Ebook: Microfinance and Poverty Reduction: An Empirical Evidence from Benin Metropolis South-South of Nigeria : An Empirical Evidence from Benin Metropolis South-South of Nigeria

This book is an empirical study of how microfinance impacts on poverty reduction in Nigeria. The book examined conceptual issues in poverty and microfinance with focus on the nature and incidences of the poverty phenomenon, justification for the establishment and growth of microfinance in Nigeria. This book with theoretical and empirical findings investigates the previous attempts by the governments in alleviating poverty and specifically how microfinance have helped in reducing the poverty menace especially since the promulgation of the microfinance banking act in 2005 by the Central bank of Nigeria. Auszug aus dem Text Text Sample: Chapter, 2.1 Definition and Meaning of Poverty: Poverty is a symptom of an improper society; the people are the victims, Mohammed Yunus, 2011. Perhaps, one of the most contentious and serious problems facing humanity today is that of poverty. Poverty may include an inability to meet ones physical needs and other kinds of deprivations ranging from people’s lack of housing/ shelter, medical care, education including clothing and physical wellbeing, (Shillington et al, 2009; O’Boyle, 1991; Jitsuchon, 2001). Defining the concept of poverty in absolute terms is in fact difficult because there is no consensus measure or single meaning of poverty and defining who is poor (Rosenfield, 2010; Spicker, 1999; Akindola, 2009). However, some definitions are worth viewing. According to O’ Boyle (1991, p.1) ‘Poverty is a problem in unmet human physical needs. That is persons and families in poverty lack the goods and services needed to sustain and support life and the income to purchase the goods or services which would meet those needs’. Weisfeld & Andrzejewski (2008) distinguished between two types of poverty; vis-à-vis income poverty and human poverty. According to them, income poverty is based on the understanding or defining of poverty in monetary income terms, this measure popularly used by the World Bank and the United Nations (UN) is regarded as the poverty line method. According to World Bank, this means that people living on less than $1.25 are in extreme poverty, while those living on less than $2 per day are in moderate poverty. In other words, human poverty includes material deprivation of people. This includes lack of basic needs of life like housing/ shelter, clothing, proper diet and other social deprivations such as ‘denial of employment, participation in social institutions and education’ (Weisfeld & Andrzejewski 2008, p. 2). The World Bank 2000 explained poverty as follows; Poverty is hunger, lack of shelter, being sick and not being able to see a doctor, not having access to school and not knowing how to read and write, not having a job, fear for the future, living one day at a time. Poverty is losing a child to illness brought about by unclean water. Poverty is powerlessness, lack of representation and freedom from servitude. Poverty is living in abject squalor and hopelessness (World Bank 2000, p. 52). According to Townsend (2010, p. 99), poverty is defined by an inadequate resources of people which ‘fall seriously short of the resources commanded by the average individual or family in the community in which they live, whether that community is local, national or international one’. For the World Health Organization (WHO): Poverty is associated with the undermining of a range of key human attributes including health. The poor are exposed to greater personal and environmental health risks; they are not well nourished, have less information and are less able to access health care. They thus have a higher risk of illness and disability…, The poorest of the poor around the world have the worst health (WHO, 2012). This definition explains succinctly the devastating health consequences and risks associated with poverty. In a similar vein, the United Nations (UN) defines poverty as ‘a condition characterized by severe deprivation of basic human needs including food, health, shelter, education, and information. It depends not only on income but also on access to services’ (UN, 1999: 57; quoted in Spicker 1999, p. 232). Furthermore, Spicker (1999), opined that poverty has different meanings ‘linked through a series of resemblances’, he identified 12 clusters of meanings to poverty. The first is that poverty is a ‘material concept’, which means that people are poor because they lack the basic needs of life like shelter, food, clothing and water. The second meaning is that poverty is a pattern of deprivation; by this he means that it is not just as a result of lack of needs but the ‘pattern of deprivation’ and duration of time in which the deprivation persists. The third meaning is that poverty is associated with limited resources; that is, the unavailability of adequate income and resources to meet ones ‘essential needs’. This is particularly true of Nigeria because for instance, there are poor people that can barely afford to pay for transportation to the hospital even if they would get free medical care/service. The fourth definition or meaning according to Spicker is that poverty is as a result of one’s economic circumstances caused by low disposable income. Similarly, the fifth meaning sees poverty as a result of low standard of living of individuals or families falling below acceptable standard or level. Inequality is the sixth meaning of poverty. According to Spicker, people are said to be poor because ‘they are disadvantaged when compared to others in the society’ who are living in wealth and opulence. The seventh meaning which is similar to the sixth is that poverty is defined in terms ones socio-economic class and position in the society. According to Spicker, the social stratification of the society placed some members in a higher position/class and others in lower position/class that have poor means of livelihood and have little or nothing to cater for their needs. Similarly, dependency, lack of basic security and exclusion are the eighth, ninth and tenth meaning of poverty. The eleventh meaning is Lack of Entitlements; according to Spicker, people are poor and hungry not because there is no food, but because they cannot afford to buy the food that exists. The twelfth and last meaning of poverty according to Spicker is that it is a moral judgment. Piachaud, 1981 quoted in Spicker, 1999 puts it thus; ‘poverty consists not just of hardship but of unacceptable hardship…, it carries with it an implication and moral imperative that something should be done about it. Its definition is a value judgment and should be clearly seen to be so’. The twelve clusters of meaning of poverty have to do more with the way the term is used by different people ‘rather than with the elements of definitions’ (Spicker 1999, p. 238). Shillington, et al (2009, p. 2) defined poverty as ‘a human condition characterized by sustained or chronic deprivation of the resources, capabilities; choices, security and power necessary for the enjoyment of an adequate standard of living and other civil, cultural, economic; political and social rights’. In summary, poverty is defined in this study as a condition of acute deprivation preventing a person from living a life of adequate wellbeing. The following different definitions bring to fore the different perspectives and understanding of what the concept of poverty is all about. As a result, it will be germane to further espouse on the meaning of this concept of poverty by explaining four different approaches which are; Monetary Approach, Capability Approach, Social Exclusion Approach and Participatory Approach. These approaches serve as a clarification to the various definitions above and also provides an ‘alternative understanding’ of poverty or who is poor? (See Laderchi, Saith,& Stewart 2003). Monetary Approach: The monetary approach to the understanding of poverty is mostly used by economics to define and measure poverty. This approach sees poverty as a phenomenon caused by lack of adequate monetary finance to meet the daily needs of life. It is popularly called the ‘Poverty Line’ method. The monetary approach originated from the famous works of Booth and Rowntree in their different studies of London and York in the late nineteenth and early twentieth century respectively. But Rowntree’s work on the survey of York which was undertaken starting from 1899 is generally believed to be the first major scientific study of poverty. According to Laderchi (2006), this research work of Rowntree is ‘generally described as the first scientific study of poverty mostly because of the high level of sophistication he applied in deriving a modern poverty line and in particular in estimating the minimal food requirements for maintaining efficiency on the basis of recently calculated nutritional standards. Such minimal requirements, together with those necessary for the purchase of clothing and rent, were added up to identify a poverty line, so that households whose income level fell below it were deemed to be in primary poverty’ (Laderchi 2006,p. 6). The Monetary approach has always been used to define and explain poverty in Nigeria; the understanding and definitions by most writers in Nigeria are usually focused on deprivation, inadequacy, consumption and income (Ugiagbe, 2012). This concurs with Tella 1997 (quoted in Ugiagbe 2012, p. 16), ‘people are poverty stricken when their incomes even if adequate for survival, fall radically behind that of the community… They are degraded, for in the literal sense they live outside the grades or categories which the community regards as acceptable (standard of living)’. Critics of the monetary approach believe that the definition of poverty around a single approach of monetary consideration is not sufficient. Laderchi (2000, pp. 3) puts it thus;’The main problem with the identification of the monetary approach as an analytical category is that different conceptual reconstructions might underlie similar practices, so that equating them with one homogeneous category is not only artificial but possibly misleading’ Another problem with the monetary approach is that it focused too much on the ‘material aspects’ of poverty (income and consumption) and neglected the non material aspects which includes ‘quality of life, quality health and educational attainment’ (Odusola, 1997). Capability Approach: The capability approach originated famously from the works of an India scholar and noble price winner for economics Amartya Sen. The capability approach differs from the monetary approach that focus specifically on real income, wealth and consumption as explanations of poverty. This approach is concerned with evaluating a person’s ‘actual ability to achieve various functioning’s’ as part of a daily living. (Sen 1993, p.30). The main tenets of the capability approach is that people should have the capability and freedom to do what they are effectively able to do , and also to live the type of life they are capable of living(Sen 1993, 1983,1985;Robeyns 2005;Laderchi, Saith & Stewart 2003). Consequently, the approach sees poverty as the result of lack of capability by the poor to be able to achieve a state of ‘adequate wellbeing’. This approach focused on some important functioning and the corresponding basic capabilities a person should have. Some of which includes; the ability to be well nourished, well sheltered and the ‘capability of escaping avoidable morbidity and premature mortality’ (Sen, 1993,p. 31). According to Sen (1993), human capabilities are an important aspect of human freedom and that a person’s capability depends on different factors which includes ‘personal characteristics and social arrangement’. In relation to poverty for instance, factors like high level of inequality and the failure of some individuals to properly situate themselves in a good position in the society may affect their capability and freedom to live a better life. Similarly, he criticized the monetary approach and explained that the approach can be incorrect and ‘misleading’ in the ‘identification and evaluation of poverty’. Hence he opined that the problem of establishing and measuring poverty can be resolved much easily if a minimum ‘combination of basic capabilities are identified’ and that this can produce a different result entirely compared to when monetary approach that focus on some certain income criteria is used (Sen 1993, p.40). Biographische Informationen The author of this book holds a BSc degree in Sociology and Anthropology from the University of Benin, Benin City Nigeria and a Master of Arts (MA) in Social Science from the University of Freiburg (Germany) and FLACSO, Buenos Aires (Argentina). Currently he is a PhD Candidate at the Institute für Soziologie, University of Freiburg, Germany.