After interviewing the CEO of the credit union last week, I began thinking about the concerns that many people have expressed regarding microfinance and the likelihood for interior communities in Suriname to default on loans. Although I have no statistical data to support these presumptions and am not even sure that I agree, it is definitely the initial reaction of most people I have spoken to.
So why would people take out a loan if they were unable to pay it back? The answer may lie somewhere in Abraham Maslow’s Hierarchy of Needs theory. According to Maslow, “people strive for “self-actualization” in order to reach their highest human potential” (Peace Corps Nonformal Education Manual). There are four needs that must be met before “self-actualization” can be achieved. Maslow believes that people’s primary need is for survival or food, water, shelter, and clothing. Once survival needs are attained, safety needs such as protection from threats can be addressed. After realizing the need for safety the focus moves to the need for love or the feeling of membership and acceptance. Ego and esteem needs are then attended to before the person can finally develop to the fullest potential and reach “self-actualization.” Each day a person’s position in the hierarchy may change according to the need that is not being met at that particular time. For instance, “even a wealthy person cannot concentrate on her work if she has had no breakfast” (Peace Corps Nonformal Education Manual).
In the interior many people are struggling to survive. Some of their primary needs such as nutrition and healthcare are not being met. This may be one reason why people would be less likely to pay back a microloan. It is quite possible that interior people would be more concerned with using the money to satisfy the need to survive rather than to generate income which would give them the means to pay back the loans. According to Maslow’s theory, people “concerned so intimately with simple survival cannot devote their energy to inner growth and a greater understanding of their circumstances until their basic needs are satisfied” (Peace Corps Nonformal Education Manual).
In addition to survival, safety in the interior is also a major concern as tensions still linger from the 1986 – 1992 guerrilla war. The need for love and acceptance is also challenged as skepticism and distrust of one another is on the rise in the interior as culture and tradition fall to the wayside. How can one feel accepted if he is not trusted? If one does not feel loved or accepted then his ego and self-esteem are surely damaged. All of these failures to meet Maslow’s Hierarchy of Needs would make it difficult for people in the interior to see beyond their immediate needs that are not being met and anticipate the consequences for failure to repay loans; the most substantial consequence being the inability to receive future loans.
A good starting point for potential microfinance programs in Suriname to address the issues that Maslow’s hierarchy reveals would be to couple loan distribution with mandatory classes addressing return on investment and the importance of using loans for income generating activities. Villagers would then be able to see past their immediate need to survive and see how these small loans could give them a more permanent solution to survival in the future. As a result, these programs would assist the people of the interior in understanding their circumstances and envisioning a way to reach “self-actualization.” Once that end is achieved, I believe that the probability for villagers to default on microloans will be significantly less.
So why would people take out a loan if they were unable to pay it back? The answer may lie somewhere in Abraham Maslow’s Hierarchy of Needs theory. According to Maslow, “people strive for “self-actualization” in order to reach their highest human potential” (Peace Corps Nonformal Education Manual). There are four needs that must be met before “self-actualization” can be achieved. Maslow believes that people’s primary need is for survival or food, water, shelter, and clothing. Once survival needs are attained, safety needs such as protection from threats can be addressed. After realizing the need for safety the focus moves to the need for love or the feeling of membership and acceptance. Ego and esteem needs are then attended to before the person can finally develop to the fullest potential and reach “self-actualization.” Each day a person’s position in the hierarchy may change according to the need that is not being met at that particular time. For instance, “even a wealthy person cannot concentrate on her work if she has had no breakfast” (Peace Corps Nonformal Education Manual).
In the interior many people are struggling to survive. Some of their primary needs such as nutrition and healthcare are not being met. This may be one reason why people would be less likely to pay back a microloan. It is quite possible that interior people would be more concerned with using the money to satisfy the need to survive rather than to generate income which would give them the means to pay back the loans. According to Maslow’s theory, people “concerned so intimately with simple survival cannot devote their energy to inner growth and a greater understanding of their circumstances until their basic needs are satisfied” (Peace Corps Nonformal Education Manual).
In addition to survival, safety in the interior is also a major concern as tensions still linger from the 1986 – 1992 guerrilla war. The need for love and acceptance is also challenged as skepticism and distrust of one another is on the rise in the interior as culture and tradition fall to the wayside. How can one feel accepted if he is not trusted? If one does not feel loved or accepted then his ego and self-esteem are surely damaged. All of these failures to meet Maslow’s Hierarchy of Needs would make it difficult for people in the interior to see beyond their immediate needs that are not being met and anticipate the consequences for failure to repay loans; the most substantial consequence being the inability to receive future loans.
A good starting point for potential microfinance programs in Suriname to address the issues that Maslow’s hierarchy reveals would be to couple loan distribution with mandatory classes addressing return on investment and the importance of using loans for income generating activities. Villagers would then be able to see past their immediate need to survive and see how these small loans could give them a more permanent solution to survival in the future. As a result, these programs would assist the people of the interior in understanding their circumstances and envisioning a way to reach “self-actualization.” Once that end is achieved, I believe that the probability for villagers to default on microloans will be significantly less.
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