Results of analyses of data collected from surveys of providers and potential users of microcredit among micro and small enterprises (MSEs) in Khartoum State, did not support the belief that there is a large gap between demand for and supply of microcredit in the state. This result points to the need to focus on and critically examine factors behind low participation rates among various borrower groups. The study also found that cost-toclient represents a very small fraction of amounts of loans applied for and interest rates charged, implying that it is not a major cost item for potential users of microcredit. Repayment rates were found to be high with no significant differences between various groups of borrowers which mean that the risk of default appears to be low. Aprobit regression analysis of determinants of ability to repay indicated that male-owned MSEs are more likely to repay loans than female owners. This suggests the need to provide the necessary complementary support for strengthening business skills and entrepreneurship of women-managed MSEs. Membership in social groups networks was found to reduce likelihood of default suggesting the need for policy and institutional innovations that can take advantage of social capital and encourage lending to organized groups to reduce risks of default. Other important factors include key business performance attributes such as successful business operations indicating the importance of measures and policies that would increase awareness of Islamic modes of finance, training and other complementary innovative mechanisms.
Key words: Supply, Demand, Repayment, Cost-to-client, Microcredit.
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