Abstract:
Microfinance is known as an effective tool for poverty alleviation. In developing and poor
countries like Pakistan superior attention has been paid to poverty alleviation through
microfinance, especially in the last decade. The successful use of the micro-credit is
considered as a victory for the disadvantaged segments. Considering the poverty alleviating
impact of microfinance currently many microfinance institutions are working throughout the
developing world. A number of microfinance institutions are working in Pakistan for the last
few decades. AKRSP, KASHF Foundation, BRAC, ASASA and DAMEN are some of the
prominent MFIs in Pakistan. These institutions are working terrifically to the empowerment,
poverty reduction and improvement of living standards for the poor people in Pakistan. Now,
they are not only working in Pakistan but also providing help and support and the source of
motivation to other MFIs around the world.
This research investigates the Impact of Microfinance on Living Standards, Empowerment
and Poverty Alleviation of Poor People with the main focus on Lahore, Pakistan. Before
and after comparison was integrated to evaluate the poverty alleviation through microfinance
by using some indicators i.e. monthly household income, savings and economic status before
and after utilization of the credit. To attain the required objectives of the study 109
microfinance beneficiaries were interviewed in five metropolitan slums of Lahore,
Pakistan. We have used the simple random sampling technique and data was analysis by
using SPSS.
By analysis of data we found that microfinance has the constructive impact on the living
standard of poor people and there has been found a significant relationship between
economic status of the microfinance beneficiaries (after the utilization of the credit) and
beneficiaries‟ age, total number of family members and monthly household income (after
the credit utilization). It has not only helped the poor people to come over the poverty line
but also helped them to empower themselves.
There is an argument that the interest rate of MFIs is very high. Most of the respondents of
our interview, agree on this issue. In spite of the question about higher interest rate, MFIs are
contributing not only in alleviating the poverty and improving the living standards of the
poor people, but also in offering extensive human development programs in Pakistan.
