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Microfinance And Economic Empowerment Of Women
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CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Microfinance
refers to the provision of financial services to low-income clients,
including the self-employed. The term also refers to the practice of
sustainably delivering those services. More broadly, it refers to a
movement that envisions "a world in which as many poor and near-poor
households as possible have permanent access to an appropriate range of
high quality financial services, including not just credit but also
savings, insurance, and fund transfers". Microfinance encompasses any
financial service used by poor people, including those they access to in
the informal economy, such as loans from a village moneylender. In
practice however, the term is usually only used to refer to institutions
and enterprises whose goals include both profitability and reducing the
poverty of their clients.
Micro financial services are needed
everywhere, including the developed world. However, in developed
economies intense competition within the financial sector, combined with
a diverse mix of different types of financial institutions with
different missions, ensures that most people have access to some
financial services. Efforts to transfer microfinance innovations such as
solidarity lending from developing countries to developed ones have met
with little success.
Microfinance can also be distinguished from
charity. It is better to provide grants to families who are destitute,
or so poor they are unlikely to be able to generate the cash flow
required to repay a loan. This situation can occur for example, in war
zone or microfinance means providing very poor families with very small
loans (microcredit) to help them engage in productive activities or grow
their tiny businesses. Over time, microfinance has come to include a
broader range of services (credit, savings, insurance, etc.) as we have
come to realize that the poor and the very poor who lack access to
traditional formal financial institutions require a variety of financial
products.
1.1.1DIFFERENCES BETWEEN MICROFINANCE AND MICROCREDIT
Microcredit
came to prominence in the 1980s, although early experiments date back
30 years in Bangladesh, Brazil and a few other countries. The important
difference of microcredit was that it avoided the pitfalls of an earlier
generation of targeted development lending, by insisting on repayment,
by charging interest rates that could cover the costs of credit
delivery, and by focusing on client groups whose alternative source of
credit was the informal sector. Emphasis shifted from rapid disbursement
of subsidized loans to prop up targeted sectors towards the building up
of local, sustainable institutions to serve the poor. Microcredit has
largely been a private (non-profit) sector initiative that avoided
becoming overtly political, and as a consequence, has outperformed
virtually all other forms of development lending.
Traditionally,
microfinance was focused on providing a very standardized credit
product. The poor, just like anyone else, need a diverse range of
financial instruments to be able to build assets, stabilize consumption
and protect themselves against risks. Thus, we see a broadening of the
concept of microfinance--our current challenge is to find efficient and
reliable ways of providing a richer menu of microfinance products after a
natural disaster.
Microfinance refers to loans, savings, insurance,
transfer services and other financial products targeted at low-income
clients. Microcredit refers to a small loan to a client made by a bank
or other institution. Microcredit can be offered, often without
collateral, to an individual or through group lending.
Microcredit is
the extension of very small loans (microloans) to the unemployed, to
poor entrepreneurs and to others living in poverty who are not
considered bankable. These individuals lack collateral, steady
employment and a verifiable credit history and therefore cannot meet
even the most minimal qualifications to gain access to traditional
credit. Microcredit is a part of microfinance, which is the provision of
a wider range of financial services to the very poor.
Microcredit
is a financial innovation which originated in Bangladesh where it has
successfully enabled extremely impoverished people to engage in
self-employment projects that allow them to generate an income and, in
many cases, begin to build wealth and exit poverty. Due to the success
of microcredit, many in the traditional banking industry have begun to
realize that these microcredit borrowers should more correctly be
categorized as pre¬-bankable;thus, microcredit is increasingly gaining
credibility in the mainstream finance industry and many traditional
large finance organizations are contemplating microcredit projects as a
source of future growth. Although almost everyone in larger development
organizations discounted the likelihood of success of microcredit when
it was begun in its modern incarnation as pilot projects with ACCION and
Muhammad Yunus in the mid- 1970s, the United Nations declared 2005 the
International Year of Microcredit.
ENTREPRENEUR
An entrepreneur is
a person who has possession over a new company, enterprise, or venture,
and assumes significant accountability for the inherent risks and the
outcome. The term is a loanword from French and was first defined by the
Irish economist Richard Cantillon. A female entrepreneur is sometimes
known as an entrepreneuse. However, with the word "entrepreneuse" being
the French feminine form of entrepreneur, its usage in English in
delineating sexes detracts from the meaning of the word "entrepreneur".
Entrepreneur in English is a term applied to the type of personality who
is willing to take upon herself or himself a new venture or enterprise
and accepts full responsibility for the outcome.
MICRO-ENTREPRENEUR
Micro
entrepreneurs are the owners of small businesses that have fewer than
five employees. Examples of micro entrepreneurs are owners of bakeries,
beauty parlours, child care facilities, repair shops, arts and crafts
shops, painting businesses, contracting businesses, family-owned shops,
auto body shops, small-scale restaurants, and small-inventory trading
businesses.
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ABSRACT - [ Total Page(s): 1 ]This study examines the impact of microfinance on economic, financial and social empowerment of women micro entrepreneurs in Ikeja, Lagos State. A sample of 50 women micro entrepreneurs were selected in Ikeja some of which include traders, hairdressers, fashion designers, fish farmers and boutique owners. Survey method was employed to obtain a picture of the population. Research data was collected using a 24 item questionnaire in order to measure the empowerment of women micro entrepreneurs and ... Continue reading---
