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Guest post by: United Nations Economic Commission for Africa Become an Author

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Microfinance initiatives offer more than just material benefits; they can also address
issues associated with "non-material" poverty, which includes social and psychological effects
that prevent people from realizing their potential. Microfinance initiatives individually and
collectively empower people. A steady income, a savings account, training, and the discipline to
honor loan repayments usually raise the self-esteem and status of clients, in societies where they
are often treated as second-class citizens. MFIs often utilize microfinance groups to provide
training in financial management, legal rights, business management, as well as other supportservices.
Principles of collective organization and solidarity empowered people to bargain for
higher wages, better work conditions, health services, child-care, and common forms of
insurance to protect their lives and livelihoods.

MFI participants, especially women, are often empowered to speak out more, assume
leadership roles, and address issues beyond their workplace, such as domestic violence. For
many women, the group is the first opportunity to meet formally with other women to discuss
problems and develop joint action. The groups serve as a channel of information. For example,
members may tell each other about counseling services that have been established for women
victims of violence and drug and alcohol addicts. Many women participants experience a change
in their household and community status. Some experience an increase in financial
responsibilities when their husbands noticed that they are involved in lucrative activities.

Microfinance in Africa: Combining the Best
Practices of Traditional and Modern
Microfinance Approaches towards
Poverty Eradication

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