The Credit Activities of the Informal Sector Should Be Discouraged. Support the Statement With Arguments.

It is true to say that the credit activities of the informal sector should be discouraged. It is due to the following reasons:

  1. They charge high rate of interest in comparison to that of formal sector.
  2. Thus the cost of borrowing is high.
  3. Due to high cost of borrowing, the borrowers have to repay more and they will have less saving, which will hinder individual economic development and ultimately will affect the country’s economic development.

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