Microfinance and Eradication of Poverty

Описание: #microfinance
#eradicationofpoverty
Poverty is big business. Even in the United States, one of the richest countries in the world, the poverty industry is worth about $33 billion a year comprising payday loan centers, pawnshops, credit card companies and microfinance providers who generate business from the poorer segments of the population (Rivlin, 2010). Among the so-called developing and least developed countries millions of people continue to face crippling poverty. ‘Ending poverty in all its forms everywhere’ is the first of 17 Sustainable Development Goals set by the United Nations. In absolute terms at the global level there are currently between 1.2 and 1.5 billion people still living in extreme poverty and 162 million children still suffering from chronic under-nutrition, a figure the UN deems ‘unacceptable’ (United Nations Development Programme, 2014).
Microfinance, or the provision of small loans to the poor with the aim of lifting them out of poverty, is a key poverty reduction strategy that has spread rapidly and widely over the last 20 years, currently operating in more than 60 countries (Bateman, 2010). According to many researchers and policy makers, microfinance encourages entrepreneurship, increases income generating activity thus reducing poverty, empowers the poor (especially women in developing countries), increases access to health and education, and builds social capital among poor and vulnerable communities (Khandker, 2005; Westover, 2008). Studies of market-based measures to alleviate poverty are also gaining considerable traction in the management literature where scholars have developed concepts like ‘base-of-pyramid’ and ‘creating shared value’ to address what businesses can do to alleviate poverty and enhance social welfare (Porter and Kramer, 2011; Prahalad, 2004).
However, more recently concerns have been raised about the real value and impact of microfinance. In the last few years ‘microfinance meltdowns’ have been reported in Morocco, Nicaragua, Pakistan, Bosnia, Mexico and Lebanon, and most dramatically in the Indian state of Andhra Pradesh when the entire microfinance industry collapsed in late 2010, which was the context of the quote by the then Indian minister mentioned above (Bateman and Chang, 2012). More disturbingly, inability to repay microfinance loans has also been linked to ‘hundreds of suicides’ among borrowers in India (Associated Press, 2012) and organ trafficking in Bangladesh (BBC, 2013). Such concerns raise important questions: does microfinance enable entrepreneurship among impoverished communities that can lift them out of poverty? Is it possible, as some critics claim, that microfinance instead of alleviating poverty actually serves to exacerbate poverty in particular contexts (Bateman, 2010; Karim, 2008)? If so, how? How do the receivers or ‘clients’ of microfinance cope with rising debts that result from incurring microfinance loans? And how does group borrowing influence social relations between individuals in the group?
To help answer these questions, we report the results of an ethnographic study of microfinance in three villages in rural Bangladesh that have been targeted by microfinance organizations aiming to reduce poverty in the region by promoting entrepreneurial activity. Our results challenge existing theory and research regarding the role and impact of microfinance – that it generates income through entrepreneurial activity, empowers women and builds social capital in poor communities.