Abstract

To date, over 689 million people worldwide subsist in extreme poverty. To address this staggering statistic, this paper explores two leading microfinance models as potential solutions. First, there is a focus on the Grameen Solidarity Group model and its reliance on group accountability to achieve its aims. Moreover, this paper analyzes the Non-Government Organization (NGO) model with an emphasis on the Mysore Resettlement and Development Agency (MYRADA) in India. The benefits and limitations of each model are considered in detail. Then, recommendations for improvement are offered that can enhance the capacity of microfinance institutions to aid people in extreme poverty for future generations. 

Overview of Extreme Poverty 

Extreme poverty can be defined as a “...situation where consumption falls short of the poverty line ($1 per day) as someone living below $1 daily income would be deprived of basic human needs such as food, safe drinking water, sanitation facilities, health, shelter, education, and information, etc. It is worthy of note that the number of people living below $1 per day expressed as a ratio of the total population is an indicator of the poverty rate in a country” (Onyele et al.). As a result of low income, poverty-stricken individuals experience abominable conditions in basic areas, including food, shelter, hygiene, and health care. “Poverty means that basic needs like food, housing, lodging and clothes are deprived…” (Boateng et al.). Consequently, people who subsist in poverty are “...characterized by hunger, social exclusion, vulnerability, low-esteem, pain and discomfort” (Gakpo et al. 6).

Beyond its financial repercussions, poverty affects people in non-material ways. “Poverty is a major way of describing…degradation of human dignity…it leads to social exclusion, isolation, fear, anxiety, and bereavement” (Backwith). From this lens, poverty is not merely a financial deprivation, but also a social and emotional one. Furthermore, poverty can be understood as a shared and inherited way of living. It dictates a person’s attitude, familial relations, and self-worth. “Culture of poverty is a pattern of life, which people adopt as a community, and is passed from one generation to the next. People adopt a submissive attitude that makes them feel marginalized, helpless and inferior” (Ezeanyeji et al. 9). From this lens, poverty strips individuals of their innate behaviors, eliminating their natural desires to participate in communities and politics. “Such individuals do not engage in community life by participating in voluntary associations, self-help initiatives and politics” (Ezeanyeji et al. 9). Impoverished persons experience a “...loss of self-confidence, self-actualization, self-fulfillment, lack of good orientation and abandonment of cultural values and heritage to the extent that people are not proud of their cultural and racial identity” (Commins). Ceasing to make an effort and resigning oneself to failure can even contribute to an overall loss of self-esteem. The financial and social defeat that people in poverty experience “makes people… incapacitated and deprives them the enjoyment of development and sustenance” (Ezeanyeji et al.). 

The scourge of poverty is not limited to a few unfortunate people. In fact, “...half of the population of the world is living on less than $5 Dollars per day” (World Bank). Unfortunately, approximately “...40% of the global population lives below the poverty line (World Bank).” Many efforts to reduce poverty flounder and end, leaving the “population of people that are still living in extreme poverty globally…still unacceptably high” (Ezeanyeji et al.). Although poverty is a global experience, it is concentrated primarily in developing countries. “The top five (5) countries with the highest number of people living in extreme poverty are (in no particular order): Nigeria, Bangladesh, Democratic Republic of Congo, India, and Ethiopia (Ezeanyeji et al. 2) Many other regions of the world endure severe poverty as well, including Sub-Saharan Africa, which is “...the poorest region in the globe” (Ezeanyeji et al. 2), and the Philippines, where “...approximately 16.5% of the society experienced poverty and 5.7% lived in extreme poverty in 2015” (Janiczak-Serafico 37).

There are a multitude of factors that may cause and perpetuate poverty among such a startling percentage of the world’s population. These reasons relate to weak financial infrastructures, lack of awareness, inadequacy of entrepreneurial skills, and a deficiency in terms of technological advancements and updates. As previously mentioned, residents of developing countries are particularly prone to extreme poverty. A reason for this may be found in the fact that most people in developing countries cannot obtain significant access to financial services, thus limiting their opportunities and contributing to their poor financial state. Most residents in developing countries “...lack access to formal financial services, and are impoverished as a result” (Onyele et al). Furthermore, the meager resources of impoverished people may be further depleted by corrupt politicians, who tend to be “...selfish, greedy and corrupt…” and “...enrich themselves by looting the commonwealth of the nation” (Ezeanyeji et al. 9). Corruption in developing countries is exceedingly ubiquitous and entwined with systemic government policies, making it nearly impossible to abrogate.

Although attempts have been made to address the problem of poverty, its scope is vast and complex. Proposed solutions such as “poverty reduction programmes and policies” have been issued and shown hopeful efforts, but are not always effective (Ezeanyeji et al.). Essentially, “...notable progress has been witnessed on poverty reduction,” but most of these attempts fail to make a significant impact. For example, charity is not necessarily a viable solution because it may risk creating dependency and removing an “...individual's initiative to break through the wall of poverty” (Grameen Bank). As previously established, financial illiteracy and lack of economic services are major proponents of poverty. Therefore, providing a substantial financial education and access to economic resources can be feasible methods of reducing poverty. Rendering financial services to “...these unreached, unserved, and unbanked portions of the population, will enable them to unleash their potential, develop their capacity, strengthen their human and physical capital, and engage in productive activities that would generate income for their livelihoods and the benefits of their families” (Ezeanyeji et al. 3). Financial inclusion of the impoverished would ultimately integrate them into society, allowing them to escape poverty and navigate their lives with economic stability. 

Overview of Microfinance

An example of how financial inclusion can provide a pathway out of poverty is found in the form of microfinance. Microfinance is “...a developmental strategy that is used to increase financial inclusion by broadening financial services accessibility to all strata of the population” (Apere). In broad terms, microfinance is a financial system through which low-income people are allowed access to financial services by retail providers, including savings, credit, payments, remittances, and insurance. These financial opportunities, in turn, allow low-income peoples to possibly endeavor in businesses or jobs to generate stable incomes, acquire assets, maintain consumption, and gain knowledge protecting them against risks they face in an already vulnerable financial market for the poor (Ezeanyeji et al. 5). Microfinance primarily targets a section of the general population that has been “...excluded from the formal financial sector over the years simply because of their income level, gender, location, level of financial education etc” (Emmanuel, et al.). It is important to note that despite being denied financial capabilities, these ‘excluded peoples’ constitute the majority of a developing country’s economy. Consequently, allowing them to join the general financial sector through microfinance can boost the country’s financial status while lifting them out of poverty (Ezeanyeji et al. 3). Unfortunately, taking advantage of financial resources and education does not guarantee a stable income or allow one to open a profitable business; in fact, most businesses formed by underserved people via microfinance programs are severely underfunded (Anane et al.). The loans arranged by such programs for small and medium-sized businesses may not significantly improve their financial situation. Furthermore, even when credit is provided, small and medium-sized enterprises rely on short-term and informal credits for long-term projects, such as equipment, to start (Gakpo et al. 9). 

Despite these shortcomings, there is still a “...strong association found between microfinance and poverty alleviation” (Dela Yao Gakpo at al.) Microfinance may offer a financial pathway through which poor individuals, especially women, can access the economy and “...mobilize greater household savings, marshal capital for investment, and expand the class in the entrepreneurs” (Ezeanyeji et al. 3). Thus, microfinancing can help alleviate poverty provided that a significant majority of the population in need follows this pathway. In order to proliferate microfinance users and raise awareness regarding this matter, one must understand the relationship between microfinance and poverty and how microfinancing can help mitigate financial hardships. Few theories offer explanations behind the relative success of microfinance; one such theory postulates that, by using microcredit, the underserved can prove their creditworthiness and therefore “...secure bigger loans from the banks to expand their business” (Ezeanyeji et al. 3). Once sizable businesses are established and undergo expansion, they will be able to employ other people from the growing labor force. As such, microfinance can not only lift certain individuals out of poverty but also create more jobs through microfinance businesses, thus benefiting more people (Nyarondia). Apart from alleviating poverty and creating more opportunities for employment, “...microfinance is making a significant contribution to economic growth as more incomes would be generated by producing adequate goods and services in the economy” (Ademola and Arogundade). Furthermore, microfinance banks offer well-paying jobs to help run the institution, creating more job openings and bolstering the economy (Ezeanyeji et al. 4). Thus, by providing microcredit and loans to the financial sector neglected by traditional commercial banks, microfinance institutions may secure and perpetuate national economic growth (Gakpo et al. 3). There are various manifestations of microfinance in real-world settings. In particular, this paper will focus on two of them: The Grameen Solidarity Group model and The Non-Government Organization (NGO) model. 

The Grameen Solidarity Group Model

The Grameen Solidarity Group model is implemented by Grameen bank, a global microfinance organization and community development institution originating from Bangladesh. “The bank is founded on the belief that people have endless potential, and unleashing their creativity and initiative helps them end poverty” (Grameen Bank). Grameen Bank and MFIs (microfinance institutions) differ from traditional commercial banks in that they offer credit and microloans to classes of people that have traditionally been ignored: the impoverished, women, the illiterate, and the unemployed. Agreements such as the group lending system and weekly-installment payments allow users to access credit. In addition, the long terms of such loans may grant the poor enough time to refine their skills in order to expand their business and increase their revenue before payment is due (Grameen Bank). The foundation of microfinance institutions (MFIs) based on the Grameen Solidarity Group model is rooted in the belief that poverty is not created by the poor but rather the economic policies and institutions to which they are bound. With appropriate changes in policy and implementation of more MFIs, the impoverished can overcome their financial hardships and mobilize their respective economies. In order to genuinely help the poor progress, they must be provided with resources such as microfinancial education and access to MFIs that will help to unlock their potential. The aspect of microfinance originating from the Grameen Solidarity Group model, solidarity group lending, has been a fundamental type of microfinance since 1980 with the introduction of the first Grameen Bank in Bangladesh (Ezeanyeji et al. 7).

The Grameen Solidarity Group model is established according to the principle of collective guarantees. These group guarantee mechanisms result in “...close monitoring and pressure from other members of the group” (Ezeanyeji et al. 8). Grameen Bank loans, unlike those of commercial banks, are not collateralized; they are instead granted to a group of users with close monitoring and pressure to guarantee repayment (Ezeanyeji et al. 8). Alongside promising to repay loans, Grameen Bank’s clients pledge to adhere to a set of core principles: Grameen Bank’s Sixteen Decisions. In accordance with these principles, borrowers are expected to adopt beneficial social habits in both their personal and professional lives (Grameen Bank). “Repayment responsibility rests solely on the individual borrower. No formal joint liability exists, i.e. group members are not obliged to pay on behalf of a defaulting member” (Hossain). Despite such loose obligations relative to commercial banks, MFIs have a fairly high repayment rate. Even in the absence of a formal agreement, group members generally contribute the defaulted amount to their MFI and collect money from the defaulted member in the future as they will be rendered ineligible to receive further loans. “Loan repayment by each member gives opportunity to other members to secure a loan and the circle continues if all members…successfully repay back their loans” (Ezeanyeji et al. 8). In theory, this system can achieve remarkable success. This is because the Grameen model creates an interdependence and mutual accountability within the underserved financial sector and the specific group. People within each group will likely genuinely aid their fellow members and wish for their prosperity as their own loan depends on their repayment.

Thus, this form of microfinancing which provides loans is more successful in interrupting poverty than are donations as they offer the poor opportunities of expansion and entrepreneurship in the clients’ respective fields. These opportunities generate income, which leads to even further flourishment and enable users to pay off withstanding debt. This financial movement based on the principles of awareness and training “has facilitated active participation by the poor” and proved its efficacy in terms of helping the underserved (Ezeanyeji et al. 8) 

The Non-Government Organization (NGO) Model

NGOs are key players in the field of microfinancing. They fulfill vital roles in areas that include, but are not limited to, rural reconstruction, agricultural development, and rural development. In general, NGOs tend to be “...committed to the upliftment of poor, marginalized, underprivileged, impoverished, and downtrodden and they are close and accessible to their target groups” (Dey and Das). One example of an NGO that promotes microfinancing endeavors is called the Mysore Resettlement and Development Agency (MYRADA) in India. MYRADA’s mission statement states that it seeks “...to enable the poor and vulnerable, through building appropriate local level institutions, to exercise their rights for sustainable and effective strategies for improved livelihoods and quality of life” (Myrada.org). To further its mission, MYRADA uses microfinancing to encourage the rural poor to become self-sustainable. MYRADA holds that “...this process can be sustained by them through building and managing appropriate and innovative local level institutions rooted in values of justice, equity and mutual support” (Myrada.org). 

MYRADA is currently managing 16 microfinance projects in 12 districts within Karnataka, Andhra Pradesh, and Tamil Nadu (Myrada.org). Throughout all of its projects, MYRADA believes that it is critical to encourage initiatives that capitalize on the strengths of its stakeholders, rather than only on their needs. As a result, MYRADA promotes microfinance mechanisms that assist underprivileged people in mobilizing and managing necessary resources through capacity building, developing entrepreneurial skills, and the use of successful social networks. To do so, MYRADA serves as a catalyst for strengthening connections between government service providers and their surrounding communities (Myrada.org). MYRADA also aims to improve the microfinancing capacity of local institutions to monitor and assure community access to services, including healthcare and education.

One of MYRADA’s key microfinance-based interventions pertains to securing gainful and consistent employment among its stakeholders. This initiative, known as ‘Livelihoods,’ is a “...domain with links to every other domain of our work…” (Myrada.org). MYRADA’s early livelihood interventions with Indian communities included participation in the government Integrated Rural Development Programme (IRDP). As an active participant of IRDP, MYRADA assisted in identifying people who were in desperate need of employment and making sure that they were receiving government assistance (Myrada.org). MYRADA also offered subsidies to low-income families who worked in industries like small business development or livestock improvement. Additionally, MYRADA assisted in giving its stakeholders new options for employment. These professions included instruction in animal health care and more effective farming methods. One example occurred through the best practices that MYRADA taught underserved farmers with respect to millet crop cultivation. Since millet is a major food grain consumed by rural communities, MYRADA helped farmers increase their yield and income of this product through targeted millet cultivation techniques. MYRADA even supported non-farm-based income-generating ventures such kirana shops, petty shops, livestock and poultry farming, and tailoring companies. Furthermore, MYRADA aggressively collaborated with banks to make sure that IRDP loans and crop loans were provided to those living in extreme poverty (Myrada.org).

As part of its effective livelihood program, MYRADA actively promotes the credit needs of its constituents. MYRADA acknowledges that the impoverished require a variety of income sources. This acknowledgment is crucial because it will enable the poor to rely on a secondary source of income in the event that their primary one is unsuccessful (Myrada.org). In addition, MYRADA established credit links with financial institutions and self-help affinity group development for the purpose of generating income. The credit needs of MYRADA’s constituents also require several small doses of income over many small cycles. Overall, accounting for credit in microfinancing in these ways can help MYRADA’s stakeholders weather gaps in employment without unduly exacerbating their impoverishment. 

MYRADA has also implemented “Internet Saathi.” The goal of this digital literacy initiative is to give 422 Saathis women the confidence they need to serve as important sources of information for their rural communities (Myrada.org). These Saathis used Android smartphones to teach women in rural communities digital skills. People from the countryside came to Saathis for assistance with homework, to learn new cooking techniques, to look for employment, or to operate a business using mobile phone applications. For instance, the MYRADA project discovered that women working in the tailoring industry could obtain new shirt designs, foot mat designs, jute bag designs, and handicrafts via YouTube (Myrada.org).

Women and youth in this project not only trained in agricultural initiatives but also in relevant job markets such as masonry, electrical wiring, driving, tailoring, carpentry, computer operation. Equipped with these skills significant to a modern market, women and youth in these programs were able to set up microbusinesses or work at private enterprises. For instance, 206 youth from poverty-stricken districts were trained in carpentry skills via the Myrada Chitradurga project. From this pool, 128 youth were able to employ themselves in their own microenterprise while 78 received salaries through private businesses (Myrada.org). 

Limitations 

In spite of all its benefits, there are a few problematic issues that arise from microloans. For example, some “businesses were not generating enough profit to sufficiently cover the running cost and profit. Therefore, the borrowers will remain in the cycles of borrowing and repaying for years and years” (Ezeanyeji et al. 1). Furthermore, despite a relative success in regions of the world such as “Asia, Latin-America, Europe etc.,” microfinance’s effectiveness in African countries such as Nigeria is heavily debated. “It is being argued that microfinance banks provide access to capital and financial services only to the poor for profit but do not play significant role in alleviating poverty” (Nyarondia, 2017). Commercialisation of microfinance may have corrupted its validity as a method of alleviating poverty in certain regions, and since this problem has persisted for an extended period of time, microfinance banking in Nigeria may be fundamentally flawed (Ezeanyeji et al. 35).

A spotlight on the performance of microfinance in Bangladesh reveals some criticism as well. Although MFIs in Bangladesh, including Grameen Bank, allege to have helped 50 million borrowers out of poverty, some speculate that these MFIs do not effectively eradicate poverty but rather create debt traps for the poor. Users unable to pay old loans take out new ones and are thus bound to the bank in a cycle of debt and repayment. This system can bring whole communities that have access to MFIs into a debt from which they cannot escape. Furthermore, some clients of the bank have allegedly been harassed by bank staff when they were unable to pay back their loans. Some of these representatives were “harassing villagers to the point where [borrowers] allegedly had to sell off their organs to pay off loans” (Fernando). Some researches also note instances in which “microloans from the Grameen Bank were linked to exploitation and pressures on poor families to sell their belongings, leading in extreme cases to humiliation and ultimately suicides” (Fernando).

Although MFIs do grant users financial services and bolster their client’s initiatives, it is crucial to note that  “microentrepreneurs need more than financial credit to operate businesses that are profitable enough to generate sufficient value-addition to pay off the loans – they also need business skills” (Viswanath). Although potential clients of MFIs are able to approach the formal financial sector through microfinancing initiatives, some are unable to capitalize on their MFIs’ resources due to a lack of “easy access to other inputs, such as account and marketing skills, which are necessary to make a business successful…”(Viswanath). The poor’s extant obstacles in the path to financial freedom are only strengthened with the help of “financial illiteracy and social repercussions through friends of family” (Janiczak-Serafico 52). These issues hinder the poverty stricken from gaining financial independence “despite the opportunities and services that accompany microfinancing” (Janiczak-Serafico 52). 

Another aspect of microfinance banking possibly precludes its users from succeeding: the location of the MFIs themselves. A multitude of microfinance banks exist in urban and semi-urban areas but there are not many in rural areas. The majority of the poor who live in rural areas are denied the services of microfinance banks due to a lack of effective transportation to the MFIs (Ezeanyeji et al. 35). Furthermore, a fundamental flaw exists in the model of microfinance banking which insists on collateral for credit: this form of banking “alienates the poor from patronizing the existing microfinance banks” (Ezeanyeji et al. 35) since an overwhelming majority of potential clients are unable to provide collateral. This demand for collateral excludes a large sector of the financial market in desperate need for MFI services and alienates the part of the population that would benefit from microloans and credit. 

Additionally, the competitive lending interest rate charged by microfinance banks possibly excludes a part of its users: the rates “scared the poor from borrowing from the bank” (Ezeanyeji et al. 35). For instance, Grameen Bank’s interest rates, which border 20%, are relatively high in comparison to traditional banks (Fernando). This high capital requirement permits only the existing rich to buy into the product “with the background of commercial banking” and possibly restrain their users back in poverty (Ezeanyeji et al. 35).

Another potential flaw of the Grameen Bank model is the bank’s high payback rates, which are over 98%. Although this may seem like an advantage of the model, there may be an ominous underside of this statistic. For instance, “in 2001, a fifth of the bank’s loans were more than a year overdue” (Peri and Phillips). It is possible that many clients were unprofitable in their initiatives even after receiving aid via microfinancing and were thus not in a position to pay back their loans in sufficient time. Although the loans were paid back eventually, this brings into question the reliability of its recipients and whether opening an MFI can possibly cause financial insolvency among large segments of a given population. 

Recommendations For Improvement

Although microfinancing is accompanied by a few flaws, it increases access to formal financial services and lifts many out of poverty.  In turn, the concept of microfinance banking as a whole should not be disregarded as an effective method of reducing extreme poverty. Rather, its shortcomings should be corrected. This paper will focus on some key improvements that can be implemented to unlock MFIs’ full potential. 

In order to resolve the issue of an unbalanced access to MFIs in urban areas in comparison to rural ones, there  “...should be deliberate policy by the government encouraging the operation of microfinance banks in rural areas and occasionally in semi-urban areas” (Ezeanyeji et al. 2). Doing so would “increase savings mobilization of the banks, thereby creating more employment opportunities” (Ezeanyeji et al. 37). With the opening of MFIs in generally rural areas, a large majority of the poverty-stricken population which had previously been excluded from the benefits of microfinance could finally utilize MFIs’ resources.  

MFIs can also ensure that their clients are in a favorable financial position and maintain the efficacy of their microloans by implementing “regular follow-up visits, continuing training, and mentoring programs built into the microloan system” (Abdellatif 39). An example of success achieved through such follow-up programs can be seen in the words of a financial manager at an MFI, who says, “...we step in before things go sideways. If this happens, we help her re-address [lenders’] needs, coach her and mentor her to be able to get up on her feet again. We do not want money to get in the way of her sustainment hence empowerment” (Abdellatif 39). Another microloan project manager says, “We create a post training community where [lenders] keep benefiting from the same services such as mentorship or internship based on reporting to the program how well the business is going” (Abdellatif 39-40). Such a community could prove to be extremely beneficial to MFIs as feedback from past clients can provide valuable insight into how effective the programs are at financing and educating its clients. An MFI could make any necessary changes to its curriculum and financial procedures and therefore emerge as an improved institution for microfinance services. These improvements would enhance an MFI’s chances to successfully lift clients out of poverty and thus spread the benefits that come with microfinance in the general population. “Strict monitoring of the client activities through regular site visits lowers the operational costs especially to remote and isolated locations in that clients do not need to take time away from work to travel far distances to make payments at the offices of their contracted MFI” (Janiczak-Serafico 53-54). Through close surveillance of its user’s activities, an MFI can ensure a greater “efficiency on the borrower’s side and better supervision and management of the loans on the lender’s side” (Janiczak-Serafico 53-54). 

As Nigeria is one of the most prominent markets for microfinance, this paper will also focus on a set of improvements specific to Nigeria. Although Nigerian users enjoy a multitude of benefits from their local MFIs, there are a few flaws in Nigerian microfinance banking. For instance, a major problem plaguing the poverty-stricken populations of Nigeria is the lack of loan repayment. Many Nigerian users mistakenly view microloans offered by local MFIs as charity rather than a loan that requires repayment and, as such, MFIs in Nigeria can suffer frequent losses. Furthermore, Nigerian microloans not only negatively affected the MFIs but also the loan-takers themselves. In 2017, researchers found that “loans and advances had a negative significant effect on poverty alleviation and economic growth” (Onyele et al). In order to combat the ineffectiveness and the possible detrimental effects of microloans poverty alleviation efforts, Nigerian MFIs should channel their efforts into marketing the aspects of microfinance banking that are successful in their local markets; for instance, they should target poor individuals with the intention of using microfinance assets, which, in Nigeria, “had a significant effect on poverty alleviation and economic growth,” or deposit liabilities of microfinance, which “had a positive…effect on poverty alleviation and economic growth” (Onyele et al).

In order to maximize the effectiveness of their loans and advances, Nigerian MFIs should also funnel “a very high proportion of their credits to the productive and real sectors of the economy for the valuable impact of their operations on Nigeria’s economic growth” (Ezeanyeji et al. 36). A focus should be made to direct microfinancial services to parts of the poor population that offer “plausible and desirable entrepreneurs” (Ezeanyeji et al. 36). Essentially, MFIs should uphold a code of ethical and professional conduct by ensuring that microloans are made only to clients that will correctly utilize them (Ezeanyeji et al. 36). Doing so will insure the MFI’s valuable resources and also prevent that microfinancial services are not wasted on individuals with malicious intent. 

The Nigerian government can also sponsor the efforts MFIs are making to abrogate poverty - helping to foster employment generation through the expansion of entrepreneurial education and activities for the poor - by promoting MFIs and considering, and therefore utlizing, MFIs as an effective method of creating employment. The Nigerian government has a tremendous effect on the Nigerian financial market and can direct its power towards alleviating poverty in its population by bolstering MFIs’ initiatives (Ezeanyeji et al. 37).

In developing countries such as Nigeria, it is also imperative for MFIs take into consideration the general financial trends, behaviors, and needs of the people participating in the market they have joined. Failure to do so and applying the same strategies that have worked in other regions does not ensure the success of their institution in a new market and can lead to an insufficient addressment of poverty in that area. MFIs can resist this issue by developing well-informed and region-specific funding strategies for low-income families that are “based on sound operational philosophies” that “make use of both local knowledge and social networks” (Janiczak-Serafico 52-53). MFIs constructed with locally “adaptive organization structures” are superiorly positioned to overcome the trap of poverty in their region. Overall, the Nigerian Government should “...be more anticipatory and endeavor to use microfinance as an effective policy tool to abrogate feminization of poverty in Nigeria and narrow the employment creation as to promote adequate inclusive growth in Nigeria” (Ezeanyeji et al. 37). 

Conclusion

This research paper suggests that there is a generally positive connection between the Grameen Solidarity Group and NGO models of microfinance institutions and a strong potential for extreme poverty alleviation. Introducing these microfinance models into a struggling economy can significantly strengthen the fight against extreme poverty by providing people with sufficient resources to employ themselves and others through microenterprises. Furthermore, it is postulated that the extent to which microfinance is successful largely depends on the levels of education, current financial standing, intrinsic motivation, and a variety of other extenuating circumstances of those affected by extreme poverty. In turn, this paper recommends conducting follow-up longitudinal studies on impoverished populations who are consistently engaging with these microfinance models to assess changes in their quality of life, financial well-being, and sense of empowerment. 

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