Micro Loans in Developing Countries: Can Micro Loans help in Reduce Poverty
The word poverty came from the Anglo-Norman word povert. Poverty is predominantly seen in the developing nations. Poverty is a where people lack their basic capacity to participate effectively in society i.e. Not having enough money to provide food and clothes to their family, not being able to work and earn for themselves. There are many reasons for poverty in developing countries some of them include overpopulation, uneven distribution of resources ,lack of education, environmental degradation, economic trends, demographic shifts, high rate of unemployment, corruption, poor government or governance, prejudice and inequality, civil wars and natural disasters etc,.
Reduction of poverty is the major concern of every developing country and even the developed nations. It can be reduced mainly by
Economic liberalization is protecting the property rights of the poor and according to the World Bank increasing the property right is one of the key factors in reducing the poverty.
Increasing Capital, Infrastructure and Technology:
Long Term economic growth can be achieved by increasing the human and physical technologies. Human technology is growth in the form of health, this leads to the economic development and in turn the reduction of poverty. Physical technologies is increasing the infrastructure of the cities and providing education to all the people in the society.
Employment and Productivity:
Providing Employment to all the people including the backward section of the society helps them to be financially stable and meet there day to day needs.
Educating the women about their rights and creating employment opportunities for them and removing the barriers of genders created by the society will also help in reduction of poverty.
Providing financial aids like loans to the economically backward classes of the society will help in the reduction of poverty. Providing micro loans is one of the most effective methods among all the methods adapted by the developing nations in reduction of poverty.
Microloan is one of the popular and effective method of reducing the poverty supported by all the countries of the world especially the developing countries. This is an inspirational story started by a common man in late 1970’s looking at the extreme poverty in his country. Micro loans or Micro Financing was first started by Muhammad Yunus in Bangladesh. He started an Organisation called Grameen Bank. The Grameen Bank provides small loans without collateral to small group of borrowers. This small financing group later grew to large micro financing organisation by lending money to thousands of people in the world. With the inspiration of Grameen Banks in Bangladesh several small micro financing institutions sprang up around the world and a new movement called International Microfinance Movement began in all the major continents of the...