An evaluation of microfinance as a tool for poverty alleviation : case study of SEPAS/FONCRESOL, Potosi, Bolivia

Abstract

In this study, I evaluate microfinance in regards to the role it plays in development. The essence of the newest debate in the field is on how to carry out microfinance so it is more effective. There are two approaches: self-sustainability, committed to a market approach to microfinance; and poverty, which views microfinance as part of a broader social perspective. Through the case study of a small poverty-oriented NGO in Bolivia, I attempt to determine the effect of its microfinance project on poverty. The findings from this study suggest that this project does not reach the poorest of the poor, has a limited impact on women's empowerment and other aspects, but has, as perceived by the beneficiaries, a positive effect on their economic lives. It is the conclusion of this study that microfinance has a limited effect on poverty reduction but that it has intrinsic value for the poor.