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IV. Module II: Linking Microfinance to Poverty Eradication
There is a fundamental linkage between microfinance and poverty eradication in that the
latter depends on the poor gaining access to, and control over, economically productive
resources, which includes financial resources. For the resource-poor of Africa, survival often
depends on subsistence agriculture and/or small income-generating activities at the home or in
the local marketplace. In many instances, microenterprises rather than formal employment
creates an informal economy that comprise as much as 70% of the national economy. Yet the
lack of saving and access to finances creates a state of perpetual scarcity, a poverty cycle that
restricts people's potential to improve their livelihoods. As already noted, the lack of financial
services is not the only limiting factor in income generation: other pervasive social, economic,
and political barriers also play a key role. Within this complex system, however, there is a
clear need for better microfinance services for Africa's poor, which can play a key role in poverty
eradication (Box IV).
An understanding of how microfinance initiatives impact poverty eradication
necessitates a definition of poverty that corresponds to a local definition of wealth. This, of
course, can vary from context: i.e. whereas financial assets may equate with wealth in urban
areas, livestock or land may be valued in rural areas. Allowing for such diversity, the following
discussion will focus on the material and non-material benefits of microfinancing.
Microfinance in Africa: Combining the Best
Practices of Traditional and Modern
Microfinance Approaches towards
Related ArticlesIII. BACKGROUND - Microfinance in Africa
IV. Introduction - MICROFINANCE IN AFRICA: THE MODEL
IV Module I Key Principles for an African Model of Microfinance
II. How Can MicroFinance Succeed In Africa?
V. Material Benefits of Microfinancing
V. Non-Material Benefits of Microfinancing
African Countries Focus on Microfinance: Twelve African Nations Engaged in the International Year of Microcredit to Date
Improving Microfinance as an Anti-Poverty Tool
I. WHAT CAN MICROFINANCE DO FOR AFRICA?
Enhancing Microfinance Efficacy through Integrated Services
How does microfinance help the poor? FAQ
IV. Principle III: Reinforce Microfinance to Advance the African Private Sector
Conclusion - Microfinance: A Platform for Social Change
Increasing Microfinance’s Reach with Integrated Services
Inhibitors to Success
Inhibitors to Success: Natural Disasters
Introduction - Microfinance:A Platform for Social Change
Redefining Microfinance as a Strategy to Achieve the MDGs: International Year of Microcredit Report Advocates Shift from Poverty Alleviation to Wealth Creation
1.19 Building trust: Working Out of Poverty
6.0 References: Microfinance in Africa - Experience and Lessons from Selected African Countries
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VI. Module III: National, Regional, and International Support
By United Nations Economic Commission for Africa
About the Author: United Nations Economic Commission for Africa
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The United Nations Economic Commission for Africa (ECA) is the regional arm of the United Nations, mandated to support the economic and social development of its member States, foster intra-regional integration, and promote international cooperation for Africa's development.
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