Benefits of Microenterprise in Developing Countries

Poverty has a devastating grip on nearly half of the world’s population, and extreme poverty has stripped the hope from more than 1.3 billion people. The “poverty cycle” is a concept that describes how generations can be caught up in poverty and kept there for decades with no way to break free.

Envision the following: Your family doesn’t have enough money to access basic things like water, sanitation, education, food, electricity, or healthcare, so you go in search of work to pay for these things. You’re exhausted from a lack of food, but you persevere in the hope you can turn things around. Right away, you face rejection because your educational level isn’t considered sufficient. You wanted to remain in school, but your parents couldn’t afford it. Within a few days, your search for work has to be put on hold because of an illness. It’s likely something connected to the poor water and sanitation in your community, the contaminated water you must rely on, or the fact that last night’s rain leaked through your patchwork house’s porous roof. You don’t have access to healthcare, so you just get sicker and sicker. Eventually, you just give up.

For families across the globe, this terrible life of poverty is a reality, and because the setbacks faced by parents play out in the lives of their children, only outside intervention with a long-term impact can break the cycle. A handout may be able to address a poor person’s immediate needs, but it takes a program that makes families self-sustaining to pull people entirely out of the mire that has trapped them.

Microenterprise loans are an effective way to help families and entire communities pull themselves out of poverty for good. Read on below to learn more about how these small-business loans improve lives.