Economic and Political Empowerment of the Poor: Promoting Empowerment through Microfinance Programmes

Microfinance refers to provision of financial services that include credit, savings, micro insurance, etc., particularly to the low income and vulnerable groups. It is argued that microfinance institutions /programmes play a crucial role in raising production, income, and employment among the poor households. Moreover, access to financial services is expected to help the poor to improve their asset base and strengthen their capacity to deal with risks and vulnerabilities. There are wide range of institutions including Co-corporative Societies (e.g., TCCSs), Non-governmental organizations (NGOs), commercial banks (both state-owned and private) and Development Banks that are involved in providing microfinance services to low income groups.

Nevertheless, the impact of microfinance on increasing income and sustaining employment generation through small-scale enterprises is not clear in Sri Lanka. The evidence shows that many small enterprises/ self-employment activities started under microfinance schemes have not been sustained due to various reasons. Moreover, there are a number of issues and challenges related to the outreach, interest rates, training and marketing facilities provided, etc., that need to be addressed in order to improve the benefits of the microfinance institutions (MFIs)/ programmes to the poor.

The objectives of this study are:

Ganga Tilakaratna, Thusitha Kumara and Ayodya Galappattige
South Asia Centre for Policy Studies, Dhaka, Bangladesh