Microfinance Essay

576 WordsAug 3, 20123 Pages
The microfinance sector consistently focuses on understanding the needs of the poor and on devising better ways of delivering services in line with their requirements, developing the most efficient and effective mechanisms to deliver finance to the poor. Continuous efforts towards automation of operations is steady improving in efficiency. The automated systems have also helped accelerate the growth rate of the microfinance sector. The goal for MFIs should be: • To improve the quality of life of the poor by providing access to financial and support services; • To be a viable financial institution developing sustainable communities; • To mobilize resources in order to provide financial and support services to the poor, particularly women, for viable productive income generation enterprises enabling them to reduce their poverty; • Learn and evaluate what helps people to move out of poverty faster; • To create opportunities for selfemployment for the underprivileged; • To train rural poor in simple skills and enable them to utilize the available resources and contribute to employment and income generation in rural areas. Weakness There´s not much research done on the actual effectiveness of microfinance as a tool for economic growth. Some argue that there´s to much focus on microfinance which will motivating less spending in other helping assistances as public health, welfare, and education. Some are doubting microfinance really have that impact on poverty as the practioners would submit. Other describes microcrediting as a privatization of public safetynet programs. There´s also some microfinance institutions charging excessive interest rates. Questions against the Grameen Bank was raised in a Wall Street Journal article. It was regarding the repayment rate, collection methods and questionable accounting practices. Studies of microcredit programs have

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