Microcredit: One of Many Intervention Strategies

During the last twenty years microcredit has become one of the most used development strategies to alleviate poverty, generate income and promote employment in developing countries. However microfinance is not always the panacea for all the evil.

This paper aims to address the following issues:

• When microcredit is successful?
• When microcredit may be inappropriate?
• What other kinds of intervention strategies are suitable?
• What other interventions can strengthen the livelihoods of the poor?

Finally, the paper concludes that:

• Donors and government should carefully analyze when microcredit is the most appropriate intervention to eradicate poverty and when other tools such as microinsurance and savings might be more efficient than microcredit;
• Microcredit intervention is recommended when there is an existing economic activity and household cash flow.

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