The impact of microfinance on democratisation

Abstract

Microfinance is said to play a role in the alleviation of poverty. If we think about it intuitively, providing poor people with some money for running their businesses can be of support in their battle against poverty. Indeed, there is some truth in this statement. There is extensive proof of the fact that microfinance boosts poor people’s entrepreneurial sense by providing them access to the market, learning them how to balance the spending and returning of money, for then being able to acquire means to escape poverty. However, microfinance does much more. Often acting at the community level, it makes people aware they can be the main agent of their destiny, developing economic social and cultural skills. On one hand, poor people can expand their land, buy a new house or own more cows. They thus ameliorate the material side of their lives. On the other hand, they learn that money for school expenses is a good investment. They have more care for their health conditions. They learn the value of savings. Hence, they develop in a more human and social sense, making an endogenous process of democratisation starting. This is the real power of microfinance as few reports have so far been able to explain.