Poverty and Microfinance in Eritrea - A Discourse

This paper analyzes the incidence of poverty in Eritrea with a particular focus on agriculture, which provides employment to 75% of the population. The paper also examines the Saving and Micro Credit Program (SCMP) and its impact on reducing poverty. In order to combat poverty, the government undertook various measures like self and wage-employment programs, savings and microcredit programs, group formation and networking. The paper identifies ways in which SCMP and other microfinance initiatives can help reduce poverty, including:

• Group organizing has proved to be successful, especially in rural settings in Eritrea;
• Building on local knowledge and tradition improves MFI acceptance and outreach;
• Scaling up microfinance to encourage and support microenterprise;
• Addressing issues associated with non-material poverty that prevent people from realizing their potential;
• Creating mechanisms for exchange of knowledge and experience among microfinance practitioners.

The study states that poverty alleviation programs were poorly targeted with excessive duplication. It suggests that they should be restructured to focus on the basic needs approach that separates generalized increases in income from the permanent reduction of poverty through the provision of health services, education, housing, sanitation water supply and adequate nutrition.