Technical Guidelines: Microfinance Against Child Labour

This paper presents guidelines on how microfinance can help reduce child labour. It has been written for the International Program for the Elimination of Child (IPEC) project designers and implementing partners.

The paper states that:

• The contexts in which child labourers live and work are heterogeneous;
• In using microfinance, it is necessary to avoid a one-size-fits-all approach;
• The guidelines that the paper presents provide the basics of a microfinance program, but can be adapted to the local context.

The paper defines microfinance and discusses:

• The things that microfinance can and cannot do in reducing child labour;
• The productive role that microfinance has in stimulating income generation;
• Its protective role in providing households with an alternative to child labour as they cope with crises and economic stresses;
• The preconditions for microfinance such as demand, supply and external environment;
• Different models for delivering microfinance to households of child labourers;
• The prospect of IPEC partnering with existing financial service providers to enhance impact and sustainability;
• Design issues like targeting and the key features of credit, savings and insurance products;
• The use of grants;
• Monitoring and evaluation of microfinance activities.

The paper concludes that:

• Microfinance is not always the answer for the needs of poor families;
• The Guidelines provide ideas on how to use microfinance to combat child labour and also suggest possible alternatives if the required preconditions are not present.