The Impact of Microfinance in Sub-Saharan Africa: A Systematic Review of the Evidence

Abstract

Microfinance is seen as a key development tool, and despite the current deepening crisis within the industry, it continues to grow in sub-Saharan Africa. We systematically reviewed the evidence of the impacts of micro-credit and micro-savings on poor people in sub-Saharan Africa. We considered impacts on income, savings, expenditure, and the accumulation of assets, as well as non-financial outcomes including health, nutrition, food security, education, child labor, women's empowerment, housing, job creation, and social cohesion. The available evidence shows that microfinance does harm, as well as good, to the livelihoods of the poor.

Investment Impact of Microfinance Credit in Ghana

“…However, various studies have likewise questioned these positive impacts across regional boundaries and suggests from theory that microfinance works differently in different regions due to variations in population density, attitudes to debt, group-cohesion, enterprise development, financial literacy and financial services provision (Rooyen et al, 2012). This is because some studies have indicated much more mixed impacts, whilst other studies have also identified certain flaws and drawbacks associated with this developmental tool.…”

Business, Commerce and the Global Financial System

“…These firms have been able to provide small unsecured loans to people who would be ineligible for loans from traditional financial institutions (Yunus 1999). Micro-finance refers to micro-credit, micro-savings, micro-insurance and money transfers for small amounts of money from (USD) $50 to $1000 (Van Rooyen et al 2012;Yunus 1999). These loans have been attributed to helping micro-entrepreneurs create business and increase income as well as contribute to an improvement in well-being to the life of the poor (Van Rooyen et al 2012).…”

“…Micro-finance refers to micro-credit, micro-savings, micro-insurance and money transfers for small amounts of money from (USD) $50 to $1000 (Van Rooyen et al 2012;Yunus 1999). These loans have been attributed to helping micro-entrepreneurs create business and increase income as well as contribute to an improvement in well-being to the life of the poor (Van Rooyen et al 2012). The Grameen Bank is attributed with the introduction of micro-finance in Bangladesh in the 1970s.…”

“…Overwhelmingly, women have benefited the most from gaining access to these funds resulting in greater employment generation, increased income generation and significant improvement in social indicators these indicators include the Human Development Index (HDI), primary school enrolment and health indicators (Khandker 2005;Van Rooyen et al 2012). Empowering women with businesses to spend their incomes on education and health for their families benefits the individual family most directly, but also has broader ramifications for their society, as it also develops the social and human capital for that society.…”

On The Two-Way Relationship between Corporate Reputation and Financial Performance in Microfinance: A Stakeholder Approach

“…The massive capital flows at the bottom of the pyramid, the indirect effect of Indian MFIs' scandalous practices on tragic suicides reported in Andhra Pradesh (Hossain, 2013), the 'usurious' interests charged to the poor by Compartamos Banco (see Hudon, 2011 andHudon &Sanderbg, 2013); added to non-conclusive findings on the impact of microfinance on poverty alleviation (Van Rooyen et al, 2012 andBarnejee, Karlan, &Zinman, 2015), depict an ignominious image of the sector.…”