Microfinance is not a panacea for poverty and related development challenges, but rather an
important tool in the mission of poverty eradication. Poverty is a multidimensional problem,
embedded in a complex and interconnected political, economic, cultural, and ecological
system.
Owing to poverty’s large scope and multiplicity of actors, there is no single guaranteed
approach to its eradication. Within this system, solutions are as multifaceted as the causes.
Such a systems’ perspective is critical in creating an enabling environment for sustainable
poverty eradication. Problems and solutions are not isolated phenomena but occur within an
interconnected system in which actors and actions have reciprocal consequences.
Consequently, poverty eradication is a complex mission and requires commitment,
cooperation, and cohesion at all levels of development – individual, household, community,
national, and global.

CAUTION: Borrowing more than you can afford to repay can lead to severe financial difficulties.

While microfinance alone does not improve roads, housing, water supply, education, and
health services, it can play an important role in making these and other sustainable
contributions to the community. As microfinance becomes more widely accepted and moves
into the mainstream, the supply of services to the poor may likewise increase, improving
efficiency and outreach, while lowering costs. This, in turn, can have a multiplier effect on
people’s standard of living.
Perhaps the greatest contribution of microfinance is that it empowers people, providing them
with confidence, self-esteem, and the financial means to play a larger role in their
development. The potential of microfinance far exceeds the micro-level, scaling-up to address
macro-problems associated with poverty eradication.

Article Extract Credit: MICROFINANCE IN AFRICA – the United Nations
Article Title: Microfinance in Africa: Combining the Best Practices of Traditional and Modern Microfinance Approaches towards
Poverty Eradication
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Calgagovski J., V. Gabor, M.C.Germany and C.Humphreys 1991. “Africa’s Financing Needs in the 1990s” in I.Hussain and J.
Underwood (eds), African External Finance, World Bank, Washington D.C.
https://www.un.org/esa/africa/microfinanceinafrica.pdf