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Microfinance and the preservation of poverty

Document type: article
Download file(s): 188456 (964 KB)
Abstract: Microfinance was born with the purpose of giving support to millions of indigent people around the world, acting as a force for good. Nowadays, it continues to expand its services but it has been acting both for good and for bad, creating an illusion of redemption from impoverishment, which turned out to be more a vicious circle than an actual aid. The author draws out some of the ways in which MFIs contribute to the perpetuation of poverty by acting as a real business whose ultimate aim is to make a profit. He also indicates how to reduce the bad effects of this situation. The target clients are mainly women, as they are more reliable in terms of households, child-care and savings protection, and tend to put every effort into repaying the debt by the required time. However, women tend to be less empowered than men, from a physical, economic and social point of view, thus giving them credit makes them stronger. Even though microfinance claims to be able to reach the poorest of the poor, it has nevertheless its own interest in maintaining poverty. Moreover, it marginalises those already in desperate situations by forcing them into quick repayments. However, most people drop out in due course because, lacking the knowledge of budget administration, they are unable to save enough to repay the loan. The psychology of micro financing is based on the dependence of its clients, and by forcing them to remain continuously in contact with the institutions. NGOs and other organisations give advice on day-to-day planning and help improve confidence and know-how.
Authors: Harper, M.
Category: General
End Page: 14
Serial number: 2
ISSN: [2210-2175]
Volume: I
Journal: Spanda Journal : quarterly of the Spanda Foundation
Keywords: credit , finance , markets , poverty , women
Language: eng
Organization: Spanda Foundation
Year: 2010
Right: © 2010 Spanda Foundation
Subject: Economic Development and Trade
Start Page: 7
Title: Microfinance and the preservation of poverty