Assessing the Impact of Microcredit: A Zambian Case Study

Expectations are high, but evidence of the impact of microcredit remains in short supply. This article estimates the impact of an urban credit programme in Zambia on business performance and on a range of indicators of wellbeing. Borrowers who obtained a second loan experienced significantly higher average growth in business profits and household income. Inflexible group enforcement of loan obligations resulted in some borrowers, especially amongst those who had taken only one loan, being made worse off. Our methodological investigations suggest that the supply of rigorous impact studies can be increased by basing them on data collection that serves a wider range of purposes, including market research.