the role of micro finance in reducing poverty

7/31/2019 The Role of Micro Finance in Reducing Poverty

1/4

The Role of Micro Finance in Reducing Poverty

Introduction

Poverty is one of the greatest challenges that every country faces. The indication of

poverty may arise from the cost of living of the population residing in the said country.

Added to that, if the family doesnt have an income earner, or has a great number of family

members and there is a little income, the poverty can be accounted. Both developed and

developing countries recognize the existence of poverty which can be another hindrance in

the continuous progress of the entire country.

Background and Problem Statement

The government and other agencies propose the different ways in reducing the

poverty. From strengthening the employment program to establishing the options in

increasing the impact of livelihood program, all of the aim is concentrated in the

participation of the people. The benefits that can be gained through the programs can

deliver the improvement in the level of living of the families through the introduction of

micro and small enterprise. It is very well said that the micro-financing can help the

families improve their lives. However, it is more admirable if the families are open in

building their own business just to satisfy their everyday needs.

Research Aim and Objectives

The main aim of the study is to determine the role of micro and small enterprises in

the action of the society in reducing the poverty. Since poverty is considered as one of the


2/4

cues for the country to aim for development, the people should also move and act to

achieve the quality of living. To support the aim of the study, there are three objectives that

can serve as the guide towards its completion. First is to discover the main objectives of the

micro and small enterprises in the society. Second is to measure the impact that it might

bring towards the people. And third is to recognize the evidences that may brighten the idea

that in the long run, the micro and small enterprises can help reduce the poverty.

Literature Review

Micro and small enterprises play a great role in the economies. In addition, the

micro-financing that can be part of the industrialization and economic growth can lessen

the impact of the global economic uncertainties. The individuals can use the opportunity

according to their managerial style, to what is needed in the community and other reasons

that can accommodate the changes and towards fighting the poverty. Through the

continuous growth of economy, the micro and small enterprises and the cooperative

behavior of the people can be the start for the individuals in transforming towards

entrepreneurs. Because of the too much openness of the countries in various technological

change, globalization, and international market, the small sectors such as agriculture and

other small income livelihood activities are left behind. It is expected that the development

must affect the small sectors and influence them to foster the growth strategies. In this case,

the role of the micro and small enterprises are highlighted by capturing the competitive

market of production and service, ensuring the continuous developmental opportunities

(FAO, 2008). The economic growth can be linked to the reduction of poverty by the aid of

the numbers of small firms and discovering their other potentials. There should be an


3/4

action towards the competitiveness of the small sectors and systematic intervention. In the

long run, the micro and small enterprises can gain the stability in the economic growth

(Downing, 2006). However, there should be an extended support coming from the financial

sector which also aiming for the same goal in developing the economy towards reduction

of policy and strengthening the area of micro and small enterprises. The changing role of

the micro and small enterprises is recognized to be synch with the existing informal and

formal financing or microfinance (Green, Kirkpatrick, and Murinde, 2006).

Methodology

The suggested method in the study is the use of comparative case studies that can

give the idea towards the growth and expansion of the micro and small enterprises that can

be an effective action in reducing poverty. The challenges that are available in the market

can be viewed through the use of the case studies that are concentrated on the micro and

small enterprises. On the other side, the small enterprises are explained to play an

important role in the economies. Through the use of the case studies, the problems that

might involve in the micro and small enterprises and the signs for the continuous growth

and development of the micro and small enterprises in the coming years are indicated.


4/4

References:

Downing, J., (2006) Integrating Economic Growth and Poverty Reduction: The Role of

Micro and Small Enterprise (MSE) Development, (USAID) United States Agency

for International Development, Accessed 15 June 2010, from www.enterprise-

development.org/download.aspx?id=311

FAO (2008) Rural Micro-Enterprise Development: A Way to Reduce Poverty, Food and

Agriculture Organization, Accessed 15 June 2010, from

http://www.fao.org/ag/AGS/subjects/en/farmMgmt/pdf/livelihood_diversification/b

rief_rural_micro_enterprise.pdf

Green, C.J., Kirkpatrick, C.H., & Murinde, V., (2006) Policy Arena: Finance for Small

Enterprise Growth and Poverty Reduction in Developing Countries, Journal of

International Development, Vol. 18, p. 1017, Accessed 15 June 2010, from

http://info.worldbank.org/etools/docs/library/239950/Murinde_Reading_GKM-JID-

article.pdf

the role of micro finance in reducing poverty

Documents