Over the past three decades micro-finance initiatives and institutions havemushroomed and now exist right across the globe. Of late micro-credit has been termedthe
tool in combating poverty, the most pressing moral, political, andeconomic issue of our time. This paper examines this
tool and seeks todetermine if micro-credit creates poverty to a greater extent than it helps to relieve it.We will look at the evidence behind micro-credits success, examine the arguments of the critics, examine the dependable factors that might make micro-credit work in onecontext and not another and finally look at micro-credits role in ending social poverty.
The success of micro-credit in poverty alleviation is widely cited. According toLittlefield, Morduch and Hashemi (2003, p.1):
Evidence from the millions of microfinance clients around the world demonstrates that access to financial services enables poor people to increase their household incomes,build assets, and reduce their vulnerability to the crisis that are so much part of theirdaily lives.
This assertion is backed up by the International Network of Alternative Financial
Institutions (INAFI)who note that ‘globally, microfinance has been recognized as apowerful instrument to address poverty’, furthermore they state ‘microfinance has
enabled countless economic achievements through significant reductions in poverty
among the most deprived and marginalized communities’ (INAFI 2011, p.6).
McNellyand Dunford (cited in Littlefield, Morduch and Hashemi 2003, p.3) report that theincomes of two-thirds of CRECER clients in Bolivia have increased after joining the