Women's Enterprise Development in Eritrea through Microfinance

This paper examines the role of the Savings and Micro Credit Program (SMCP) in reducing poverty in Eritrea. It also explores and analyzes other institutions that provide microfinance. More than 66 percent of people in Eritrea live below poverty line. Many of these poor households are headed by women, and are particularly vulnerable. Drawing from a study on microfinance in Eritrea that uses primary and secondary data, the paper states that:

• Microenterprises are an important source of income for women entrepreneurs, but they form only one part of their overall livelihood systems;
• Women clients use microfinance to invest in enterprises or fund new businesses;
• Microfinance helps women clients reduce vulnerability and expand business options;
• Functioning of the SMCP system draws mixed feelings;
• Microfinance has not been able to help very poor women overcome poverty;
• Most MFIs, including SMCP, provide training for credit management, but are less successful in providing business skills and markets.

Finally, the role of microfinance in reducing vulnerability of women clients points to continued donor investments in microfinance programs. Microfinance has the potential to assist poor women and small scale women entrepreneurs in Eritrea.