Jean-Michel Servet

Poverty versus Inequality

Poverty reduction and microfinance are generally referred to in the same breath by microfinance institutions (MFIs) and by the organizations supporting them at the international level, through multilateral or bilateral cooperation or through large private foundations, or nationally. In national strategic poverty reduction plans, microfinance is the preferred means of achieving the Millennium Development Goals. It is usually presented as a package of financial services for poor people that aims chiefly to enable those people substantially to improve their lot in life. Of the various poverty reduction instruments, microfinance is considered one of the most promising, in particular because it can be used on an unprecedented scale thanks to its supposed capacity rapidly to become self-sustaining. Let us start by briefly defining the two terms in the equation: microfinance and poverty.

Microfinance; Financial Inclusion and Social Responsibility

While one can observe an extension and intensification of financialization in all modern societies, including the so-called “developing countries,” access to financial services is usually not thought of as a fundamental human right.1 Yet, financial instruments play a more and more essential role, whether in the risk management of daily life, to increase one’s income or to smooth resources and expenses. But the international community has its eyes fixed mainly on the Millennium Objectives of the fight against poverty adopted by the United Nations in 2000;2 on its first indicator, the increase of per capita income; and on the associated objective of a decrease by half of the proportion of the population living on less than a dollar a day by 2015. Among all the objectives adopted, there is no comprehensive indicator of the use of financial services. Also, there is no financial indicator among the human development criteria of the United Nations Program for Development. Yet the proposed indicators are diversified and even reach beyond the strictly economic domain. There are, for example, references made to health care, education, environment, to women’s participation in public life and to housing conditions.3 Certainly, these indicators are thought too increase the productive capacities of the people. This omission of the financial dimension contrasts with the more and more intense media coverage of microfinance, from the time of the first Microcredit Summit in 1997 until the climax of the Nobel Prize awarded to Muhammad Yunus and the Grameen Bank in 2006.