Tweet

Introduction - Abstract - Factors Impeding the Poverty Reduction Capacity of Micro-credit: Some Field Observations from Malawi and Ethiopia

Guest post by: African Development Bank

Article Overview: Poverty reduction has been identified as the overarching long term goal for most of the development interventions in Africa, and more recently crystallised in the Millennium Development Goals and the New Partnership for Africa’s Development (NEPAD). In Africa, more than 40% of its 750 million people live below the internationally recognized poverty line of $1 a day, and the evidence is even more worrying for sub-saharan Africa.

Introduction - Abstract - Factors Impeding the Poverty Reduction Capacity of Micro-credit: Some Field Observations from Malawi and Ethiopia

Poverty reduction has been identified as the overarching long term goal for most of the development
interventions in Africa, and more recently crystallised in the Millennium Development Goals and
the New Partnership for Africa’s Development (NEPAD). In Africa, more than 40% of its 750
million people live below the internationally recognized poverty line of $1 a day, and the evidence
is even more worrying for sub-saharan Africa. The number of poor people has grown relentlessly,
causing Africa’s share of the world’s absolute poor to increase from 25% to 30% in the 1990s
(UNDP, 2001 and 2002). However, Africa’s development challenges go deeper than low income,
falling trade shares, low savings, and slow growth. They also include high inequality, uneven
access to resources, social exclusion, and insecurity, especially amongst women. While some African
countries are showing promising economic progress and are making notable strides in addressing
major development constraints, such as Uganda, the majority of the continent is still under great
stress to meet the human survival needs. More specific concern is raised due to rural-urban
disparities in income distribution, access to education and health services, and prevalence of
ethnic or cross-boundary conflict. In particular, the most outstanding factor is the gender disparity
in access to resources, such as land, credit, technology, markets and production information and
skills development.
In most African countries women tend to account for an average 51% of the population, and
make up about 65% of the rural labour force. In addition, women tend to shoulder the greater
burden of child and family welfare, social and community obligations, engaging in more than one
economic activity as well as undertaking domestic chores. In connection with the growing emphasis
on poverty reduction sustainably, micro-credit has been recognized as the most necessary and ‘the
missing ingredient’ which is most effective in reducing poverty of the poorest of the poor (Otero
and Rhyne, 1994; Khandker, 1998). Thus, many rural based micro-finance programmes have
attempted to address the women specific need for micro-credit. Female entrepreneurs and microcredit
borrowers tend to face greater constraints than men such as socio-cultural barriers, legal
and structural constraints, higher rates of illiteracy, inadequate experience in credit management,
and constraints related to collateral, marketing, inputs, production technology, to name just a few.
This paper analyses the effectiveness of micro-credit as a means to reducing poverty, with particular
focus on women, and demonstrates, through the critical analysis of some country-specific examples,
that the use and supply of micro-credit does not always lead to a sustainable impact on household
or female poverty reduction. This will be done through the analysis of the micro credit delivery mechanisms and related conditions of the micro-finance institutions (MFIs) projects and
programmes.
This paper uses the term micro-credit and micro-finance interchangeably. The methodology used
in this paper is field observations, in addition to interviews and discussions with micro-credit
delivery officers as well as clients in Ethiopia and Malawi. The field investigations were carried
out at different points in time during the period 2001 and 2002.

ECONOMIC RESEARCH PAPERS
NO 74
(January 2003)
Factors Impeding the Poverty Reduction Capacity of Micro-credit: Some Field Observations from Malawi and Ethiopia
by
Sunita Pitamber

Related Articles
  Savings Mobilisation: Tenets of Micro-credit for Poverty Reduction
  Group Mobilisation: Tenets of Micro-credit for Poverty Reduction
  Abstract - Factors Impeding the Poverty Reduction Capacity of Micro-credit: Some Field Observations from Malawi and Ethiopia
  Micro-finance Policy and Development Framework: Malawi
  Recommendations for future research - Factors Impeding the Poverty Reduction Capacity of Micro-credit: Some Field Observations from Malawi and Ethiopia

Article Tags: african countries, community obligations, development challenges, development constraints, development interventions, domestic chores, economic progress, family welfare, gender disparity, human survival, labour force, long term goal, micro credit, millennium development goals, nepad, poverty line, poverty reduction, sub saharan africa, technology markets, trade shares



Related Forum Posts
Nana excercise - Nana > answer the following: 1. If you had no chance of failure what would you dream to be your ideal Job or Business? 2. What about this dream excites you? 3. What Field of Study (Major) will get you closer to this dream? 4. What other Field of Study would "compliment" (Minor) your dream to get you closer to it. REMEMBER: there is no wrong answer. I'm hoping this exercise will help place you in a program that makes you excited at a "most probable likely" future. Your answers will help open a dialogue on the forum.
Re: My Favorite Book For Entrepreneurs In 2010 - Lead The Field. By Earl Nightingale. I have read the book more than 7 times, since I bought it in 2008
Re: What or Who Sparks Your Business Interest - this might be surprise to you, but poverty spark my business interest. Poverty is prevalent in Africa. And I discovered early in life that people that own their businesses are richer than anypne else. I decided to get out of the poverty level and business provided a way of escape.
Re: The 3 Factors That are Limiting Your Productivity - Hi Evan, Thanks for a great article and video on 'The 3 Factors That are Limiting Your Productivity'. I think that no matter whether you are self employed like myself or a CEO with staff, it is so important to manage your time so as to maximize the benefit to your business. Your expression Eliminate; Automate; Delegate is easy to remember and will certainly stick in my mind. There are many good business ideas out there but they will ultimately run into difficulty without proper planning and execution so these tips will certainly help. I have also left this comment on the article and will place a link to it on my blog. regards, Mal.
Landmark Forum Education - I was at an Introduction to the Landmark Forum meeting yesterday and I heard from a lot of people that own businesses there state that the Landmark Education was a key ingredient in their Business Success. Has anyone on the this Forum been to the Landmark Forum 3 day Course? If yes, how has it impacted your business? Thank you for sharing.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Fear Factors in Small Business: Sales & Marketing

WHAT IS MANAGEMENT CONSULTING

Ten Things You Can Do To Be a Better Leader

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.