Informal Microfinance in Developing Contexts and the Case of Xitique in Mozambique: A Literature Review

A significant constraint for economic developmentEconomic development in developing countriesDeveloping countries is the financial sector’s inability to support small businessesSmall businesses, as most are informal. However, it is possible to find alternative or informal microcreditMicrocredit schemes that support families and small businesses in these contexts. In several cases, they constitute an ancestral traditionAncestral tradition. This study aims to provide an updated literature reviewLiterature review on informal microfinanceInformal microfinance schemes and summarise the main issues and arguments on this subject. It also presents a less known case: the case of xitiqueXitique, an informal and traditional Mozambican communitarian microfinanceMicrofinance practice. Results show that traditional informal microfinanceInformal microfinance coexists with formal financial systems and exists worldwide in developing countriesDeveloping countries, often rooted in traditional and community practices that play economic and social roles. The Mozambican xitiqueXitique shares common patterns with informal collective microfinanceMicrofinance practices in other parts of the world. However, it has developed specificities in the context of informal markets. This study contributes to a deeper understanding of the theme in developing contexts and highlights the role played by informal microfinanceInformal microfinance as a part of a solidarity economySolidarity economyand its potential contribution to development.