Before Microfinance: The Social Value of Microsavings in Vincentian Poverty Reduction

Abstract

The purpose of this article is to present and discuss the values and limits of microfinance within the context of poverty reduction, international development and community empowerment. The main thesis is that microfinance requires a more complex strategy than simply the provision of credits. The development of financial capital depends on the increase in human capacity and social capital. Microfinance is revisited under the ethical lenses of global responsibility for alleviating poverty and developing community sustainability. Through a critical review of the literature and case studies from the Philippines, the author suggests a value-based Vincentian approach to integrate microfinance into community empowerment. In connection with the main thesis the author argues that the achievement of economic self-reliance through microfinance is contingent upon the development of capacity building, social capital and empowerment at the individual, collective and systemic levels.

Differential Social Performance of Religiously-Affiliated Microfinance Institutions (MFIs) in Base of Pyramid (BoP) Markets

“…Furthermore, while microinsurance was introduced as an element of microfinance, it is increasingly becoming an independent approach to poverty alleviation resting in the hands of insurers, not MFIs. Microsavings, on the other hand, have been available for a longer period, are typically tied to microloans, and have demonstrated a relationship with borrower success when offered in conjunction with the loan (Hossain 2012;Vonderlack and Schreiner 2001), or even as a precursor to providing credit (Tavanti 2013). Microsavings ultimately serve as a form of insurance, and may be viewed as superior due to the fact that savings give the borrower more decision-making power in how to use these 'surplus' funds.…”

“…This proxy was chosen given the indication from our literature review that a broader offering of peripheral services designed to improve the well-being and success of the borrower was aligned with a stronger social orientation, and a higher degree of social responsibility (Hossain 2012;Ogola 2012;Tavanti 2013;Vonderlack and Schreiner 2001). The aggregated information was acquired from the MFIs' web pages, where they describe the service options available to their clients.…”

Microfinance and financial inclusion: Challenges and opportunities

“…There will always be a few smart operators on both the supply side and the demand side, but in general, microcredit works well. It works especially well for the institution if it can be accumulated with other financial services such as microsavings, microinsurance, and micropayments (Bergsma, 2011; Chikalipah, 2018; Davis, 2012; Delgado, Parmeter, Hartarska, & Mersland, 2015; Tavanti, 2013). It works well for the client if, in addition to microfinance services, he can also be provided with human capital and social capital in the form of livelihood training and access to markets, respectively (Bradley, Mcmullen, Artz, & Simiyu, 2012; Lam, Zhang, Ang, & Jacob, 2020; Rajasekhar, Manjula, & Suchitra, 2017).…”

Assessing the Challenges and Opportunities of Pastoralists Sustainable Livelihoods: The Case of Yaballo Woreda of Borana Zone, Oromia

“…One of the major challenges faced globally that is impeding human and economic development is poverty (Asongu, 2013;Baumann, 2001;Chibba, 2009;Tavanti, 2013). With the levels of poverty, inequality, and social-exclusion on the rise, calls to close this gap are also becoming louder.…”