Microfinance: A Platform for Social Change

This paper argues that although microfinance is an effective poverty alleviation tool, it should be utilized as a platform for multiple empowerment approaches, building on successful microfinance models. The paper states that:

• Over the years, microfinance has demonstrated that its impact goes beyond providing individuals with access to capital;
• Microfinance has helped to protect, diversify and increase sources of income and assets that enable the poor to make their way out of poverty;
• However, for the billions of people who still live on less than two dollars a day and have no access to basic facilities, microfinance must continue to be deployed and leveraged to its maximum potential;
• There is need for microfinance practitioners to understand that:
  • Simple access to capital is often not enough for poverty alleviation;
  • Poverty is a result of a multitude of factors that encompass more than merely a limited income;
  • To properly serve clients needs and fulfill its purpose, microfinance needs to do more to address the underlying factors of poverty than simply providing access to capital.

The paper concludes that:

• An integrated approach to servicing clients can enhance the efficacy of microfinance as a poverty alleviation tool;
• MFIs can contribute to greater sustainability at the client level by acting as a platform to deliver important social services along with credit;
• Using microfinance as a platform to offer integrated services increases economies of scope for organizations.