Vifgage

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Long before microfinance was underway, lenders viewed tangible collateral as something to lend against. In a primitive market tangible collateral expands the number of possible positive sum games in credit markets, and the sizes of loans that may be negotiated. This type of lending was developed long ago as suggested by mortgage, which means a dead pledge or security in Old French, and in a term that is no longer used, vifgage, or living pledge or security. Under a vifgage the borrower provided a member of his family to the lender, and this family member worked on the lender’s land or in the lender’s business until the debt was repaid, usually through the imputed wage of the bonded worker or the value of his production. Vifgage survived until relatively recently in Africa and is reported still to exist in informal markets in India.

TAKEN FROM: Innovation in Finance & Movement to Client-Centered Credit, J.D. Von Psichke [Journal of International Development - Dec. 14, 369-380 (2002)]

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