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Working Paper 74 - Factors Impeding the Poverty Reduction Capacity of Micro-Credit: Some Field Observations from Malawi and Ethiopia


Poverty reduction has been identified as the overarching long term goal for most of the development interventions in Africa, and more recently crystallised in the Millennium Development Goals and the New Partnership for Africa’s Development (NEPAD). In Africa, more than 40% of its 750 million people live below the internationally recognized poverty line of $1 a day, and the evidence is even more worrying for sub-saharan Africa. The number of poor people has grown relentlessly, causing Africa’s share of the world’s absolute poor to increase from 25% to 30% in the 1990s (UNDP, 2001 and 2002). However, Africa’s development challenges go deeper than low income, falling trade shares, low savings, and slow growth. They also include high inequality, uneven access to resources, social exclusion, and insecurity, especially amongst women. While some African countries are showing promising economic progress and are making notable strides in addressing major development constraints, such as Uganda, the majority of the continent is still under great stress to meet the human survival needs. More specific concern is raised due to rural-urban disparities in income distribution, access to education and health services, and prevalence of ethnic or cross-boundary conflict. In particular, the most outstanding factor is the gender disparity in access to resources, such as land, credit, technology, markets and production information and skills development.

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