Before Microfinance: The Social Value of Microsavings in Vincentian Poverty Reduction

This paper discusses the values and limitations of microfinance within the context of poverty reduction, international development and community empowerment.

The paper states that microfinance requires a more complex strategy than simply the provision of credit. Development of financial capital depends on the increase in human capacity and social capital. Achieving economic self-reliance through microfinance is contingent upon the development of capacity building, social capital and empowerment at individual, collective and systemic levels. The paper:

• Reviews microfinance from the standpoint of global responsibility for alleviating poverty and developing community sustainability;
• Reviews literature and case studies from the Philippines;
• Suggests a value-based Vincentian approach to integrate microfinance into community empowerment;
• Calls for a community-driven and integrated model for microfinance.

The paper states that the Vincentian approach to microsavings and community development adds a meaningful strategy in the microfinance debate. It concludes that microfinance is an effective tool to fight poverty when it integrates strategies for improving access to capital with programs that build social capital and capacity.