Research Korner: Effectiveness of Micro-Financing

The Solution for Unemployment

The Solution for Unemployment Introduction Every country faces the global dilemma - unemployment. Tailing to that is the other category named as underemployment and is linked with the problem of poverty. The problems in employment is the most difficult to answer that even the politicians find it hard to solve. Apparently, there are many programs lend by the governments in all parts of the world to fight the problem in unemployment, but it seems like there is no applicable solution that will fit in all types of society. There still no definite solution that might create difference and fight the reigning poverty among nations. Unemployment – Cause and Effect In the developing countries in both Asia and Africa, the socio-economic status of the people is affected because of the unemployment. Many researchers around the world practically suggested that the level of literacy among the nations is the fundamental of the unemployment. This is because due to the lack of competency received by the people. Furthermore, there are hindrance in the culture and tradition such as the patriarchal trend which means to prioritize the education or the power of men and leaving the women behind. In terms of the education, the gender inequalities and socio-economic status became the norm of the society which deteriorates the knowledge and skills of others. This is not a good implication in a country, most especially if the country has future plan to develop and progress. Actually, no one really answered the right cause of unemployment; the researchers only justified their hypotheses by illustrating the common scenario that might leads to its roots. However, the effects are very obvious, if a country has a low level of employment and increase the rate of unemployment, the people will definitely suffer in poverty. The continuous poverty will manifest in the economic status of the country, losing all their resources and credibility to improve and follow the steps of the other developed countries. Unemployment – Solution Even if the cause of the unemployment remains blurry, still the effects are blatantly seen in the society. Various programs and international social work are prepared by most of the developed countries with an aim to steer the competency among the developing countries. The availability of jobs abroad is a good example of fighting the unemployment in the country. However, the growing number of immigrants might cause to reduce the capability of the second country (the place where the job is available) to serve even in their own people. This is also a negative trait in the mother country (where the overseas worker came) because they are serving the human capital with no economic gains. If you will see it closely, the economic gains will solely receive by the second country which might be the greatest advantage for them to progress more. With regards to this idea, it is better if the people will serve in his own country and be with his family. The government and banking/financial institutions joint together and offered the basic solution to fight the unemployment by introducing the microfinancing. Microfinancing is an appropriate solution in which the people might engage in a small business. This promotes the anti-poverty agenda and building the entrepreneurial skills of the individuals. Microfinance institutions offer a limited fund to support the livelihood of the family. The main focus of the microfinancing is to empower the women or the housewives, while their husbands are working. In that way, the poverty and the problem of unemployment is reduced. This kind of activity is suitable for the developing countries and helping the society changed their ideas in businesses. In addition, microfinancing institutions doesn’t only offers loans and credit but also the training for the members to be an effective entrepreneur in the future. The businesses resulted to microfinancing might help improve the quality of life of the individuals because of the various opportunities it offers, if and only if, that individual is aware about the risks that it might involve and know how to manage the money he possess. It is important that the individual is responsible in handling the credit/loans in order to have a long-term relationship with the institution. Conclusion If there is congestion on the employment, why won’t an individual create his own type of business that might create opportunities on the other job seekers and increase the socio-economic status of the proprietor? Unlike the employment which the employer or the company holds the time of the employee, the individual can handle his own time and in the long-term might be the boss of his own business.   References: ACCION, (2008) Marketing Strategies for Microfinance, Building Sustainable, Commercial Microfinance Programs [Online] Available at: http://www.accion.org/Document.Doc?id=466 [Accessed 19 July 2010]. Murray, S., (2008) For Microfinance Marketing [Online] Available at: http://www.swwb.org/files/pubs/en/marketing_for_microfinance_e.pdf [Accessed 19 July 2010] Polliger, J., Outhwaite, J., & Cordero-Guzman, H., (2007) The Question of Sustainability for Microfinance Institutions., Journal of Small Business Management, Vol. 45, No. 2.

The Solution for Unemployment

The Solution for Unemployment Introduction Every country faces the global dilemma - unemployment. Tailing to that is the other categor...

Micro Finance and Poverty Alleviation Proposal

Micro Finance and Poverty Alleviation Proposal   An Investigation on the Roles of SBLPs and MFIs in Poverty Alleviation and Development of Socio-Economic Structure in India   1.0 Background of the Study             Started by non-profit organisations, self-help groups are community-based financial intermediaries that are usually composed of twenty and below local women. These self-help groups, whom pool money to regular contributions to generate enough financial capital, may be registered and non-registered. The funds that the group was able to collect will be lent back to the members or other members of the community for specific purposes. On the basis of mutual helping, self-help groups function in accordance with broad anti-poverty agendas. Self-help groups are basically viewed as an instrument for women empowerment and leadership development in communities.             Further, one of the basic distinctions of a self-help group is that it serves as a financial intermediary between informal financial market and formal financial actors like micro finance institutions (Rutherford, 1999). Microfinance, on the other hand, is defined as the provision of various financial services to poor or low-income clients including consumers and self-employed for the purpose of supporting their financial and non-financial needs. As a practice, microfinance aimed at sustainable delivery of these services. It is intended that micro finance could lead into effective money management strategies in order for poor people to address their own financial needs hence to live out of poverty in the future.               In theory, microfinance encompasses all initiatives in increasing the access to, or improving the quality of, financial services of people in poverty who could use or could benefit from using the lent money other than the traditional financial services. Nevertheless, the goal of microfinance is not merely monetization but instead to address the several types of needs of poor, near-poor and low-income families. These needs include lifecycle needs, personal emergencies, disasters and investment opportunities (Rutherford, 2000). As such, micro financing conforms to creative, flexible and collaborative way of meeting the needs of underprivileged group of people.              In this way, poor people are given the opportunity to engage in entrepreneurial activities as an instrument in alleviating poverty. Micro financing puts emphasis on building the capacity to participate in micro entrepreneurship, aside from generating employment. Hence, microfinance is considered as a tool for socioeconomic development as it aimed to create self-sustaining businesses among the poor people. These livelihood opportunities are also regarded as an avenue to cope up with financial difficulties such as sending children to school and putting nutritional foods in the table.             In India, the growth of microfinance is stable and continuous through self-help group-bank linkage programme (SBLP) and microfinance institutions (MFIs). SBLPs and MFIs are the main channel of microfinancing in the country wherein they served over 33 million Indians in 2008. Four out of five microfinance clients in India are women. Women, most specifically, are mobilised into self-help groups to build their social capital and facilitate access to finance for the groups and their members. Self-helped groups in Pakistan thus served as specialised microfinance institutions to reintegrate people towards a quality living which impacts literacy and health.       2.0 Statement of the Problem             The problem that will be addressed in this study is the position that SBLPs and MFIs are taking in alleviating poverty and developing socioeconomic structure in India. The key question to be answered is: How SBLPs and MFIs helped in alleviating poverty and developing the socioeconomic structures of people in India? In particular, the research will seek to answer the following research questions. 1)                 How do SBLPs and MFIs contribute in poverty alleviation and socioeconomic development in India? 2)                 In what specific ways does micro financing proved to be beneficial for the people in India?   3.0 Overview of the Methodology             The study will explore the problem in an interpretivist view, using exploratory research strategy because it aims to determine the present facts as well as facts that are not yet explored about the phenomenon. Exploratory research will enable the study to look at the problem in both descriptive and exploratory manner. It will look into the problem by exploring the views of different sets of respondents, as well as by exploring different literatures related with the study.             This study will also employ qualitative research method because it will try to find and build theories that will explain the relationship of one variable with another variable through qualitative elements in research. Through this method, qualitative elements that do not have standard measures such as behavior, attitudes, opinions, and beliefs within the business domain will be analyzed.             This qualitative study will conduct primary and secondary research. The primary source of data will come from the researcher-made questionnaire. The primary data frequently gives the detailed definitions of terms and statistical units used in the study. These are usually broken down into finer classifications.             The secondary sources of data will come from published articles, books, business journals, theses and related studies and the Internet. Acquiring secondary data are more convenient to use because they are already condensed and organized. Moreover, analysis and interpretation are done more easily.     References Rutherford, S. (1999). Self-help groups as microfinance providers: how good they can get? Mimeo. Rutherford, S. (2000). The Poor and Their Money. Oxford University Press: New Delhi.

Micro Finance and Poverty Alleviation Proposal

Micro Finance and Poverty Alleviation Proposal An Investigation on the Roles of SBLPs and MFIs in Poverty Alleviation and Developm...