Urban Sustainability and Poverty: Can Microfinance Make a Difference?

Abstract

Microfinance is perceived as a way to provide the impoverished with access to credit, but does it provide a sustainable solution to the ever growing problem of urban poverty? Microfinance has found new visibility with the experience of the Grameen Bank in Bangladesh. The Grameen Bank is considered a model of microfinancial success leading to a Nobel Peace Prize in 2006. But microfinance has had a mix of success and failures and despite being present in every region of the world; it is poorly documented and understood. Scholars who want to get an informed understanding of the microfinance world will find themselves confronted with an abundance of anecdotal information, giving the misleading impression of a wealth of data but little in the form scientific data. For example, empowerment of women is the best documented aspect of microfinance. However important woman empowerment may be, it does not capture the totality of the impact of microfinance on poverty or on the economy. Microfinance is a unique instrument to fight poverty and the difference it has made is beyond debate, but is reliance on microfinance sustainable for developing countries?