Microcredit and Poverty Alleviation Essay example

In both developing and emerging economies, microfinance has vastly and increasingly been seen as one of the most important means for enhancing the lives of the poor and therefore a major tool for economic and social development mostly in rural areas. Lately, contrary to this widespread belief, critics have raised eyebrows against this growing popularity of microfinance as a major tool for enhancing economic development. Contrary to belief, they are of the opinion that microfinance is a ‘make-belief’ that is hindering economic and social development rather than enhancing it.

The book, Microfinance and its Discontent: Women in Debt in Bangladesh written by Lamia Karim, gives us account on what causes a culture to be known as “economy of shame” status, such as in the case of Bangladesh. She writes on a subject that is a top list priority in the economical world these days, the corrupt ways NGO’s lenders do business not only in Bangladesh but across the world, however, she centralizes her views on Bangladesh and only a handful of NGO’s. Even though this was primarily a look at Bangladesh, it has resulted in capturing the attention of people across the globe not only with the NGO’s mention in the book but resulting in a closer look at all NGO’s and how they serve the people. Karim shares with the readers how the 1980’s nongovernmental organizations (NGOs) led in the way of microfinance institutions and claimed that they were providing women with an empowerment tool by issuing them loans. We find that over 80% of borrows are women and most are economically challenged already. With that being stated Karim also takes a look at how and why that is, she discusses the long term effects it is having on women and how it is furthering the exploitation of women in Bangladesh. She looked at how this type of exploitation has not only weakened further women’s economy in Bangladesh but has also strengthen the power NGO’s have over the people (mainly women) at the same time. It takes a look at this type of expansion and brands NGO’s use as a “shadow state

Many families in developing nations do not have sustainability in their lives. In her article, “Microfinance Empowering Female Entrepreneurs”, Elizabeth Matsangou writes, “starting and growing a business is virtually impossible without access to financial services.” Basically, Matsangou is saying that in order to start a business, you need help with the use of micro-loans. Further proving the point that micro-loans that empower women and women need these loans. Many women in developing countries start micro-enterprises to help raise money for their family. With this in mind, it is obvious to see what kind of positive impact micro-loans can have on women. Starting businesses are nearly impossible without the use of micro-loans, proving that they can help empower

For Victoria’s case, she needs the money to buy more potatoes and quinoa to make sure her shop has all the proper vegetables (Kiva.org). If Victoria can keep her shop well stocked, she may attract more customers and make more money. By earning more money, Victoria can improve her quality of life. According to Plan Canada “microfinancing can lead to improved access to clean water and better sanitation while also providing better access to health care” (plancanada.ca). Research shows that microfinance loans are better suited for women because they are less likely to miss payments on their loan and it helps them feel empowered (plancanada.ca). By lending to Victoria, she will feel empowered and will be able to support herself and her family. Also, because she is a woman, she is less likely to miss

Micro credit is the process of helping the “poorest of the poor” obtain loans. Since big time banks rarely help people who need help acquiring loans, micro credit is another source that makes it possible for the lower class to achieve that. They focus on they call the “real economy,” where they are on personal relationships with their clients. They want them to succeed and help their clients change their own life. Compared to the big banks, they are not looking to make huge amount of interest back off their loan (paper chasers).

In this article Muhammad Yunus is in a poor village where he sees real poverty for the first time. Yunus later finds himself giving some of village people loans. With his help the poor small village was out of poverty.

80% of micro-loans in developing countries are made to women. A large majority of people living in developing countries are in poverty. Most of these people were living off of a dollar a day. Micro-loans have been created to help the people that need them. Women in developing countries are empowered by micro loans and they use that power to help their families, economy and ,gain more recognition in their culture.

However, the author essentially opposes any government intervention towards leading efforts for women. Half the Sky does a good job at creating awareness of these atrocities that occur to women in other countries and how those same atrocities can go unpunished. Narayan, a critic, really helped understand one real issue by stating that, “The ubiquitous insistence that women’s inclusion is ‘good for development’ is not identical to showing that particular forms of development are good for [all] women. Many ‘economic opportunities’ the book celebrates, such as micro-credit, requires shoeless women to boot-strap themselves to ‘success,’ working harder and harder to compensate for the improvidence of men-folk, the impoverishment of nation states, the depredations of corporations, the vagaries of markets and the destabilizing neo-liberal policies of international financial institutions.” While micro-credits’ main targets are to help women in developing nations, it can sometimes do more harm than good in the basis of exploitation sometimes through predatory lending (fraudulent practices). Muhammad Yunus is cited a lot when it comes to microfinance and women living in impoverished foreign countries.

Muhammed Yunus is an innovative economics professor who through hard work has become the face of microeconomics. In his novel, Banker to the Poor, Muhammed Yunus presents his concept of micro-lending as the leading solution for eradicating poverty. During conversations between Muhammed Yunus and banking professionals, professor Yunus was astounded by the way business was conducted in financial institutions, more specifically how they decided who qualified for a loan. After reading, Banker to the Poor, I can’t help but wonder, does Muhammed Yunus’ concept really benefit the lower class like he claims it does?

The individuals from Grameen Bank are urged to plant trees, develop kitchen enclosures and assemble houses and clean restrooms, which are planned to address environmental concerns. The Grameen Bank has deliberately focused on women understanding that their support in social development is essential for financial development in light of the fact that women assume essential part in giving health, training and sustenance. The Bank's social development programs additionally incorporate exhaustive preparing program in maternal health, nourishment and youngster consideration (Rahman & Qiang, 2011). The social development programs likewise supplies tree seedlings and seeds for kitchen plants with a specific end goal to enhance both living conditions and the environment. Grameen Bank has been set up to sort out the provincial poor through a credit program with the goal that they can produce profitable independent work for themselves in exercises of their decision. Grameen Bank considers poverty not as the making of poor rather that of the framework which is comprised of the ideas, theoretical systems, approaches and foundations. On the off chance that we can change the framework, there would be no poverty. Grameen Bank thinks poor as proficient and venturesome as any other individual on the planet (Barua,

At the beginning when Muhammad Yunus first introduced the idea of lending money to the poor people, there was a lot of apprehensiveness and skepticism among conventional banks because poor people

The most debatable topic in microcredit has always been interest rates, especially that prices paid by low-income clients tend to be higher than conventional banks’ rates, and interest rates for some MFIs have exceeded annual rate of 100 percent on effective basis. In Egypt, microcredit rates are increasingly being criticized and viewed as unreasonably high, while it is immoral to set high prices on the poor. At least once a year, an article must be found in an Egyptian newspaper urging for the need to create “a bank for the poor”. Driven by religious perspective and long history of subsidized policies, the longing for a bank for the poor in Egypt have always been spinning around the idea of providing credit to low-income households

The use of microfinance as a tool to tackle poverty can be dated all the way back to the 19th century when some scholars and economists talked about encouraging entrepreneurs and farmers to take small credits in order to get out of poverty. The Microfinance model we use today got it root from the Grameen Bank created by Dr. Muhammad Yunus from Bangladesh. When he returned home from the United States with his PhD in economics, he found out that established organizations like the World Bank is not doing a good enough job helping poor

Building Social Business is a book about social enterprise written by Muhammad Yunus. Muhammad Yunus is a social entrepreneur, economist, banker, and civil servant leader from Bangladesh. He is known for founding the Grameen Bank which is a microfinance organization and community development bank. Yunus is a well-known proponent of microfinance and microcredit. Due to his efforts in making a change through microfinance and microcredit and other noble causes, Yunus has been given several awards including the Independence Day Award in 1987, World Food Price in 1994, Pfeffer Peace Price also in 1994, Gandhi Peace Price in 2000, Volvo Environment Prize in 2003, Nobel Peace Prize in 2006, Presidential Medal of Freedom in 2009, Congressional

“Microfinance is the provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services.”