The aim of the following paper is to value the impact that microcredit’s have as an instrument against Poverty.
It presents the international impact that microcredits have had. The international community has realized that it is necessary to bring resources to the neediest people. The figure of microcredit has a double function: it generates social benefits and teaches people to understand that their work can improve their standard of living.
As popular or innovative can these programs, some politicians or rulers can spread the idea that microcredit is a tool that eradicates poverty, but rather must realize that they are ways to help eradicate and that its use can be exponential development lever.
It presents the importance of these plans as engines of development, the government's responsibility as regulator and generator programs, also the importance of control and proper use for those efforts are coordinated and not duplicated.
Finally, conclusions are presented respect for these programs, which can help generate wealth in places where it is needed.
2. What is a Microcredit?
Microcredit, also known as microfinance, is the provision of a variety of financial services such as deposits, loans and insurance to poor families who do not have access to the resources of formal financial institutions. The loan is used to invest in microenterprises, and to invest in health and education, improve housing or dealing with family emergencies.
Moreover, microcredit is not limited only to provide financial services, also provides training in money management, and touches on aspects such as leadership, confidence, self-esteem, education and how to manage a microenterprise. And while some programs are concerned exclusively for savings and credit, others have this element as part of a package that also includes activities related to health, family planning and the organization of production and distribution of goods.
“Micro finance goes beyond the access to and the distribution of money. It enters into the deeper issue of how money is used, invested and how savings are done. Micro finance is even more than the supply of financial services. It is a way to give people access to new opportunities. Together with the ability to increase their income, they receive information and training and learn how to manage their money. Micro finance therefore also encloses issues as: organizational and operational aspects, leadership development, trust building, small enterprise management, education and information transfer. Empowering the people improves their self-confidence and will make them feel more confident to enter into the economic, social and political life of the society. These non-financial services define the specific character of micro finance and make micro finance programmes so valuable.”(Putzeys, 2002)
3. Target Groups
The target population of Microcredit programs is composed by poor people who lack access to institutional loans from commercial banks or other public institutions. However, these poor people have the ability to engage in activities that will increase their income eventually. They are called "poor entrepreneurs" and differ from those paupers who are unable to carry out economic activities due to lack of personal skills or the degree of poverty in which they find themselves. These should preferably be assisted by other social programs. Nevertheless, some microcredit programs have managed to assist the extremely poor (Littlefield, Murduch and Hashemi 2003).
The correct identification of the target population is important for creating and maintaining credit discipline, which is necessary for the sustainability of the program. Women are a common target group in microcredit programs because they have demonstrated better entrepreneurial qualities and better repayment rates than men.
Women have more limited access to credit because the assets normally, which could serve as...