2.9: REFLECTIONS ABOUT MICROFINANCE AND POVERTY
ALLEVIATION
According to the( NMFR, 2005,3): National micro finance policy
for Rwanda, the interest in micro finance has burgeoned during the last
decades; multilateral lending agencies, developing and developed country
governments, and non-governmental organizations, all support the development of
micro finance. Despite this development, financial markets in most developing
countries are prepared to provide efficient and effectivefinancial services, to
low income households.
Majorities of Rwandans, whose incomes are very low, have
limited access to financial services and micro finance institution offers the
possibilities of managing scared households and enterprise resources more
efficiently.The micro finance services can be critical element of poverty
alleviation strategy. Improved access and efficient savings, credit, and
insurance facilities can enable the poor to smoothen consumption, manage their
risks, build their assets, develop their micro enterprises enhance earning
capacity.
Micro finance services can also contribute to the improvement
of resource allocation, adoption of better technology and provision of markets.
Thus micro finance helps to promote economic growth and development. Savings
services are among the most beneficial services for low- income people. Nearly
all households need to save to protect themselves from periods of low-income
and to cover large anticipated expenses. The enterprises need to store the
value accumulate from profit until they can invest them to earn return. Others,
thus broadening outreach can use the savings kept as funds investment.
Like some services as savings, credit services can allow
enterprises and families to make some important investment. Enterprises use
this credit as source of short-term working capital and long-term investment
capital. The households use it to meet consumption needs, particularly during
when income flows are low.
Without permanent to institutional finance, most poor
households continue to rely on self-finance or informal source of micro
finance, which limits their ability to actively participate in development
opportunities. Micro finance institutions can contribute to the development of
overall financial system through the introduction of financial markets.
Micro finance can provide an effective way to assist and
empower women, who make up significant proportion of the poor and suffer from
poverty.
In brief, micro finance addresses the financial needs of
significant portion of our population. Micro finance institutions are mainly
the facilities of underlying economic opportunities that lead to poverty
alleviation on rural areas of Rwanda and economic prosperity in general.
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