Poverty Reduction Through Microfinance

Abstract

Microfinance is believed by many people in Africa to allow poor people to protect, diversify, and increase their sources of income, which is known to be the essential path out of poverty and hunger. This chapter examines whether microfinance can really help to reduce poverty. The enduring question is: Can microfinance be the game changer that will lift the many poor rural women and men in Africa out of the misery of extreme poverty? Is this strategy bliss or myth? First, the author provides a context and rationale for microfinance in African countries. Second, the chapter follows a brief overview of the literature on the impact of microfinance on women's empowerment and whether credit lending transactions benefit the intended recipients. Finally, the chapter reviews the arguments of both sides of the debate and draws out future research trends.