What is the Impact of Microfinance on Poor People: A Systematic Review of Evidence from Sub-Saharan Africa

This paper reviews empirical research on the impact of microfinance on the poor in Sub-Saharan Africa.

The paper studies evaluations of microfinance interventions across Sub-Saharan Africa and synthesizes evidence on impact of microfinance on incomes and non-financial outcomes of the poor. Based on the synthesis, the paper proposes a causal chain for the impact of microcredit and microsavings. Findings include:

• Microcredit has mixed impact on incomes;
• Microcredit and microsavings have positive impact on savings, but they increase clients’ expenditure and accumulation of assets;
• Microfinance has positive impact on health, food security and nutrition;
• Microfinance has positive impact on housing, and microcredit may empower women;
• Microfinance may equip the poor to deal with external shocks;
• MFIs need to focus on lending to poor entrepreneurs;
• Microsavings may be a better model for poverty alleviation than microcredit.

The paper recommends specific measures for policy, research and practice.