Microfinance Programs as a Means of Alleviating Poverty: Lessons from MFIs in Newly Industrialized Countries

Abstract

The history of modern microfinance activities can be traced back to 1976, when Muhammad Yunus set up the Grameen Bank as a project of assisting poor women to access credit for income generating activities in Bangladesh. Since then several microfinance institutions modeled on the Grameen Bank have been developed and implemented in reaching majority of the unbanked poor population in many countries around the globe. Microfinance is now being considered by many countries and governments as one of the most important and effective strategies of poverty alleviation. Among the beneficiaries of micro financing are women Microfinance has enabled them to be self employed thus improving their security, autonomy, self confidence and status within the household.  This study examines microfinance as a poverty alleviation strategy. Lessons from microfinance institutions in Kenya reveal that microfinance has provided poor people in Kenya especially women with an opportunity to engage in income generating activities.

Keywords: Poverty, micro-finance, micro-credit, development, investments, interest.