Issue of Discussion: Micro finance is an effective poverty alleviation tool but the current outcomes are not as per expectations. A study conducted by Alhuda Centre of Islamic Banking and Economics in Pakistan, the sustainability of Micro finance borrowers is lessor than the estimated and the borrowers found in more than one loan cycle and institutions but still looking to get more.

By Whom and where: Aamir Malik, Head of Operations at Alhuda Centre of Islamic Banking and Economics, Pakistan [In Microfinance Professionals LinkedIn Group]

Respondent 1

Comments:
Jitesh Kumar Panda- I think Microfinance as a tool may be seen in context of efforts towards promotion of livelihoods.

Microfinance Institutions/programs may need to collaborate with other livelihood promoting institutions/programs to achieve outcomes related to poverty alleviations.

Respondent 2

Comments:
Ajay Kumar- Micro-finance in isloation is merely micro-credit and more of business with the poor. Hence, Financial Inclusion should be the aim along with convergence of services and then only the real objective of serving the poor can be achieved. Various linkages, micro-enterprises and skill up-gradation are another areas where microfinance should be dovetailed. 

Respondent 3

Comments:
Aamir Malik •  Thanks for sharing your views. 

Respondent 4

Comments:
Asifur Rahman- I disagree with the statement "Micro finance is a effective poverty alleviation tool". To me it is just a financial service to the people who previous did not have access to such service. Poverty alleviation need proper environment in the society to increase income. In the 3rd world countries the problems are multi-dimensional.

Think about a woman who took the loan to produce goods. If she fails to sell the produced, Then MF cannot be held responsible for her loss. Again in practice, most of the loans are taken to meet unforeseen expenses like health care etc. In that she has to payback from her existing income. But if her loan is not approved then she has to go to the money launder and face usury. In any case MF is not responsible for her deteriorated situation. In true sense, MF saved her from an even worse situation.

But the problem raised when we (MF professionals) talked abut poverty alleviation. Coz it rose their expectation. In my experience, MF has a very little role to play in "poverty alleviation". "Poverty alleviation" is a much bigger game and an integrated effort is required in this regard from the Govt.

May be Credit + concept of BRAC is a practical approach. But again if MF is influenced by charity money then it would not be possible to provide the service to 4 Billion people at BoP.

For the healthy growth of the industry, it is better to separate MF from other social agendas. It must concentrate on the financial services only.

Respondent 5

Comments:
Muhammad Afzal- Very much agree with Asif. MF bring low income groups at a platform from which they can obtain financing at their doorstep to enhance income generating activity.