Reflecting on Micro Finance in Poverty Reduction

Dennis Dzansi, Victor Atiase

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    Abstract

    Development policy has increasingly shifted towards expanding financial services to the poorer sections of the population
    following the Grameen Bank success. In spite of this and other micro finance success stories, the effectiveness of microfinance
    in reducing poverty continues to be questioned with some arguing that micro finance programmes have little to no impact on
    poverty reduction. Whilst demanding empirical evidence of positive impact, critics of microfinance as poverty reduction
    instrument continue to ask lingering questions like who is the programme supposed to reach? Who is it reaching? What impact
    is it making on the lives of the poor? On the other hand, some are steadfast that a well-designed microfinance programme can
    change the lives of the poor at the individual, household, enterprise and community levels and help raise the standard of living
    of the poor out of the poverty. In this study, the researchers enter the debate by reviewing both empirical and normative
    literature to determine the extent to which microfinance is able to reduce poverty. Based on insights gained, it is concluded that
    micro finance is not fulfilling its original mandate of extricating the poor from poverty or vulnerability to it to the level of comfort.
    We also provide recommendation for policy and practice.
    Original languageEnglish
    Article number5
    Pages (from-to)345-352
    Number of pages8
    JournalMediterranean Journal of Social Sciences
    Volume5
    Issue number21
    DOIs
    Publication statusPublished - Sep 2014

    Bibliographical note

    CC-BY This work is licensed under Creative Commons Attribution 3.0 License.

    Keywords

    • micro finance
    • poverty alleviation
    • micro finance institutions
    • MFIs
    • NGOs

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