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

A significant constraint for economic development in developing countries is the financial sector’s inability to support small businesses, as most are informal. However, it is possible to find alternative or informal microcredit schemes that support families and small businesses in these contexts. In several cases, they constitute an ancestral tradition. This study aims to provide an updated literature review on informal microfinance schemes and summarise the main issues and arguments on this subject. It also presents a less known case: the case of xitique, an informal and traditional Mozambican communitarian microfinance practice. Results show that traditional informal microfinance coexists with formal financial systems and exists worldwide in developing countries, often rooted in traditional and community practices that play economic and social roles. The Mozambican xitique shares common patterns with informal collective microfinance 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 microfinance as a part of a solidarity economyand its potential contribution to development.