MYTHS OF MICROFINANCE AS A PANACEA FOR POVERTY ERADICATION AND WOMEN EMPOWERMENT

The discussion of whether provision of microcredit to the poor could change the social equation and conditions in which the poor, especially women, live in rural areas is a current debate. Proponents of microfinance argue that targeted credit is a tool for solving rural problems, especially poverty,...

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Bibliographic Details
Published in:Savings and development 2005-01, Vol.29 (2), p.199-222
Main Authors: Onyuma, Samuel O., Shem, Alfred Ouma
Format: Magazinearticle
Language:English
Subjects:
Credit
Economic development
Informal sector
Microcredit
Microfinance
Microloans
Nongovernmental organizations
Rural poverty
Women
Womens empowerment
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Summary:The discussion of whether provision of microcredit to the poor could change the social equation and conditions in which the poor, especially women, live in rural areas is a current debate. Proponents of microfinance argue that targeted credit is a tool for solving rural problems, especially poverty, enhancing poor women's existing socio-economic conditions and changing the relations between gender and class, to the benefit of poor women. However, critics argue that while a marginal increase in income and assets can enhance the well-being and economic security of the poor, the increase may be too little to affect the pervasively entrenched political and economic relations. Literature tends to indicate positive impacts of microlending on the poor, thus creating misconceptions that microlending is a panacea for poverty alleviation amongst people and regions. This article identifies five myths of microfinance by exploring its benefits and losses and concludes that the poor need more than microloans. They need holistic rural development approaches and other comprehensive programmes that address their lack of access to and control of productive resources, difficulties in accessing labour opportunities, formal education, work skills and gender bias.
ISSN:0393-4551