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Both good contract design and pricing policy matter greatly. Still, they are necessary conditions for success, not sufficient conditions. A great deal of what distinguishes failed microfinance from successful microfinance ultimately has to do with management: Particularly with how staff members are motivated and equipped to do their jobs.’ In this, microfinance is no different from businesses that sell soft drinks or haircuts.
If one just read newspaper stories, it would seem that all microlenders can boast repayment rates above 98 percent and are making steady profits; management does not seem to be a big issue...
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