Poverty In Developing Countries

1540 Words7 Pages
Poverty has been one of the drawbacks in economic development activities. Coleman (1999) argues that the lack of access to capital in less developed countries resulted in severe poverty in those countries. Everything around the people in Less Developed Countries (LDCs) revolves in a cyclical and unpredictable manner, whereby access to little or no capital and the production on a very small-scale basis makes it more unbear-able for the individuals to accumulate savings, acquire relevant assets and plough back their returns into more productive activities. Poverty in LDCs can be associated with the existence of little or no profit generating ventures, most especially in the rural areas, no or little financial support, overpopula-tion and poor…show more content…
Microfinance stands in the gap between the poor borrowers and the credit market. Several studies revealed that microfinance has been an instrument to fight poverty and help the less privileged or the “unbanka-ble” to be able to access finance and live a promising life (Bateman 2010). To achieve developmental goals in developing countries, individuals, NGOs, and governments adopt microfinance as a tool to ensure comfortable lives among the poor. “Micro-finance allows the poor to protect, diversify and increase their income, the essential path out of poverty and hunger” (Littlefield, Morduch, and Hashemi, 2003, pg, 2). Microfinance institutions have taken the initiatives by providing both formal and in-formal financial services to the poor in less developed countries (Banerjee and Duflo, 2010). Littlefield, Morduch, and Hashemi (2003) argue further that the poor could be independent and be able to save enough money towards running of small businesses, payment of school fees, payment of health care services as well as taking care of other basic domestic needs if given the avenue to borrow small amounts of…show more content…
Generally, there is no consensus on the impact of microfinance on poverty reduction as the impact may differ from one socio-economic and cultural settings to another. Even though almost all the studies conducted to assess the impact of micro-finance program on the poor and women in Ghana resulted in positive outcomes, most of them use a very small sample size, and also concentrated on a particular district to arrive at a general conclusion, which literally means there is some sort of bias in the selection process as well as inability to control the demographic

More about Poverty In Developing Countries

Open Document