Although microfinance cannot be seen as a panacea for poverty reduction, when properly harnessed, it can make sustainable contributions through financial investment leading to the empowerment of people, which in turn promotes confidence and self-esteem, particularly for women. More importantly, the global experience with microfinance has shown that even poor are creditworthy. Studies have shown that microfinance plays three critical roles in development.
Firstly, it enables the very poor households to meet their most basic needs and protect/hedge against risks. Secondly, concomitantly it is associated with improvements in households’ economic welfare. Thirdly, by supporting women’s economic participation it helps to empower women and promote gender equity.