In this lesson you will meet Lorenzo who is studying development and has decided that he does not understand microfinance. He wonders why it is thought to be such a vital tool in the fight against poverty and what exactly is meant when someone says “people need microfinance”.
You can explore the origins of microfinance schemes and reflect on why they have become so popular. Do they justify the hype?
The Microcredit Summit Campaign aims to ensure that 175 million poor people receive microcredit by 2015. Will this reduce poverty? Are micro-entrepreneurs really going to become engines of growth and employment?
Lorenzo realises that services which help people manage their money are very important, whether or not they reduce poverty, and investigates the variety of motives microfinance suppliers have and whether they can be sustainable.
So is promoting microfinance a win-win situation or are donors and other investors taking the easy route by pouring funds into micro lending whilst failing to address other fundamental issues?