On borrowed time: the impact of microfinance on poverty alleviation

Abstract

How do you solve a problem like the Philippines? As a developing country, it suffers both chronic and absolute poverty. Efforts to ease and alleviate poverty have been proposed and implemented by both government and non-government institutions. However, it still continues to be unmanageable to the point of the government resorting to granting dole outs such as the conditional cash transfer and microfinance programs. The government even prioritizes the aforementioned programs as its premier poverty alleviation strategies. Throughout the years, these so-called poverty alleviation measures only delay the inevitable and mask the true nature of the crisis looming over the country. Income disparity welcomes the increasing poverty incidence in the Philippines. As unemployment and underemployment is a constant figure in a poverty-stricken developing country, it is only natural for the people to hold on to just about anything the government feeds them. This paper is a result of a consolidation of primary and secondary data gathered from surveys, interviews, and extensive research. It aims to analyze the microfinance program and its impact on poverty alleviation. The microfinance industry is a tool to expand financial services to the poor by means of micro-loans, micro-savings, and micro-insurances. It provides cheaper financial services to the poor whom the commercial and private banks have excluded from their services. In contrast with the overt success of various microfinance institutions in the Philippines is the increasing rate of dependency and vulnerability among the poor. The microfinance industry is getting better, but what about its clients? With nothing to hold on to but the micro-loans, they are easily swept away into a deadly world of an endless cycle and a borrowed life.