Role of Micro Finance in Pakistan

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Recommended: Topic on poverty reduction

Half of the world’s population is living below or near poverty line, which is 2 or less then two US dollars. To encourage the development and eliminated poverty UN have announced their goal of millennium to eradicate poverty till 2015. Pakistan is 87th poorest country of the world and 23% of its population is living under poverty line, which is US$ 1 per day. Micro finance is a method to alleviate poverty and empower, and raise the living standard of poor people. Micro finances are provided by the MFIs, who address the financial needs of poor people, neglected by the conventional financial institutions. Micro financial activities are as old as 200 B.C, which were started in India in shape of moneylenders, chit funds and merchant banks. Ireland and Germany are respectively second and third for starting micro financing activities to reduce poverty in 17th and 18th century respectively. Microfinance in Pakistan has been started in 1970s, government redirected credit was used as a development tool. SBFC, YIPS, SES, and YC were among the first schemes started by the FIs under the indirect political influence of Pakistan government to help un-employed and small entrepreneurs.

Problem Statement

Micro finance is a methodology through which micro-entrepreneurs are provided with working capital, short term loans as well as assistance to startup their business, in order to achieve employment and increase in living standard of the poor people. Micro finance institute provide such finances and financial services like savings and credits some time insures as well in face of high risk of default. Currant paper will investigate the role of micro financial institutions in empowerment, living standard and poverty alleviation of poor people in...

... middle of paper ...

...finance systems to enhance housing opportunities: A case of South Africa. Property Management, 25 No. 1, 80-97

Suadnya, W., Chamala, A., Abdurahman, M., & Sayuti, R. (2005). Empowerment and microfinance: an analysis of theoretical concepts and practices – Reflections from microfinance project in Indonesia. INSTITUT FRANÇAIS DE PONDICHÉRY. Retrieved April 18, 2010, from http://www.rume-rural-microfinance.org/IMG/pdf_Microfinance_Challenges.pdf

Vincent, G. (n.d). Sustainable micro entrepreneurship: the role of microfinance, entrepreneurship, and sustainability in reducing poverty in developing countries. Retrieved April 12, 2010, from http://www.gdrc.org/icm/micro/guy_sust-micro.pdf

Zelealem, T., Temtime, S.V., & Shunda, J.P.W. (2003). A decision tree approach for integrating small business assistance schemes. Journal of Management Development, 23 No.6, 563-578

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