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How does microfinance help the poor? FAQ

Written by: Microfinance Gateway

Article Overview: Experience shows that microfinance can help the poor to increase income, build viable businesses, and reduce their vulnerability to external shocks. It can also be a powerful instrument for self-empowerment by enabling the poor, especially women, to become economic agents of change.

How does microfinance help the poor? FAQ

Experience shows that microfinance can help the poor to increase income, build viable businesses, and reduce their vulnerability to external shocks. It can also be a powerful instrument for self-empowerment by enabling the poor, especially women, to become economic agents of change.

Poverty is multi-dimensional. By providing access to financial services, microfinance plays an important role in the fight against the many aspects of poverty. For instance, income generation from a business helps not only the business activity expand but also contributes to household income and its attendant benefits on food security, children's education, etc. Moreover, for women, who, in many contexts, are secluded from public space, transacting with formal institutions can also build confidence and empowerment.

Recent research has revealed the extent to which individuals around the poverty line are vulnerable to shocks such as illness of a wage earner, weather, theft, or other such events. These shocks produce a huge claim on the limited financial resources of the family unit, and, absent effective financial services, can drive a family so much deeper into poverty that it can take years to recover.

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Article Tags: empowerment, external shocks, financial services, financial services, food security, household income, income generation, microfinance, poverty line, self empowerment, viable businesses, vulnerability, women, women



Related Forum Posts
Re: Gap Between Rich and Poor Widens - yes very true... In under-developed countries the gap between the poor and the rich is getting wider day by day. This has created frustration in the people because survival has now become a question mark for the poor...
Re: Gap Between Rich and Poor Widens - d gap between the rich 'nd d poor is immeasurable. Think of a bottmless gulf! Wat makes it bigger is even the fact dat the poor r being exploited daily for wat they can give in exchange for mere survival. Most esp in the 3rd worlds were bosses are almost unregulated as to how they deal wit employees- if dey love their lives, dey better stick in to the bosses favour!...
What makes a good sales rep? - I read about a great salesman and poor salesman who were sent to a village where people could not afford to buy a new shoe. The poor salesman did not believe anyone could buy new brand shoe so he could not sell in the poor village. But this great salesman believed that at least there would be a person who would be interested in using the new shoe for the first time in his or her life. That believe made him to sell more new shoes in the village than the other person who went back to the city because of his believe. So, one of the qualities sales representative can have is to believe in himself and the products is representing. I will share more of the qualities in the next posts.
Re: Gap Between Rich and Poor Widens - One thing about "rich" and "poor" is that it's all relative. Poor people in the US live like kings compared to the poor in other countries. For example, there's starvation in the Sudan, not to mention genocide... Whereas here in the States, the poorest people have cellphones (given to them by the government because apparently it's a right to have a cellphone), food - whether acquired through food stamps or from food shelves, Section 8 housing, WIC for mothers, and so on. Most poor people have at least one TV - color, of course - and when we go digital in another year or so, instead of having to buy converter boxes so their old TV sets can receive digital signals, the poor will receive coupons so they can get them for free. Whereas lower middle class has to pay for all that stuff... But there again... you have to blame the government. By "enabling" people to live off handouts, by allowing people to live as if they *deserve* those handouts, they're destroying their initiative. And as each subsequent generation grows up...they seem to not know that they can actually do things for themselves...
Re: Gap Between Rich and Poor Widens - You're right about that. The gap between the rich and the poor widens as the population of poor people kept on rising. Although most businesses are making it big in their own field, the people working hard in these companies are the same people who continue to experience the same problems which i why they always end up having problems and more difficulty in life.


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