Microfinance Goes Macro: Impact on Poverty Alleviation in Pakistan

Abstract

Today one of the most compelling challenges facing Pakistan is the problem of poverty.In the quest for solutions to the country’s development challenge and poverty alleviation,microfinance is becoming one of the most admired options as credit has been identifiedas a barrier facing the poor, especially the rural poor. The overall aim of this paper isto explore the impact of microfinance on alleviating poverty. Pakistan's poverty reduction strategy has yielded handsome result in the shape of sharp reduction in headcountpoverty from 2000-01 to 2005-06. Although, poverty has declined but the fact remainsthat 22.3 per cent people of Pakistan are still living below the poverty line (EconomicSurvey of Pakistan 2007-08). Macroeconomic strength is a precondition for the economicgrowth that fetch the poverty reduction and growing living standards. But macroeconomic Stability is not sufficient. Rather, it is the foundation on which to build a flourishing economy. Successfully targeted microfinance programs are also the key to permanent and sustained reduction in poverty. Microfinance institutions can contribute to this by building financial regulation and providing guidance to the borrowers. Operating on these grounds, microfinance institutions can make a big difference in alleviating poverty in Pakistan.