Enhancing Human Capital Through Microfinance |
Microfinance: Theories and Principal Eco:4343 |
Naureen Jahan 121091031 |
C [ - 1 - ] | Pageontents
Objective - 2 -
Introduction - 3 -
The concept of microfinance - 4 -
The concept of Human Capital: - 5 -
Development of human capital concept - 5 -
Measurement of Human Capital: - 6 -
Element of Human Capital: - 6 -
MFIs in Enhancing Human Capital: - 6 -
Enhancing Human Capital through Health Services: - 6 -
Enhancing Human Capital through Education and Literacy: - 7 -
Enhancing Human Capital through Business Development Training: - 7 -
A few cross country policies taken by Microfinance ...view middle of the document...
Many poor participants may lack such skills and may benefit very little from micro-finance. So it is an essential element for poverty alleviation of poor. If there is rich human capital then poverty alleviation is easier. Therefore every developing countries and even developed countries work on building human capital. Human capital enhances a countries economy and the biggest example of this is China, due huge labor force and human capital Chinas economy is famous and world known. Human capital formation faces, however, severe obstacles. Because human capital cannot be seized and transferred to a lender in the event of default, it cannot be used as collateral; consequently, the poor must fund their educational choices out of their retained earnings, wealth, or abstention from current productive work. Because they are poor, the marginal cost of doing so may be prohibitively high (Ray, 1980).
When microfinance institutions give credits to the poor’s they start up a new business or expands their old business and these enhances human capital. And how microfinance enhances the human capital or what is the steps taken to build human capital will be discussed below.
The concept of microfinance
Until the 1980s only a handful of institutions offered credit and savings services to poor people in developing countries. Today microfinance institutions number more than 7,000 worldwide, a level unimaginable 20 years ago. Yet while microfinance services have grown, so have the number of poor. In Sub-Saharan Africa about 48 percent of the population lives on less than US$1 per day. In South Asia alone, more than half a billion people still live below the poverty line. As policymakers look toward financing innovative programs that help curb the growth of burgeoning poverty, microfinance can offer some hope—but only if policymakers and development practitioners understand the services that the poor demand and if they can learn from the experience of government and nongovernmental programs that have allowed innovation to flourish and the particular finance needs of the poor to take center stage.
Microfinance is constituted by a range of financial services for people who are traditionally considered non bankable, mainly because they lack the guarantees that can protect a financial institution against a loss risk.
The true revolution of microfinance is that this tool gives a chance to people who were denied the access to the financial market opens new perspectives and empowers people who can finally carry out their own projects and ideas with their own resources, and escape assistance, subsidies and dependence. Microfinance experiences all around the world have now definitely proved that the poor demand a wide range of financial services, are willing to bear the expenses related to them and are absolutely bankable.
The target group of microfinance is not constituted by the poorest of the poor, who need other interventions such as food and health security, but...