Research Articles Base: Microfinance

The Impact Of Micro Finance On Women Empowerment

THE IMPACT OF MICRO FINANCE ON WOMEN EMPOWERMENT       Micro-financing is usually for everyone who has the needs to expand their business and willing to pay their obligation on a timely manner but usually men go out and look for a job while most women stay at home and take care of their children or look for a living that usually can be done at home or nearby area in order to take care of their family and earn as well to be able to make ends meet. This has been the reason why most micro-financing caters mostly to women especially in Asian and African Community, they have found most of enterprising housewives for sustainable participation in the economy.       In Latin America about 40% of women produce food and other business to sell while in Asia there are about 60% of them develop their own business at home a small store, grocery, food business and more and in Africa about 70% to 80% of women produce food through land cultivation, livestock, small fishery and other livelihood from their backyard and selling it to their neighbors or directly to the market. These activities created a good participation in their economy that there are also successful women in this kind of business although it is hard to expand usually they start in modesty and earn a little. They find it fulfilling and satisfying to do the work they love while they can still divide their time to take care of their children.       This is where micro-financing company sets-in they have considered these women’s activities to group themselves to be eligible for micro-financing loan to improve, innovate and later expand their business using a small loan from the beginning and later on grow their small business. Micro-financing companies like Kiva, Micro Finance Africa and others does not just usually give funds they also look for ways to train, inform and encourage them the best ways to expand their business so that women can gain control over their livelihood by helping themselves and others. If they are willing and able to demonstrate their best interest usually they achieve economic and social gain, they empower themselves within the community to earn a decent life with the help of micro-financing, they have found a way to climb out of poverty.       In India the Self Employed Women’s Association (SEWA) concerns are equality and human rights of Indian Women. Their micro-financing scheme also provide opportunity through linking them with basic services, labor savings, food processing, information and communication technology and other self help training that will provide them with the basic framework in business creation thus necessary for their success and empowerment. The knowledge and experience they can gain from this training is beneficial as a good entry point to uplift the low morality and dignity of women that has been a part of their tradition that usually women should only stay at home.       In Sub Saharan, South Africa and most parts of the region they have serve the women more than 20 years of empowerment by giving them loans and micro-credits resulting in business opportunity and expansion, poverty eradication, maximization of their resources, self reliance and efficiency of not just women but the participation of the family to maximize their business. Given the complexity and poverty that they have experienced during the last few decades the women can say that they are more enterprising and they have the courage to take advantage of the program set by micro-finance banks to further strengthen their little home-based business.          In Asia particularly the Philippines ABS-CBN one of the most trusted media broadcast is a sister company of Bayan Foundation Micro finance Foundation Inc. started out in 1993 by giving funds to 25 poor women. Reorganized in 2006 to further strengthen their mission to become a full pledge Micro Enterprise Development program that usually caters for women who would like to create a more sustainable livelihood, they do not just give loan but they also provide entrepreneurship training education and values formation to strengthen the family. Opportunity Microfinance Bank, (OMB) also provide a real time training and Christian values formation beside the loan.       Most of Micro Financing Companies has helped most women not just to empower themselves through financial and material gain but they also give them back the pride to become the women of the century who no longer stays at home. Microfinance is an accepted strategy to reach women. According to Global Micro Credit Summit held in Spain that there are about 137.5 million families who have received loans most of them are held by women who has the access to loans and financial services and usually they cater to the poorest community. Most Micro Financing Organizations have followed the rule of the proverbs “give a man a fish and you feed him for a day but teach a man to fish and you feed him for a lifetime” but this time it is the women.  References: http://wikigender.org/index.php/Empowering_Women_through_Microfinance:_Evidence_from_India  / http://www.microfinancecouncil.org/   / http://en.wikipilipinas.org/index.php?title=ABS-CBN_Bayan_Foundation%2C_Inc. / http://www.chs.ubc.ca/srilanka/PDFs/Empowering%20women%20through%20microfinance.pdf  / http://www.microcreditsummit.org/papers/+5cheston_kuhn.pdf Credit:ivythesis.typepad.com

The Impact Of Micro Finance On Women Empowerment

THE IMPACT OF MICRO FINANCE ON WOMEN EMPOWERMENT Micro-financing is usually for everyone who has the needs to expand their busines...

Impact of microfinance on self help groups in coimbatore district

Impact of microfinance on self help groups in coimbatore district   Review of Literature   Microfinance is the provision of financial services, primarily savings and credit, to poor households that do not have access to formal financial institutions and that, microfinance has captured the imagination of opinion leaders, governments and donor agencies as key strategy for poverty reduction. At the same time, however, significant differences of opinion have emerged between the supporters of the microfinance movement and various critics, who have become increasingly numerous and vocal. Self Help Groups (SHGs) is being used in India to refer to unregistered groups of 10 to 20 members involved primarily in savings and credit activities. As in the case of the typical Accumulating Savings and Credit Associations described by  (1995), noted that members save periodically in the group and the savings are lent out to members who require loans at a fixed rate of interest. SHGs however differ from typical ASCAs in their small size, their being promoted1 among the poor by external agencies, most importantly in their obtaining loans from banks. Over 90 percent of these groups have only women members as  (2002) provides an overview of microfinance SHGs in India. Microfinance has captured the imaginations of many people working to reduce poverty as the premise is simple rather than giving handouts to poor households, microfinance programs offer small loans to foster small-scale entrepreneurial activities. Such credit would otherwise not be available or would be only available at the very high interest rates charged by moneylenders. Moneylenders operate with little competition since potential entrants quickly find that costs and risks are high and borrowers are usually unable to offer standard forms of collateral (1993). However, the emerging microfinance movement demonstrates institutional innovations that appear to greatly reduce the risk and cost of providing financial services to poor households. Innovations include contracts that give borrowers incentives to exclude bad credit risks and monitor other borrowers’ activities, schedules of loans that increase over time conditional on successful performance, weekly or semi-weekly loan repayment requirements (1999).   Questionnaire   The questionnaire will cater to survey questionnaire method that focusers towards Self help groups and details on microfinance thus, linking to case study inquiry from wherein research subjects or respondents are located. The survey will be distributed in Coimbatore District in India. The questionnaire will be in a form of survey related statements that uses a five point scaling system function to rank responses of the subjects on each of the statement items that ranges from 1 to 5 classification of strongly disagree, disagree, neutral, agree and strongly agree respectively.  Furthermore, methodology adheres to case study approach in comprehensive and spontaneous manner to be gathered and collated by means of primary and secondary research sources as supporting literature is a vital factor for the research process to achieve a unified degree of research validity and reliability posits, as the latter may serve as one important research method at hand. Through this method, first hand information will be achieved as there uses in research participants to give in ideal response known in case study assimilation.  A total of 50 respondents will be in random sample, this will comprise of self help group members relating to microfinance indication of the Coimbatore District in India. The survey statements will deal to the impact of microfinance in self help groups of the district. (refer to below format of what the survey will be like) as the following survey questionnaire (statement) formation are to be adopted in the whole duration of the research investigation as one core method to utilize.       1 Strongly Disagree 2 Disagree 3 Neutral 4 Agree 5 Strongly Agree     No STATEMENTS           1 Microfinance has reduced the incidence of poverty through increase in income, enabled the poor to build assets and thereby reduce their vulnerability 1 2 3 4 5 2 Enabled households that have access to it to spend more on education than non-client households. Families participating in the program have reported better school attendance and lower drop out rates 1 2 3 4 5 3 Empowered women by enhancing their contribution to household income, increasing the value of their assets and generally by giving them better control over decisions that affect their lives 1 2 3 4 5 4 Contributed to a reduced dependency on informal money lenders and other non-institutional sources 1 2 3 4 5 5 Facilitated significant research into the provision of financial services for the poor and helped in building capacity at self help group level 1 2 3 4 5                 Credit:ivythesis.typepad.com

Impact of microfinance on self help groups in coimbatore district

Impact of microfinance on self help groups in coimbatore district Review of Literature Microfinance is the provision of finan...

Microfinance and Food Security Strategies

Microfinance and Food Security Strategies               Sustainability is one of the major concerns of a country for continuity and   endurance. Especially in the developing nations, sustenance should be paid   more attention than anything else. Being independent from the neighboring   countries in the needs of the countrymen should be prioritized.               Food security directly refers to the social and economic stability of a   country. If food availability is enough, hoarding and panic buying is not present, it   clearly states that the country had enough to give its citizens decent meal and   goods they want to eat. And economic growth is connected on the behaviour of   availability in the market.               The government has the cardinal responsibility in ensuring its citizens   enough supply of food. Over the years, the government of Kenya is striving to   achieve national and household food security through various programs and   activities. Agricultural products are the staple food of Kenyans such as maize,   rice, wheat, beans, sweet potatoes together with traditional foods like sorghum,   cassava, arrow roots and yams. Production of these crops has increased in the   recent years but still with little success to provide for all its citizens. The 2007   Economic Review of Agriculture found out that 51 percent of Kenyans has   inadequate access to food. Thus, food security is directly linked to economic   state which the poverty rate is estimated at 47 percent nationally.               Kenya managed to provide enough for its people the staple grain of maize   for the last three years, but the importation of wheat and rice continued due to its   local low production. In 2008, Kenya faced a big challenge on food availability   due to short rains from the previous year, post-election violence, spread of   livestock disease and increasing cost of agricultural farming. Food deficit is   experienced nationwide and the production of crops is still declining.               In which case, the government has to take a big step in solving the food   availability problems. And microfinance is one of the solutions thought of for   alleviating poverty, provide employment and establish food security.               Finance, or simply the acquisition and utilization of money in a certain   establishment, is the very lifeblood of every enterprise. Microfinance is the   method of financial management used by small and medium-scale enterprises or   by micro entrepreneurs. Microfinance emerged in developing countries to give   opportunities to underprivileged citizens to have their own small business. It just   not alleviates their economic status but helps their human development as well.   Having a sense of self-worth is important for people to keep their value of   existence.               Micro lending is the process of advancing small loans to aspiring   entrepreneurs and existing small scale businessmen to give them enough   starting capital. In Kenya, microfinance starts to be the revolutionary movement   in helping the poor people to improve their household state. It is a country that is   largely agriculture-based on production and employment. The clients of micro   lending are usually having a business start-up or expanding existing micro   enterprises which are mostly women. Banks granting micro lending commonly   take title deeds from rural folklores that serve as collateral. However, lands in   rural communities are communally owned.               Small loans are usually used in agricultural activities. For instance, poor   villagers in Western Kenya get a jumpstart for basket and market weavers.   Moreover, rice farmers in Ahero or Mwea could increase the crop yielding and a   season harvest would make a difference not just for them but for the country as   well. Improving facilities of home-grown business like cementing it would also   make the output and revenue improve. Thus, micro lending granted to poor   villages could increase their household income and eventually help the family   members. Education could finally be afforded and children would be entitled to   health care. Empowering the citizens’ well-being as a whole and moving up to   the social ladder are the potential benefits of microfinance and micro lending.               However, experts noted that microfinance could be totally applicable to all   developing countries. The cost of agricultural inputs such as seeds, fertilizers and   equipments has continuously outpacing and a small loan couldn’t afford its   expansion. What’s really needed is subsidy from the government to cushion out   farmers if famines or natural calamities strike and destroy their crops.               Moreover, illiteracy and ignorance among poor people tends to be   exploited by loan firms. Lenders are ill-informed and eventually abused.               Microfinance has already established its effectiveness among other   countries. However, nations with different situations and circumstances could not   adopt microfinance because it tends to be useless and futile try. What’s really   needed in alleviating poverty is understanding the situation and possible   solutions with the assistance from the government and private institutions as   well.       References:   http://www.ovimagazine.com   http://microfinanceafrica.net   Kinyua, Joseph, Assuring Food and Nutrition Security in Africa by 2020: Prioritizing Action, Strengthening Actors and Facilittating Partnerships, April 2004             Credit:ivythesis.typepad.com

Microfinance and Food Security Strategies

Microfinance and Food Security Strategies Sustainability is one of the major concerns of a country for continuity and ...

The Role the Co-operative Credit Unions in Contemporary Ghana and Beyond

The Role the Co-operative Credit Unions in Contemporary Ghana and Beyond Introduction In the idea of promoting the economic and social growth, the introduction of other alternative is necessary. The role of the financial institutions became more emphasized in the introduction of livelihood programs. In this event, Ghana as one of the developing countries in South Africa has the opportunity to link the practices in credit unions towards the economic growth. However, the money transactions in the credit unions might be different as compared to the banking institutions. What is Credit Union? Credit unions along with the other cooperative activities evolved from the traditional practice, same as the commercial banking did. The idea and concept of the credit unions is to aid the poor people most especially the people who reside in developing countries. By simply providing them money and making loan transactions, the relationship between the people and the financial institutions are understandably beneficial (Scott, 2009). From the past decades, the activities involved in credit unions in developing countries gained considerable interest from development theorists and practitioners. Thus the same mechanism is applied in Ghana. Co-operative Credit Unions in Ghana Credit unions, like the other financial institutions are also regulated and commonly administered by the government. This is done through ensuring that all of the support given by various credit unions leads to the common good of the society (Scott, 2009). In Ghana it is identified that the microfinance system is being regulated by the commercial banks laws. On the other hand, there are a separate laws for the cooperative and non-bank financial institutions. The credit unions in Ghana is performed under the rural microfinance (RMF) and found to be more beneficial to the customers because of the recorded improvement that reflects in the new era of financial institutions. Through the wise combination of a more commercial approach, reconstruction on the sector and recapitalization and building capacity, and lastly strengthening the regulation, the credit unions seems more admirable. The weak performance that mostly identified under the welfare focus and policies of low interest is reportedly became the center of the idea in focusing for a better management and satisfying the services of the credit unions. Albeit there are many limitations in the credit unions, still it is viewed to resist the impacts of changes in financial stream. In addition, there are no stipulated specific provisions regarding the capital requirement on the users but as long as the members can manage and be responsible on their roles, the credit unions will continue to be strong (Basu, Blavy, and Yulek, 2004). In commercial banking, it is still a debate for some developed countries unto how to compensate the arising problems in banking as well as the insurance of the members whenever the financial crises hit them hard. The only answer that they found is through providing stability which may seem impossible because of the financial conditions and uncertainties (Starr and Yilmaz, 2007). Effectiveness In the economic liberation of the financial sector of Ghana, there is a strong and competitive financial that can make significant impact in mobilizing the domestic savings in Ghana. In order to manage the new challenges involves in the credit unions and the associations, new policies and institutional mechanisms are needed to transform the credit union movement to a new credit union model (Ofei, 2001). Through this, it is expected that the economy can experience further growth. The role of traditional banking system in Ghana is, however, managed to support the continuous growth in micro and small enterprises (MSEs). Based on the approaches of the business sectors in strengthening the facilitation of MSEs, the assessments can be traced on the investments of the financial institutions which can be both commercial banking and credit unions. It is suggested that the collectors of loans and investments must be insured to regulate their operations. Through the Credit Union Scheme and GCCUA system that is implemented in the country, the fraudulent individuals can be identified and educate the people in supporting the MSEs for the future growth of the nation’s economy (Alabi, Alabi, & Akrobo, 2007). Conclusion In the contemporary situation on Ghana, the credit unions became the sole provider of loans and investments for the organizations which only needs a small capital and yet struggles in paying high interest. Since Ghana already recognized the areas in which they can gain the advantages and therefore promote the growth, it is not impossible for Ghana to continue its development.   References: Alabi, G., Alabi, J., & Akrobo, S.T., (2007) The Role Of “Susu” A Traditional Informal Banking System In The Development Of Micro And Small Scale Enterprises (MSEs) In Ghana, International Business & Economics Research Journal, 6(12) [Online] Available at: http://www.cluteinstitute-onlinejournals.com/PDFs/2007222.pdf [Accessed 17 September 2010]. Basu, A., Blavy, R., & Yulek, M., (2004) Microfinance in Africa: Experience and Lessons from Selected African Countries, (IMF) International Monetary Fund [Online] Available at: http://www.imf.org/external/pubs/ft/wp/2004/wp04174.pdf [Accessed 17 September 2010] Ofei, K.A., (2001) Retooling Credit Unions: The Case of Credit Union Association of Ghana [Online] Available at: http://www.ilo.org/wcmsp5/groups/public/—ed_emp/documents/publication/wcm_041869.pdf [Accessed 17 September 2010]. Scott, J.A., (2009) Commander and Installation Bank and Credit Unions Liaison Officer Desk Guide, (DFAS) Defense Finance and Accounting Services, [Online] Available at: http://www.dfas.mil/more/referencelibrary/MDA_210-02-D-0003.pdf [Accessed 17 September 2010] Starr, M.A., & Yilmaz, R., (2007) Bank Runs in Emerging-Market Economies: Evidence from Turkey’s Special Finance Houses, Southern Economic Journal, 73(4):1112. Credit:ivythesis.typepad.com

The Role the Co-operative Credit Unions in Contemporary Ghana and Beyond

The Role the Co-operative Credit Unions in Contemporary Ghana and Beyond Introduction In the idea of promoting the economic and social gro...

TO DEVELOP A MICROFINANCE PROPOSAL AT MY NGO FOR A DONOR

TO DEVELOP A MICROFINANCE PROPOSAL AT MY NGO FOR A DONOR Date:______________- Dear (Non-Governmental Organization); I am writing to you in the hope that you will lend us a helping hand in the establishment  and implementation of  our  program. Our program is all about giving free lessons to public school children in the elementary years who are currently having a hard time understanding their lessons. It is in the form of tutoring with the objective to help these children cope in their classroom lessons and activities. Aside from academics, we also aim to act as a guiding force to guide these children in the right path regardless of their color, religion, beliefs, and family history. Many of these children just need listening ears to which their parents and family cannot provide as they are busy looking for a way to live. I am not in the position to know if our public school system  have provided  other  measures to aid these children academically and emotionally. For all intents and purposes, there may even be programs already in effect. But based on observations, it might not be  implemented efficiently due in part to overly large population in any public school especially in the NCR regions. Conversing with students, I found out that tutoring is available for certain subjects whose teachers are willing to extend an additional hour or two but this comes with a corresponding fee. Most parents cannot afford or are not willing to add additional expenses for tutors as they feel their limited income will go a long way if they will spend it on food and other necessities instead of feeding the tutor. Even if we know they are partly wrong, we cannot blame them. Most of the times, survival is their topmost priority.                 Ninety percent of our program will focus on academics. There will be no segregation of grade level as this is not a formal schooling. No subject matter is assigned. Rather, each children will be given time to ask questions about their lesson in school that they do not understand; and each children will also have the opportunity to explain, even to teach the lesson that their group member finds difficult.   The tutor’s main role is to act as buffer to the children, explain further the lessons, or correct discreetly the explanation or the teaching of the student.             The remaining ten percent will be allotted for making products to be sold on special occasions as during the Christmas season, Valentine’s day, and Graduation period. Part of the earnings will be divided equally among the children while another part will be used to subsidize activities that will boost rapport and solidarity. This will teach them the value of earning money through hard work as well as the usefulness of team spirit. In this regard, we would like to ask you to participate in our program by sending tutors to mentor these children, and to contribute the amount of Php ______   to finance our program. Your tutors will also be asked to help train other people in the act of tutoring and dealing with children. The financing will cover the cost of operational expenses as: -           writing materials -          light snacks -          materials to be used for crafts to be sold on occasions -          graduation get-together -          other incremental expenses We know that you will welcome this opportunity to help our children to  better understand their lessons, raising the level of literacy in our country. As a start, we will only start within Metro Manila but our aim is to spread this advocacy to all the Philippine islands. We trust that our advocacy Is in line to what your organization aims for. Should you need to know more about our program, please feel free to contact us. You can reach us through our contact number of ———- or you can send us an email through our account at ______.  We are also available to meet with you to discuss our agenda at your most convenient time and place. We hope to receive a reply before the start of the school year 2012-13 as we plan on implementing our program before the first quarterly exam.                                                                    In good faith, we remain                                                                      ______________________                                                                    Name and Signature Association of ___________                                                                                     Credit:ivythesis.typepad.com

TO DEVELOP A MICROFINANCE PROPOSAL AT MY NGO FOR A DONOR

TO DEVELOP A MICROFINANCE PROPOSAL AT MY NGO FOR A DONOR Date:______________- Dear (Non-Governmental Organization); I am writing to ...

THE ROLE OF THE CENTRAL BANK OF NIGERIA IN THE REDUCTION OF THE UNEMPLOYMENT RATE IN NIGERIA FROM 2000 TO PRESENT

THE ROLE OF THE CENTRAL BANK OF NIGERIA IN THE REDUCTION OF THE UNEMPLOYMENT RATE IN NIGERIA FROM 2000 TO PRESENT             Unemployment is one of the major macroeconomic problems faced by Nigeria. Unemployment rate in 2000 was 18.1 percent, this was reduced to 12.2% in 2002 and 11.9% in 2005 (Akintoye, 2008). Although the figures have reduced in five years, the 11.5% is still a considerable number of the Nigerian population.             There are many definitions of unemployment one of which is the definition given by the International Labor Organization (ILO). Their definition is limited and may not at all perfectly apply to the cultural constraints in Nigeria but nevertheless it is perceived to be encompassing. The unemployed according to the definition, are the economically active population who have no work because they lost their jobs and or have left work, they are thus available to work and are looking for employment. (Akintoye, 2008)             Just very recently, the Central Bank of Nigeria (CBN) urged the state governments to partner and support the Entrepreneurship Development Center (EDC). EDC is one of CBN’s initiatives to reduce the incidence of poverty and the rate of unemployment. EDC offers entrepreneurial training in enterprise development to include basic principles in management, developing a business, growing a business, and creating employment through the business. (People’s Daily, 2011)             This recent initiative is in line with the microfinance program of the Federal Government through the CBN. The CBN Act 24 of 1991 [as amended] and the Bank and Other Financial Institutions Act [BOFIA] 25 of 1991 [as amended] confer to the CBN the key role in the microfinance program for the informal sector (CBN, n.d.).             Microfinance is the provision of access to micro-credit to the poor who do not have the means to access the same from conventional financial institutions (CBN, n.d.) because of lack of assets for collateral. The microfinancing program is aimed to reduce unemployment to the poor especially the informal sector and provide them with access of small loans or credits. The microfinancing program can reduce unemployment through the informal sector provided that it is well-managed and supported (Akintoye, 2008).             The Informal Sector includes those who create their own employment but are not accounted in the statistics of the employment (Todaro 1997 cited by Akintoye, 2008). They are engaged in the production and distribution of goods and services to generate for themselves some income inspite of the fact that they are constrained in terms of capital, technical know-how and physical and human capability (Sethuraman, 1981 in Akintoye, 2008). The economic activities of the informal sector are not included in the GDP (Farrel in Akintoye, 2008) which brings us to the legality issue, that is, if they comply with the “judicial, regulatory and institutional framework” (Feige 1990 in Akintoye, 2008).             The roles of the CBN in microfinance are multifaceted. These includes an establishment of a National Microfinance Consultative Committee (NMCC); crafting of clear microfinance policy; periodic review of the microfinance policy and guideline; mainstreaming micro financing and promoting harmony and a level playing field; interlinking micro financing programs with development banks, financial institutions and microfinance banks; channeling of microfinance funds to microfinance banks; advocating of interest rates that is determined by the market; and implementing training programs to all involved stakeholders. (Akintoye, 2008).             Microfinancing has a role in reducing unemployment and combating poverty. In the case of Nigeria microfinance is pushed as a strategy by the Federal government to reduce unemployment through the Central Bank of Nigeria however there are problems and issues that hamper the effective implementation of the project and the efficient distribution of micro credit to the unemployed.              The CBN’s microfinancing program has attracted 439,902 borrowers in 2009. (Mix Market, n.d.). This is a staggering number and is less than one million out of the 40 million that need the microfinance service. This is even worsened by the fact that micro-credit facilities are only a meager .20 percent of Nigeria’s GDP. Lending and pay rates are also a mad contradiction, with 100% interest for lending and 5% for savings. Micro-credit goes to the commercial sector (78.4%) instead of the agricultural (14.1%) and manufacturing sector (3.5%) which are more vital sectors of the economy. The problem of distribution is that microfinance is concentrated on the south and eastern part neglecting the northern part consisting of the Muslims who are the poor majority of the population. (Aliyu-Dahinu and Zubair, 2008)             If the issues above are addressed through the concerted efforts of the Federal Government and the CBN and also through a focused implementation of CBN of its mandate in microfinancing, more unemployed and the poor will have access to credit and remove them from the drudgery of unemployment and poverty. REFERENCES Akintoye, IR., 2008. Reducing Unemployment Through the Informal Sector. A Case Study of Nigeria. European Journal of Economics, Finance and Administrative Science. Issue 11 (2008). [online] Available at: < http://www.eurojournals.com/ejefas_11_10.pdf> [Accessed 6 May 2011].   Aliyu-Dahinu M., and Zubair, H., 2008. Microfinance in Nigeria and the prospects of introducing its Islamic version there in the light of selected Muslim countries’ experience. MPRA Paper No. 8127. [online] Available at: < http://mpra.ub.uni-muenchen.de/8127/1/MPRA_paper_8127.pdf> [Accessed 6 May 2011].   Central Bank of Nigeria, n.d., Microfinance. [online] Available at: <http://www.cenbank.org/devfin/microfinance.asp> [Accessed 6 May 2011]. Mix Market, n.d. Microfinance in Nigeria. [online] Available at: <http://www.mixmarket.org/mfi/country/Nigeria?gclid=CMPNheq-06gCFdMQHAodQz0DhQ> [Accessed 6 May 2011]. People’s Daily, 2011. Poverty alleviation: CBN calls for partnership with states. [online] Available at: <http://www.peoplesdaily-online.com/business/economy/8224-poverty-alleviation-cbn-calls-for-partnership-with-states-> [Accessed 6 May 2011].   Credit:ivythesis.typepad.com

THE ROLE OF THE CENTRAL BANK OF NIGERIA IN THE REDUCTION OF THE UNEMPLOYMENT RATE IN NIGERIA FROM 2000 TO PRESENT

THE ROLE OF THE CENTRAL BANK OF NIGERIA IN THE REDUCTION OF THE UNEMPLOYMENT RATE IN NIGERIA FROM 2000 TO PRESENT Unempl...

The Contribution of Microfinance Institutions to Poverty Reduction

The Contribution of Microfinance Institutions to Poverty Reduction  Nowadays there are many microfinance institutions that help rural people to avail financial services and loans to low income clients or to lending groups.  The microfinance is very helpful to those consumers and self-employed individuals who do not have access to banking loans and other financial services.  Generally, microfinance is a cooperative which has an objective to provide varied high quality financial services top the many poor and near-poor households.  And, the most interesting part of it is microfinance not only offers loans but as well as savings account, insurance and money transfers with a very low maintaining balance that poor people can really afford to invest or save money regularly.    In this connection, microfinance, has offered a wide range of services which includes also the micro credit.  Microcredit refers to the condition of credit or loan services to poor clients.  Typically, banks do not allow their clients to avail financial loans or credit who are in below income bracket.  The banks always make sure that their clients have a permanent job as well as sufficient monthly income and have enough   assets as collateral before the bank approves loan applications.   They always consider the fact that the clients have the financial capability and stability to pay for the amortization of the credit or loan.  In contrast, poor people do not have many assets that can be secured by a bank as collateral.  And, because of these circumstances, poor people more often borrow from moneylenders who give high interest rates in exchange of quick release of loans.  In fact, moneylenders are always there for any loan emergency.  They are always flexible with the borrowers who run into their lending shops for financial problems or emergency cases.  (http://www.idrc.ca/cp/ev-115786-201-1-DO_TOPIC.html)  Nevertheless, the founders of the microcredit movement in the 1970s have built financial institutions that can provide financial assistance to the poor people with a very minimal interest.  Correspondingly, microfinance institutions have the basic principles and goals for the poor clients aside from providing loans, savings, insurance and money transfer services.    First goal of microfinance institutions is to further assist the poor households to increase their income and build up their assets.  Second is to integrate or to manage the loans of the poor clients in such a way that the loans will be paid for itself continuously under any circumstance.  Third is the microfinance institution aims to build permanent local institutions.  There are various donor funds from a number of  non- government organizations as well as the government   that both aim to provide financial services as giving donations and donor funds that aligned with the private capital.  As a matter of fact, microfinance is currently considered as an effective tool for socio-economic development through the great help of various charity institutions.  This is the reason that poor clients who could no longer repay a loan, must have a charitable donor that willing to pay the whole amount of loan.  (http://en.wikipedia.org/wiki/Microfinance) Furthermore, there are many professionals and donors from charitable institutions who limit or restrict microcredit to loans for only important and productive purposes. There are many small time entrepreneurs now who are given chances by these microfinance institutions to start any business that requires only small amount of capital.  And, as poor people gained access to loans from microcredit institutions it is very apparent that it is needed in every part of the globe.  It is also great evidence that a lot of people are applying for any financial services because the poor clients know very well that micro finance services truly help them to elevate their low economic status.  In the same fashion,   poor people want to get out from poverty situation by borrowing, putting up business and increasing their profit.  More than that, many poor borrowers are really reducing their poor burdens through engaging themselves into business ventures.  These people are strongly motivated to use the money that they have loaned in the useful consumption as for micro enterprise.  This is   a safest form of saving money and money withdrawal if in case the member needs it for emergency.  At present time, microfinance is already operated through a financial system and approach that provide high quality of loans to urban and near urban areas as well as with entrepreneurial households.  It has been steadily improved in delivering ad providing financial services to the poor clients. Subsequently, many people all over the world are already aware of microcredit program that especially promoted for the improvement of the life of the world’s poorest people.  At the same time, to help these people to have bread and butter in order to live decently and fruitfully.  (http://en.wikipedia.org/wiki/Microfinance) References: (http://www.idrc.ca/cp/ev-115786-201-1-DO_TOPIC.html) (http://en.wikipedia.org/wiki/Microfinance) (http://en.wikipedia.org/wiki/Microfinance)   Credit:ivythesis.typepad.com

The Contribution of Microfinance Institutions to Poverty Reduction

The Contribution of Microfinance Institutions to Poverty Reduction Nowadays there are many microfinance institutions that help rural pe...

An Econometric Model on the Contribution of Micro-finance Institutions to Poverty Reduction

Contribution of Micro-finance Institutions to Poverty  Micro-finance Institutions are viewed as a means to end poverty in many developing nations.  Microfinance is the provision of a broad range of financial services such as <ul type="disc" style="margin-bottom: 0in"> <li class="MsoNormal" style="line-height: 200%"> 	 	deposits</li> <li class="MsoNormal" style="line-height: 200%"> 	 	loans</li> <li class="MsoNormal" style="line-height: 200%"> 	 	payment services</li> <li class="MsoNormal" style="line-height: 200%"> 	 	money transfers</li> <li class="MsoNormal" style="line-height: 200%"> 	 	insurance to poor and low-income households and their microenterprises</li> </ul> The three types of sources for micro-finance are: <ul type="disc" style="margin-bottom: 0in"> <li class="MsoNormal" style="line-height: 200%"> 	 	formal institutions – i.e. rural banks and cooperatives</li> <li class="MsoNormal" style="line-height: 200%"> 	 	semiformal institutions – i.e. nongovernment organizations</li> <li class="MsoNormal" style="line-height: 200%"> 	 	informal sources – i.e. money lenders and shopkeepers</li> </ul> Institutional microfinance includes microfinance services provided by both formal and semiformal institutions. Microfinance institutions are institutions whose major business is the provision of microfinance services. About 90% of the 180 million poor households in the region still lack access to institutional financial services. (ADB) Most formal financial institutions deny the poor financial services because of <ul type="disc" style="margin-bottom: 0in"> <li class="MsoNormal" style="line-height: 200%"> 	 	perceived high risks</li> <li class="MsoNormal" style="line-height: 200%"> 	 	high costs involved in small transactions</li> <li class="MsoNormal" style="line-height: 200%"> 	 	the poor’s inability to provide marketable collateral for loans</li> </ul> ADB, through its Microfinance Development Strategy, aims to ensure permanent access to institutional financial services for the region’s poor people and their small businesses.  To achieve this objective, ADB will focus on <ul type="disc" style="margin-bottom: 0in"> <li class="MsoNormal" style="line-height: 200%"> 	 	creating a microfinance-friendly policy environment</li> <li class="MsoNormal" style="line-height: 200%"> 	 	developing financial infrastructure</li> <li class="MsoNormal" style="line-height: 200%"> 	 	building viable retail institutions</li> <li class="MsoNormal" style="line-height: 200%"> 	 	supporting pro-poor innovations</li> <li class="MsoNormal" style="line-height: 200%"> 	 	supporting social intermediation</li> </ul> Providing the poor with improved facilities to save and to have better access to credit and insurance helps them manage risk, build assets, increase income, and enjoy a better life.  (ADB) The majorities of poor people live in rural areas and have very little opportunity.  Microfinance helps these people who have no collateral.  The economic environments provide business opportunities.  In Nepal for instance, most Nepalese micro entrepreneurs are economically isolated, which means that their market is often local, small and does not offer any demand growth prospects.  Commercial banks and other financial institutions normally do not like to go in that area because of the geographical constraints, underdeveloped infrastructures and other physical constraints. (Sapkota) However, these rural areas have a substantial demand for micro-credit.  If rural people are not brought into the mainstream for economic and social change, there will be no change in rural development.  (Sapkota) Asian Development Bank’s Vision is a region free of poverty.  They know and acknowledge that expanding access to financial services is critical for eliminating poverty and for realizing the Millennium Development Goals.  Recent estimates by the Consultative Group to Assist the Poor (CGAP) indicate that microfinance institutions in Asia have about 41 million loan accounts and 98 million deposit accounts.  (ADB)  The microfinance industry has been evolving over the last 3 decades.  In the early part of the 1980’s, the industry was dominated by nongovernment organizations (NGOs) that created various programs which attempted to address the failure of markets and governments to provide financial services for the poor which relied heavily on external grant funding. (ADB)  ADB’s first microfinance project supported the NGO microfinance institutions in the Philippines.  Some of these programs became flagship operations.  One such operation is the Grameen Bank in Bangladesh.  BRAC’s impressive results generated a lot of interest in microfinance in the broader development community.  (ADB) ADB has supported microfinance for many years. From 1988 to 1999, ADB approved 14 microfinance projects totaling 0.10 million, 13 projects with microfinance components valued at about 6.79 million, and 45 technical assistance projects for about .42 million. Recognizing that the industry landscape has changed over the years, ADB began to formulate a microfinance development strategy in 1999 that was approved in May 2000. (ADB) After the strategy was adopted, ADB’s assistance shifted from providing support for narrowly defined microcredit projects to building financial systems for the poor. From 2000 to 2004, 10 microfinance loan projects totaling 0.80 million and 16 projects with microfinance components of about 1.02 million were approved. ADB also provided financial assistance to 7 governments to prepare microfinance projects and for 21 advisory technical assistance projects for capacity building at various levels in 12 countries.  (ADB) Another significant change is that microfinance services are no longer considered a niche market activity that should be confined largely to the development community and carried out solely by specialized microfinance institutions. Today, it is believed that if microfinance is to achieve its full potential, it must be fully integrated into a developing country’s financial system with access to vast amounts of human, physical, and financial resources and management know-how. (ADB) According to a study by ADB, a paradigm shift toward market-based approaches to poverty reduction is also taking place. In the larger business world, a growing number of established companies including some multinational corporations have achieved impressive results in reaching the poor in innovative ways with their products and services. This reaffirms the feasibility of large-scale commercial microfinance and strengthens private sector interest. (ADB) References: Asian Development Bank.  Microfinance:  Financial Services for the Poor.  12 November, 2009.  Retrieved 22 June, 2011 from http://www.adb.org/microfinance/default.asp Asian Development Bank.  Special Theme: The Changing Face of the Microfinance Industry.  Building Financial Systems for the Poor.  ADB Report 2004.  Retrieved 22 June, 2011 from http://www.adb.org/Documents/Reports/Annual_Report/2004/special-theme.pdf Sapkota, Shanti.  Micro Finance Institutions and It’s Role in Alleviating Rural Poverty in Nepal:  A Socio-economic Analysis.  South Asian Network of Economic Research Institutes (SANEI) Pakistan Institute of Development Economics.  July 2008.  Pp 1-56.  Retrieved 22 June, 2011 from http://www.saneinetwork.net/research/sanei9/Study%2012/Abstract.pdf Credit:ivythesis.typepad.com

An Econometric Model on the Contribution of Micro-finance Institutions to Poverty Reduction

Contribution of Micro-finance Institutions to Poverty Micro-finance Institutions are viewed as a means to end poverty in many develop...