The biggest misconception about microfinance is that it is the miracle pill to put an end to poverty. This is just untrue. No one said that microfinance is the key to stopping poverty or to lift all people in developing countries out of poverty.
Poverty is an issue that has confronted several countries over the years. Not even the best leaders have been able to do something to fix the problem. Therefore, to put this kind of burden on the concept of microfinance is just unfair.
Microfinance targets poor people because the idea is for them to have easy access to loans as long as they use the money wisely and repay the loans. They can use the money to start a business. It is not a part of the concept to take everyone out of poverty but to at least give them tools to jump-start their plans.
Women are also among the main targets of microfinance. They are usually left out as caretakers and are unable to bring money to the family. This is totally wrong, especially in a modern society. Therefore, even if women stay home to take care of their families, they can still earn money. Besides, given how difficult it is to raise children these days, having only one provider in the family is not enough.
Success is not like magic
Another misconception about microfinance is that it is like a magic wand where people can get access to loans and they instantly become rich. To succeed, the loans obtained should be used the right way. Recipients should also work harder so that whatever amount they have after getting the loans will grow and they can repay them in due time.
The reason why others failed is that they were unable to use the money for the best possible use. They had not seen such a huge amount of money before. They were overwhelmed and used the money for personal desires. When it was time to repay, they were unable to do it. This resulted in a snowballing amount of loans.
In the end, it is still the government that has the responsibility to take people out of poverty. Individuals should also work hard so they won’t remain poor for the rest of their lives. Microfinance is one of the tools available for them to use if they want to succeed. When used well, these loans can go a long way.
Poverty is a complicated issue and encompasses a lot of factors. You will know more about it if you read the posts of Sharone Perlstein, a finance expert. If you dig deeper into the concept of microfinance, you will realize that it should work well.