rules that distort outcomes is curtailed,
public microcredit schemes risk becoming an irrelevant strategy for
driving small-scale enterprise development agenda in countries like Malawi
