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The issue of financial support to the poor people of a society

Microfinance, or financial services for the poor, offers a distinctively crosscutting tool capable of alleviating some of the most challenging issues of our time.

  • If we try to force it to deal with social change, and communist societies are an extreme example - we see their failure to progress with time;
  • Backed up by six randomised controlled trials from six countries, the graduation approach is gaining steady recognition as a means for governments to improve social safety nets, and enable the most vulnerable members of society to become healthy and active economic citizens;
  • BRAC provides health loans that integrate access to health providers, Pro Mujer offers a discounted health package to microfinance clients, while several other global providers have started to offer micro-health insurance;
  • Cambridge University Press, September 2003 , a textbook by Professor Hillman, provides a broader examination of education and other public policy choices;
  • This claim fits exactly with our stance - gov should act in the extreme cases of harmed rights, not in the day-to-day details of poverty.

These include, but are not limited to, ending extreme poverty and hunger, promoting gender equality, enabling access to healthcare, and promoting inclusive economic growth. Yet, financial services are not nearly as accessible as they ought to be to make a meaningful global impact across these fields. Below I outline five reasons why we must continue to invest in financial services for the poor, in line with the five sustainable development goals in which microfinance is a critical part of the solution.

Microfinance is a proven part of the formula for beating extreme poverty Financial services, such as savings, cash transfers and loans, are part of a powerful formula proven to lift millions of households from the direst forms of poverty.

Five challenges prevent financial access for people in developing countries

Once clients complete the programme, microfinance then helps to sustain that path. Backed up by six randomised controlled trials from six countries, the graduation approach is gaining steady recognition as a means for governments to improve social safety nets, and enable the most vulnerable members of society to become healthy and active economic citizens.

This recognition needs to turn to action. This in turn offers resilience to communities in the face of changing weather patterns, and enables farmers to meet food demand from millions of families worldwide. In sub-Saharan African, where food insecurity is the most pronounced, organisations such as Opportunity International and One Acre Fund are making strides using tailored financial services to empower smallholder farmers through investment in new techniques, high quality seeds and fertilisers.

These measures, being increasingly employed by MFIs globally are helping to strengthen local livelihoods, reduce dependence on imported food, and enable farming households to boost incomes and stabilise consumption, bringing benefits that accrue as wide as the community, and down to each individual household member.

With growing demand for food caused by an increasing global population the implementation of these measures needs to accelerate.

Financial Assistance for the Poor Should Be the Responsibility of Charities, Not Government

Microfinance offers access to healthcare where other options are simply not available Healthcare remains a vital service unavailable to those who need it most — the poor and vulnerable, yet universal access to affordable healthcare would require the mobilisation of huge public financial resources. When it comes to microfinance this lack of existing resources is our trade.

Financial service providers have come up with innovative financing mechanisms that promote healthcare that have shown increasing evidence of positive impact. Freedom from Hunger, for example, has integrated health education into its credit products that over time lead to behavioural change in the communities in which they serve.

5 reasons why we need financial services for the poor

BRAC provides health loans that integrate access to health providers, Pro Mujer offers a discounted health package to microfinance clients, while several other global providers have started to offer micro-health insurance. One billion people still lack basic healthcare, and an estimated 100 million people a year fall into poverty trying to access it.

We can significantly reduce that number if we scale up the health financing solutions that we know are working. In Bangladesh, we saw how lending to women through small groups has increased their sense of empowerment within households and communities, in what is otherwise a patriarchal society.

Microfinance can also be a great source of empowerment for adolescent girls.

  • This, however, means involving the government bureaucracy—whose very inadequacies forced many parents to assume the responsibility for their children's schooling in the first place—in the school system;
  • Equally disheartening are the disparities in educational attainment between different groups within countries and regions;
  • From this viewpoint, people are in poverty because they find themselves in holes in the economic system that deliver them inadequate income;
  • General programs that provide each and every poor with the same food, the same clothes not only ignore such difference, but embody the idea that all poor are equally poor;
  • Uganda did better than Malawi, however, in preparing for the influx of new students.

With an expansion of microfinance, we can reduce gender inequalities in ways that extend beyond just economic and financial exclusion. In South Asia and Latin Americamicrofinance has given millions of rural women, previously engaged in domestic work, the chance to earn independently and sometimes employ others through the micro-businesses they establish.

Over our 40-year experience of providing microfinance at scale to rural women, we have also seen how their empowerment has gradually led to more women joining the formal workforce. Expanding access to financial services to the poor, would promote MSME resilience, business growth, and help generate and secure millions more jobs.

  • They can hire and fire with no constrains, with much of the staff actually volunteering;
  • Not only are we not educated but we don't have a street-wise education;
  • Schools that are accountable to the local community—and to parents, specifically—have a greater incentive to provide a high-quality education, even though corruption may exist at the local level as well as at the national level.

While practitioners are still in the process of understanding the full breadth of utility of microfinance, we do know that there are few tools with as wide an application to alleviating the various dimensions of poverty. Put simply, with the tools and support financial service providers offer, each client is better able to determine how they manage their resources and plan their futures.

General Information

This sense of agency may not translate clearly into the achievement of any one development goal. But it does make a real difference in how the disempowered take charge of their own lives and access the opportunities they deserve which ultimately is what the next fifteen years are all about. Bangladeshi women wait for a volunteer to distribute their loan money collected from a microfinance agency at Manikganj,100 km 62 miles from the capital Dhaka.