Microfinance: Improving the Standard of Living in Developing Countries

1094 WordsJun 25, 20185 Pages
The United Nations has established a list of 8 goals that were to be achieved. These were eradicating poverty and extreme hunger, achieve universal primary education, promote gender equality and empower women, reducing child mortality rates, improving maternal health care, combating HIV/AIDS and other deadly diseases, ensuring environmental stability, and finally to develop a global partnership for development. Although these are arduous tasks, several of these goals are being accomplished with the help of great ideas and well executed planning. Microfinance is one of the great ideas that can help in accomplish several of the goals established by the United Nations. A brief history on microfinance Microfinance is the purveying…show more content…
Not only are the recipients enjoying a higher income and creating employment positions, their standard of living is enhanced significantly. But these are just a few of the institutions that are successful in creating social and economic reform. There have been criticisms to microfinance, in that it may not be as effective as advocates for the system may claim. Some advocates may claim that microfinance is the best way to eradicate poverty. Supporting research for that is not always conclusive. Economic journalist, Nicholas D. Kristof, asserts that an increase in savings rate by recipients of micro-loans is attributed to the large difference microfinance makes than simply the process of lending. Social and non-income related impacts: Although microfinance helps in combating poverty in developing countries, there is a side-effect of the implementation of MFIs in them. These are non-income or social impacts on the consumers. The microfinance industry currently serves over 80 million poor entrepreneurs globally, about 70% of who were among the poorest when they took their first loan. These clients fit the profile of those at most risk of contracting HIV/AIDS. Women, who bear the brunt of global poverty, are also the primary beneficiaries of microfinance. Microfinance has typically targeted women-led microenterprises
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