JBS Vol 05. Num 1. 2003 - MICROCREDIT AND POVERTY: NEW REALITIES AND ISSUES

In recent years, microcredit, known in its wider dimension as microfinance, has become a much-favored
intervention for poverty alleviation in the developing and least developed countries. There is scarcely a poor
country or a development-oriented donor agency not involved in the promotion of a microfinance program It is
argued that the poor themselves can positively contribute to economic growth rather than relying on trickle
down from others This paper focuses mainly on the experiences of Bangladesh and draws attention to some
important issues and actions which will make microcredit more robust to consolidate its gains and to increase its
impact on reducing poverty in Bangladesh Examining its impact on the quality of life of the poor, the paper
examines seven emerging issues, namely (a) targeting the poorest versus achieving sustainability (b) new
products for wider target groups (c) non-donor source of funding of microfinance institutions (MFI) (d)
govemance of MFIs (e) sustainability of bonowers (1) regulatory framework and (g) creating an autonomous
wholesale fund. The paper also suggests strategic issues for the future and the strategic steps that need to be
taken to make microfinance more effective to enable a staggering 1.3 billion poor people of the world to come
out of the poverty trap as soon as possible