Microfinance Goes Macro: Impact on Poverty Alleviation in Pakistan

Abstract

Today one of the most compelling challenges facing Pakistan is the problem of poverty. In the quest for solutions to the country's development challenge and poverty alleviation, microfinance is becoming one of the most admired options as credit has been identified as a barrier facing the poor, especially the rural poor. The overall aim of this paper is to explore the impact of microfinance on alleviating poverty. Pakistan's poverty reduction strategy has yielded handsome result in the shape of sharp reduction in headcount poverty from 2000-01 to 2005-06. Although, poverty has declined but the fact remains that 22.3 per cent people of Pakistan are still living below the poverty line (Economic Survey of Pakistan 2007-08). Macroeconomic strength is a precondition for the economic growth that fetch the poverty reduction and growing living standards. But macroeconomic stability is not sufficient. Rather, it is the foundation on which to build a flourishing economy. Successfully targeted microfinance programs are also the key to permanent and sustained reduction in poverty. Microfinance institutions can contribute to this by building financial regulation and providing guidance to the borrowers. Operating on these grounds, microfinance institutions can make a big difference in alleviating poverty in Pakistan.

The Effectiveness of the Government Rural Social Services Microcredit Programme in Bangladesh

“…Previous studies also found similar result that microcredit is associated with per-capita income and household income among the borrowers (Hossein, 1988). Similarly, in our neighbour country, microcredit has positive effects on participant’s income in India (Imai et al, 2010), Sri Lanka (Silva, 2012), and Pakistan (Bashir et al, 2010).…”

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“…Such programs most of the time impact positively and these programs of microcredit also serve the purpose best. Living standard of poor people enhanced by microcredit and it also reduced the poverty in Pakistan (Bashir, Amin, & Naeem, 2010). Microcredit in poverty alleviation plays a significant role but in poverty reduction microcredit is like a water drop in a sea.…”

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