May 2006


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No more fencing for (micro)finance!
Let's have a look at the development scenario of the global
economy. On one side, there is a cusp of technological revolution, ushering in a new era of economic prosperity for advanced countries while on the other side, many of the world's poor countries find themselves still scourged by massive poverty.

The lack of access to credit to the poor is more or less due to practical difficulties arising from the discrepency between the mode of operation of the financial institutions and the economic
characteristics and financing needs of low-income households. Microfinance services have shown an alternative to solve this problem. Microfinance is now being promoted as a key poverty alleviation strategy which can enable poor people to cope with the adverse socio-economic impacts of structural adjustment policies and globalisation.

The access to microfinance services such as credit, savings, insurance and pensions, is still highly unequal among men and women. Therefore while talking about microfinance, we must consider two issues simultaneously, one is poverty alleviation and the other is women empowerment through emphasising the gender sensitive issues. But we must find out the inter-linkages between access to savings and credit and empowerment. The
microfinance programmes may contribute to both social and political empowerment, but that depends on the intensiveness of the success of the programmes.

Microfinance institutions can broaden their resource base by mobilising savings, accessing capital markets, loan funds and effective institutional development support.  Convenience of location, positive real rate of return, liquidity, and security of savings are essential for successful and proper savings mobilisation. Ample savings facilities can serve the demand for financial services by the customers and also can fulfill an important requirement of financial sustainability to the lenders.

In the entire process, ICT as a tool, can facilitate to a great extent through saving time, energy and manpower. It has already been found that the ICT sector can either emerge as the leading sector of growth and innovation for the economy, or it can contribute enormously toward productivity growth through their across-the-board adoption in the economy, that is analytically equivalent to leapfrogging. In this issue the articles will provide you the idea about the role of ICT in microfinance sector in various nations around the world. It is high time to start thinking about more areas for ICT intervention to facilitate microfinance for the economically weaker sections of the society.

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