Micro-finance and its Impact on Poverty Essay -- Economy, Interest Rat

Despite the growing body of literatures about the microfinance and its impact on poverty, there are counter growing criticisms against microfinance in issues such as reaching the poor, unchanged poverty level, high interest rate, brutality in repayment processes, financial sustainability, and women empowerment. (Hossain, 2010). In terms of poverty reduction and reaching the poor people, the studies edited by (Hulme & Mosley, 1996) on the impact of microfinance on poverty found that poor people do not benefit from microfinance; it is only non-poor people who do well with microfinance and achieve positive impacts. (Morduch & Haley , 2002) points out that studies that have been conducted to examine the microfinance targeting and impact illustrate that MFIs show considerable diversity in their ability to reach poor people and the MFIs that have excellent financial performance do not imply excellence in outreach to poor people. However, (Odell, 2010) thinks it’s impossible to answer the question, does the microfinance work? (Odell, 2010) argues that the microfinance is a collection of tools and there are different types of MFIs, clients, and offered services .MFIs work in different environments, in different countries and it’s not correct to generalize the findings of a single impact study on the m icrofinance on the world. In addition, the measurement of microfinance impact is surprisingly difficult, because it’s not easy to isolate the impact of microfinance from other factors (CGAP). Fore instance, if the clients who got microfinance services are not doing better in their business than those who didn’t, this not means this caused by the microfinance services. There are other factors that could be involved in this impact such as the ... ... and in the term of physical mobility, ownership and control of productive assets, and their status within the community. A second viewpoint believes that microfinance do little to women empowerment and may contribute to reinforcing existing gender imbalances. (Cheston& Kuhn, 2002) conclude that empowerment is a complex process and MFIs microfinance is not always empowering for all women. MFIs need to improve their services and processes to ensure that they support the empowerment of women. Critique and criticism against microfinance extended to argue many other issues such as considered microfinance as a tool of economic globalization, or creation of technology dependency. Millions poor women and men in the world need access to microfinance.Hoewver; Microfinance is need to be review and evaluated objectively to improve its services and learn from its mistakes.