| Description |
Microfinance is defined as "financial services especially in the form of micro loans provided to impoverished individuals and groups in poor and developing regions".1 While social entrepreneurs strive to solve social problems by using a variety of businessrelated techniques, this paper will focus specifically on the impact of microfinance. In this paper, I explore whether microfinance is effective, and discuss the pros and cons associated with this popular form of social finance. 2 While microfinance has helped many individuals to rise above poverty, it has also proven to be detrimental in many cases. This research and analysis focus primarily on the practice of microfinance in Ghana, which I was able to observe first-hand during my time in the country as an intern with a reputable microfinance lender, as well as through a literature review and interviews with lenders, borrowers, government officials and others within the microfinance sector. This thesis shares my research and work on the ground from 2006-2016 encompassing my Boy Scouts of America Eagle Project, a volunteer church service mission, the internship noted above, and a literature review. This paper concludes that, while microfinance can help to alleviate poverty if carried out by legitimate firms with solid business practices, there is also considerable harm that can result when lenders without good business practices make loans to low income individuals in the developing world. |
