PEOPLE-CENTERED CREDIT SYSTEMS IN DEVELOPING COUNTRIES: THE NEED FOR REGIONAL NETWORKS Introduction Slums and squatter settlements, a common feature of most urban areas in developing countries of the world, are not "problems" that have to be "tackled". They are a consequence of a wide ranging set of problems that face urban poor and government agencies. Concentration of large populations in cities generates "spatial polarization, economic dualism, social inequity and diseconomies of scale in the long run" (UN- ESCAP, 1992: 114). The resultant slums and squatter settlements are formed due to a lack, or very poor quality, of basic infrastructure and services (water, sewerage, drainage, roads); social infrastructure (health care and education) and access to finance. Lopsided policies and vested interests of politicians and government agencies have only compounded this problem. Walking along the street of a settlement, one is struck by the apparent contrast of dwelling and habitat found on the same street. On one side is a dilapidated single storied house of tin sheets, open drains and no windows. Across the street is a fine two-storied brick and concrete house with glass windows and paneled doors and painted walls. There are many reasons for the existence of such differences even among the poor. One variable that repeatedly comes up as a sort of common denominator, and that is external to the resources of a household is credit, specifically adequate access to different sources of credit. This article concentrates on the low-income households of urban areas in developing countries. The issues and ideas discussed here are based, in part, on primary surveys of 256 squatter households spread over six settlements, and 54 informal credit suppliers who served their financial needs. NGOs, social workers and academics were also interviewed to glean their opinion. The survey was conducted in Bangalore, India in June-July 1991. Go to the next section Return to the Table of contents Return to the Virtual Library on Microcredit