Farmers’ appropriation of microcredit programs and informal institutional change in Tigray, Ethiopia

Based on ethnographic research and from an actor-oriented approach, this paper investigates the outcomes in terms of social and institutional change of the introduction of microcredit in Tigray (Ethiopia). It shows how farmers’ appropriation of microcredit programs causes informal credit, land and social security institutions to alter in significance, function and meaning. Contrary to the intentions of microcredit programs, farmers use 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 lending and land rental between households with differential access to resources. Due to microcredit clients’ immediate large cash needs to pay off their debts, short-term informal money lending and one-year land “sale” have gained importance. An informal social security institution has been adapted to take care of unlucky microcredit borrowers. On a broader level, the paper analyzes the encounter of the global paradigm of microcredit to fight poverty with local Tigrayan, historically grounded conceptions of debt, independence and wealth.status: publishe