Microfinance and Poverty: Questioning Conventional Wisdom Hege Gulli	También disponible en español!
Are all microentrepreneurs poor? Is the lack of access to credit the biggest constraint facing microenterprises? Do high interest rates charged by microlenders stunt these firms' growth? These questions and others testing frequent assumptions about microlending were tackled by Norwegian economist Hege Gulli in her recent book "Microfinance and Poverty: Questioning Common Beliefs." "Microfinance should be seen as the provision of small-scale financial services to businesses and households traditionally kept outside the financial system rather than the more narrow view of microfinance as services for poor microenterprise owners," Gulli argued in her paper. Take, for instance, the idea that microentrepreneurs are poor and in need of assistance. A recent IDB study of the poverty profile of people working in urban microenterprises in six Latin American countries indicates that not all microentrepreneurs are living on the edge of poverty. In fact, such tiny businesses include firms ranging from survival tactics to highly sophisticated entrepreneurial activities, Gulli writes. As such, urban microenterprise development programs may need to make a special effort to target the poor. At the same time, many microenterprises are dynamic businesses with considerable growth potential. CONTENTS: Preface Executive Summary Part I. Microfinance and Poverty: Main Issues Part II. Common Assumptions about Microentrepreneurs and Microfinance Institutions (MFIs) Assumption 1: Most microentrepreneurs are poor. Assumption 2: The most serious obstacle facing microentrepreneurs is lack of access to credit. Assumption 3: The main objective of most microfinance institutions is poverty reduction Part III. Common Assumptions about the Outreach of Microfinance Institutions Assumption 4: The poorest microentrepreneurs are reached by NGOs that apply the solidarity group methodology Assumption 5: MFIs face a trade-off between reaching the poor and achieving financial sustainability Assumption 6: Rural and poor areas remain underserved by MFIs Assumption 7: MFIs must specifically target the poorest people and areas Assumption 8: MFIs working with poor people in rural areas merit subsides Part IV. Common Assumptions about the Impact of Microfinance Assumption 9: Microcredit programs improve the livelihoods of the poor Assumption 10: For people below the poverty line, microcredit has a lower impact on income Assumption 11: The best indicator of the impact of microfinance is a change in clients�L income Assumption 12: MFIs need to target the manufacturing sector to have an impact on the microenterprise sector Assumption 13: The high interest rates charged by MFIs inhibit growth of microenterprises Assumption 14: Savings is more effective than credit in reducing poverty Assumption 15: Microfinance needs to be integrated with other development services to have an impact on poverty and business growth Part V. Conclusions and Recommendations Annex 1: Contacts and Resources on Microfinance and Poverty Annex 2: Supporting Data Bibliography
Inter-American Development Bank Paperback - 126 pages, December 1, 1998 / ISBN: 1886938458 (USD 14.95)
Contact the author - Hege Gulli [ HGULLI@HOTMAIL.COM ] Go to the website of the Inter-American Development Bank To order copies of these publications, please send an e-mail to idb-books@iadb.org. Please specify title, quantity, language and complete shipping address. This book can also be purchased through Amazon.com Contact Address Inter-American Development Bank 1300 New York Avenue N.W., Washington, D.C., 20577, USA

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