Sample Essay on Poverty Reduction Programmes

Poverty Reduction Programmes

Poverty remains a global scourge, with every nation grappling with ways of alleviating the living standards of people. As a result, the world witnessed an array of programs, aimed at reducing poverty in the world. According to the United Nations, a country’s economic growth cannot solely reduce poverty unless governments work towards improving equality and creating jobs for people. The inclusion of these two components is essential for the world to realize Millennium Development Goals. This paper discusses various programs used to reduce poverty in the world today.

One of the commonest poverty reduction programs in the world is micro financing. In most cases, developing countries hardly get financial support because commercial banks make losses when they invest in rural areas. Consequently, some of these places do not a formal market for lending and borrowing money. In cases they exist, such people are disadvantaged because they lack assets to guarantee them assets. As a result, poor people and those in remote areas turn to moneylenders who charge exorbitant interests rates. Therefore, microcredit movement seeks to address such financial issues, which affect people in rural area, with the aim of empowering them and alleviating their living standards.

In 2006, the Global Microcredit Summit promised to provide credit services to up to 175 million people in the world Proofreading-Editingby 2015. In most cases, governments and developmental agencies support microfinance institutions to enable them reach more people, targeting women, who account for the largest number of clients in need of financial support. While this is the case, two fundamental issues arise. Firstly, people question the effectiveness of microfinance services. Over the years, the question remains how they transform the lives of the poor. Is this impact permanent or short lived? The second concern is whether these programs reach the core poor in the society or just the better off among paupers.

There is documented evidence to indicate that microfinance services do not help the poor but the non-poor borrowers. When put to scale of poverty reduction, non-poor borrowers appear to experience substantive impact compared to beneficiaries that live in abject poverty. In some cases, the impact is so minimal that those who do not go for these services seem to do better than those loaned do. In explaining this trend, experts argue that credit is among several other factors, which can make a business grow. Oftentimes, microfinance beneficiaries do not have entrepreneurial skills, necessary to run a business. Other factors relate to the infrastructural capacity of the area. People can only make good use of the finances when they have ease access to the market. Thus, microfinance alone cannot eradicate poverty.

Besides microfinance services, developing countries use conditional cash transfers as a way of dealing with poverty. Unlike other forms of cash transfers, conditional cash transfers require beneficiaries to make certain commitments before receiving the funds. Such commitments could be agreeing to take their children to school or visiting medical facilities regularly for checkup. These were first introduced in Latin America and South Asia, even though they are currently widespread. In Mexico, the program reaches up to 5 million households.

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