The Contribution of Microfinance Institutions to Poverty Reduction
Microfinance is the provision of financial services such as loans, saving, insurance, and training to people living in poverty. (1) I have read in a popular magazine regarding the uplifting story of a certain lady who, because of help from Microfinance, rose from poverty and has been living a normal and secure life in her country. Microfinance is one of the most inspiration-filled success stories in the poor and striving countries. Experts have agreed that in the last 30 years, it is widely recognized as a “savior” and rightful sustainable solution in getting rid of global poverty. In a loose sense, microfinance “revolutionize” the way of helping poor in different countries around the world. It “deviates” from the so called formality of lending with luxurious collaterals, which usually only the rich can avail and thereby neglecting the real “ones” the poor. To serve their purpose, and to begin their missions in propagating their services, microfinance institutions go to the roots of the problem of every poor person—money. Microfinance acts as “savior” to the poor but, it has to teach them how to be “saved” and cooperate so that the goal of poverty alleviation could be attained smoothly. As a point of departure, institutions have to check the plan of the beneficiary whether it is for business or for other reasons. Once the plan of pursuing business is being suggested, they have to offer business aspirants enough money to start or expand businesses in case it has been improving. A certain market vendor in the Philippines used to borrow 5,000 to 10,000 at the beginning, but as time went by, her “little business” expanded and grew and so she needed more capital to cater to the ever increasing demands of the customers. She was able to borrow 20,000 to 30,000 monthly, and she has been planning to raise more her loans for the other projects and businesses. The poor are also taught on how to have savings and insurance so as to wisely explore their everyday struggles in life. This is also done so as to safeguard the poor from slipping back into poverty due to unforeseen events and untoward incidents. Providing for the future and keeping the source of livelihood in order, are key factors to get rid oneself from poverty.
In all of these projects and provisions of microfinance, the plight of women can never be forsaken and overlooked upon. Why is this so? According to statistics, 70 percent of those living in poverty worldwide are female. (2) This situation is really noticeable in our society, where women are even regarded in some countries as inferior beings. In Afghanistan for instance, women are counted as “nothing,” have no voice or right in any social gatherings. In Islamic Saudi, women could not expose their faces in public, otherwise they would be punished. These are just some “destitutions” that women in some parts of the world are suffering. Yet, the worst poverty that women could endure is the physical poverty and material destitutions. Hence, microfinance provide some special and particular needs of women. In fact, most of the recipients of microfinance in most of the poor countries around the world are, women and mothers. Women have “soft and special “place in the heart of microfinance institutions. Women are vital cogs in the society for they are “the mirror” of the countries advancement and progress. Thus, the saying, “as the women go, so goes the nations” is aptly fitted here.
Microfinance has been helping the “poorest of the poor” in every corners of the world. Banks, private corporations and, even business tycoons have embraced microfinance in their own backyards. With the participation of giant moguls, poor people have become more “provided” financially, notwithstanding the impact that it could make on the economy of every nation. However, with the advent of modern technologies and change in human lifestyle, socio-economic pressure, a tempting question could be raised, how far have microfinance already reached in terms of its goals and interest in serving the poor countries of the world? There have been reports of inconsistencies and unfounded rumors on how microfinance institutions have been running their organizations, yet, the most pressing news around the world are that people have accounted endlessly on how they were aided and “saved” from the misery of poverty, and how they improved their lives. Based on studies, microfinance would endure the hardships of time, provided that it would avoid many dangers or temptations such as: (1) focusing only on more secure client base and, (2) neglect those who are in greater need.
Microfinance should not lose sight of their lofty goals which are : The marginalized people or the undeserved. Ultimately, it should pave way to equal access to financial opportunities and the vision to move beyond misery and poverty.
Footnotes:
1. Opportunity International
2. wikipedia
Credit:ivythesis.typepad.com
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