Unruly entrepreneurs – investigating value creation by microfinance clients in rural Burundi

Figures & data

Table 1. Unruly practices – overview.

Unruly Practices	Example
Consumption spending	Spending loan money on daily needs
	Spending on special events and emergencies (shocks)
Illegitimate investment	Spending on investment other than specified in loan application
	Investments of questionable status (e.g. alcohol production)
	Spending on long-term investments (at times, against the policy of the MFI)
Loan juggling	Borrowing from multiple sources
	Sustaining long-term debt financing by drawing on multiple lenders and repaying credit with debt
	Mixing MFI with informal lending services
Loan arrogation	Loan migration (changing place of residence in order to be eligible for a specific loan program)
	Impostors (using another community member as a ‘substitute lender’ in order to increase own loan volume)

Figure 1. Micro-loan decision process and rule-breaking.

Figure 2. ‘Consumption spending’ storyboard.

Figure 3. ‘Illegitimate investment’ storyboard.

Figure 4. ‘Loan juggling’ storyboard.

Figure 5. ‘Loan arrogation’ storyboard.

Table 2. Unruly practices: regulation approach and social entrepreneurial approach.

Unruly practices	Description	Regulation approach	Potential for value creation
Illegitimate investment	Spending on investment other than specified in loan application	Forbidden or strongly discouraged	Preserving the community’s own normative paradigm, increased control over the community’s finances; innovativeness, cultivating ‘business thinking’, managing risk and maximizing profit
	Investments of controversial status (e.g. alcohol production)
	Spending on long-term investments
Consumption spending	Spending loan money on daily needs	Non-income generating uses, forbidden	Basic need fulfilment, community integration, preserving social bonds, deepening network participation and creating new networks, building alliances, securing the social status of the family
	Spending on special events and emergencies (shocks)
Loan juggling	Borrowing from multiple sources	Forbidden, considered to be the cause of over indebtedness	Risk management through multiple group participations; maintaining relationships, building alliances, increased financial literacy; creativity and innovation
	Sustaining long-term debt financing by drawing on multiple lenders and repaying credit with debt
	Mixing MFI with informal lending services
Loan arrogation	Loan migration (changing place of residence in order to be eligible for a specific loan program)	Illegal – disruptive to loan disbursing systems; undermining the principles of ‘fairness’	Innovative income-generating activity, securing a wage source for the impostors, allowing for large-scale investment, cementing social bonds, increasing agency, empowerment
	Impostors (using another community member as a ‘substitute lender’ in order to increase own loan volume)