Do Microcredit Programs Alleviate Poverty and Foster Environmentally Sustainable Development? A Review of African Case Studies

Desta, Asayehgn, Ph.D. Sarlo Distinguished Professor of Sustainable Economic Development, Dominican University of California

An Abstract

With the hastening of the global poverty crisis and the absence of an adequate social safety net for those marginalized and vulnerable sections of society in the less developed countries, a number of researchers have moved beyond the relentless pursuit of short-term toward long-term anti-poverty, environmentally sustainable paradigms to assist chronically poor sectors of society. Though a remarkably polarizing issue, in the last three decades microcredit programs have been made available to the chronically poor as a viable option to involve them in the formal economic sector. It is assumed that the disadvantaged groups will become productive members of society if they involve themselves in small businesses that may contribute to powerful changes within their lives. Based on anecdotal assessment of the impact of microcredit as a financial instrument, the United Nations declared 2005 as the International Year of Microcredit. Realizing that chronically poor people merit the greatest international attention, using the year 1990 as a baseline, the United Nations has advocated the reduction of both extreme poverty and hunger by half or more by the year 2015, those whose income is below US $1 per person/day.

A review of the existing literature which has burgeoned over the past decades indicates that it would be an over exaggeration to claim that microcredit programs have significantly helped to lift the poor out of poverty. The existing microcredit programs seem to be focusing on borrowers living above the poverty line rather than on the hard core poor. Based on few analyzed empirical case studies, it can be ascertained that the microcredit programs in Africa may not be effective in achieving sustainable development unless the projects are based on longitudinal studies that could: a) systematically address the cause of poverty, b) identify the poverty segments of the population, c) pay special attention to raising the awareness of the chronically poor, and d) train the participants to specialize in environmentally-sensitive new business ventures.

A Review of African Case Studies

The area of sustainability that appears to be receiving the most attention from microcredit lenders is the reduction in land degradation and the development of healthier, more permanent and less destructive farming practices in Rwanda’s Eastern Province, Kigali city Northern Provinces, and Huye District in the Southern Province. According to the Rwandan Red Cross- RRC (2009, p.1), “The Rwandan economy is based on the largely rain-fed agricultural production of small, semi subsistence and increasingly fragmented farms. It has few natural resources to exploit, and a small uncompetitive industrial sector. Food security is threatened by a decline in soil fertility and poor crop management, pests, diseases, poor storage, …, scarcity of farm land, poor agricultural practices and population density.” The RRC also indicates that over the past five years, chronic childhood malnutrition rates in the country have increased from 43 percent to 45 percent, and that “Rwandan households are exposed to some vulnerability in access to or consumption of food while 28 per cent of households suffer from malnutrition” (2009, p. 1).

The aim of the microcredit projects spearheaded by the RRC is to improve communities’ livelihoods by contributing to effective poverty reduction and complimentary economic development activities for sustainable food security. As stated by RRC, the overall objectives is to provide a venue for income-generating activities through a rotating microcredit scheme which is aimed at a number of sectors including in-kind agricultural inputs, livestock, commerce, retail, and carpentry. As stated by RRC (2009, p. 1), Examples of projects developed from this microcredit program include preparing agro-forestry and forestry nurseries for cooperatives and associations involved in the program, and the distribution of proper tools, seeds, and fertilizers.

A snapshot of some of the benefits reaped from the microcredit initiatives in Rwanda include:

1. Increased agricultural production and other incomes

2. Improved household nutritional status

3. Boosted communities’ capacity to manage their rotating funds

4. Provided the means for small shops and stock in the community

5. Enhanced knowledge and skills in families to resolve problems, manage projects, and participate in cooperative organizations and group works

6. Replicated new practices in other areas so that more associations and vulnerable communities are being served

7. Improved RRC staff and volunteers’ capacity to plan, monitor, and evaluate their projects

In short, the lessons learned from the microcredit projects in Rwanda are that, “…the fact that in order for projects activities to be sustained there must be a concordant level of understanding between all stakeholders. Additionally, it is imperative that vulnerable groups are encouraged to participate in the steering committees and working groups. It is imperative that assessments of the associations be conducted with all members and that the information is then disseminated to others involved in the same line of activities” (RRC, 2009, p. 2).

Another case study which shows an example of the association between sustainable development and microcredit took place in Machakos in east central Kenya. As stated by Duran (2002 , p. 1), “In the last decade alone, drought periods in 91/92, 95/96, and 98/2000, and the devastating floods in 1997/98, and again in 2002 in different parts of the country have been recorded. These phenomena have had the cumulative effects of reducing household food availability, purchasing power, and coping capacity, impoverishing the rural population”

In 2001, a year after a devastating drought that left 4 million people in dire need of food, the International Federation, in conjunction with the Kenya Red Cross Society (KRCS), developed a program in the Machakos district of Kenya that would deal with the impact of drought and famine before problems developed. As documented by Duran (2004, p. 1), more than 50 per cent of the residents of Machakos were categorized as the absolute poor (i.e. those who cannot afford to meet the basic minimum food requirement even after spending all their total incomes on food only).

The International Federation of Red Cross initiated a bilateral cooperation with the Kenya Red Cross Society, contributed microcredit funds and designed a Drought Preparedness program for the Machakos District. More specifically, the Machakos program focused on “…developing branch capacities through training to enable the Machakos branch to mobilize volunteers, and through training to work closely with and from within rural communities. The three-year project, implemented by the KRCS – Machakos branch with technical support from the International Federation , aims at strengthening the local and district capacities, through local and innovative mechanisms to predict , cope with and recover from recurrent drought impacts” (2002, 2).

In addition, the microcredit projects implemented in the Machakos District included agriculture that focused on farming drought-resistant crops, education on storing and developing seed banks on a community level, development of small-scale water systems that were built with community assistance, and the formation of water committees that would provide stable water management practices. Kenya experienced another drought in 2004. The Machakos district, which was most affected by the 2001 drought, was able to work with the conditions in 2004 and was ultimately unaffected by the drought. In Duran’s words, “Developing all these activities through microcredits we were able to mobilize the community, to reinforce the social tissues, and support their initiatives for their own development” (2004, p. 4).

For the last five years, with microcredits disbursed for food production in Gambia, Mozambique, Nigeria, and Tanzania, farmers increased their output and attained food security (Tsogde, 2002). For example, in Tanzania, after the Tanzanian Government approved a national microfinance policy in May 2000, the International Fund for Agricultural Development (IFAD), a specialized agency of the United Nations dedicated to eradicating rural Poverty in developing countries, helped mobilize savings and disbursed funds as credits to the agricultural sector. As a result, the poor, including women as user-owners were empowered. And the country’s substantially improved in food security and income. Thus microcredits have become a formidable economic tools for agricultural policy makers (2002). In Gambia, the IFAD contributed to a rapid increase of rice growers with increases in different villages ranging from 50% to 200%. In Nigeria, the Cassava multiplication Program increased cassava production in the country, from less than 14 million tons in 1987 to over 30 million tons in 1998, becoming the world’s largest producer of cassava. In Mozambique, microcredits improved the level of income, employment, and food security of fishermen and their families, through the provision of fishing inputs and credit. As summarized by Tsogbe (2002, p. 22), the examples taken from the four case studies show that microcredit can be a catalyst for reaching the goal of increasing agricultural production by creating both backward and forward linkages.

To test their hypothesis that the success of micro-finance institutions is measured according to the extent of their outreach to the poor and their financial viability or sustainability, Adams et al. (2002) studied four case sites on microfinance initiatives in South Africa. The case studies included the following sites: Mathabatha village) Limpopo Province), Kgautswane village (Limpopo Province), Oudtshoorn (Western Cape) and Mtshabe (Eastern cape). The finding of the research indicates that the village banks do not charge interest rates to cover costs. But, the informal group (i.e., credit unions, moneylenders, money keepers, families, relatives and friends, etc) charged minimum interest rates. Since microcredit financial institutions in the studied regions depend on external funds, Adams et al, proposes that microfinancial institutions need to incorporate interest rates in order to enhance self-sustainability of village banks and other group-based credit arrangements. In their own words, Adams and his group (2002) suggest that “Micro-finance institutions in South Africa therefore need to encourage clients and support the pooling of material resources. Nonetheless, since the objective of moneylenders is based on interest-seeking activities and not on altruism, there is a need for appropriate regulation by government” (p.125).

The main findings of the South African case studies included :

1) In Oudtshoorn, most of microcredit lending operations deepen the poverty levels of the poor.

2) Among the microfinancing institutions’ services and operations, there are common aims and objectives, to serve the poor and help them develop sustainability by achieving financial and food security.

3) The microfinancing institutions need to cover the costs they incur. For that, they should charge high interest rates to cover these costs and grow.

4) Except for the Mathabatha Bank the other three microfinancial institutions are highly dependent on outside funding. Thus, the other banks need to begin weaning themselves away from their dependence on external subsidies.

5) Since funding does not mean money only, the case study village banks need educational advice on how to follow their savings’ progress to determine whether or not they are really valuable to the community

6) Since women are diligent savers at the village bank and are always members of the village savings club, the empowerment of women should receive a lot of attention in the process of development.

7) Since most rural areas are led by traditional chiefs and follow strict cultural rules and formalities, village banks need to work in cooperation with village authorities to ensure the smooth operation of development programs.

8) Incentives should be provided to community-based savings schemes to encourage saving and investment. For example, the model of savings used by the school in Oudtshoorn could be adapted for use by schools and communities.

9) Despite an adequate supply of consumer credit in Oudtshoorn, the research findings concluded that credit was needed for productive purposes in short supply for those with no conventional collateral.

10) The village banks need to improve their marketing/promotion/outreach activities and re-engineering delivery systems.

The South African case studies were very extensive. Although the analysis was based at the village level, the case studies fail to address the status of poverty level of the client or households. The focus of the case studies seem to be more on the sustainability of the microcredit village banks and their financiers rather than on the effect that the sustainability-focused microcredits can have on the participants, the community, and the environment.

Since the issuance of Proclamations No. 40/1996, a number of finance (MFI) institutions were established in Ethiopia as share companies in accordance with the Commercial Code of Ethiopia. The ownership of Ethiopia’s MFIs is based on the country’s administrative structure. For example, in 2002, six out of 20 MFIs were largely owned by regional governments and non-profit organizations in the regional states. In other MFIs, the equity structures were sponsored by foreign donors who have contributed the initial capital for required registration. Seventy eight percent of the clients are from rural households and 41 percent of the clients are women (Al-Bagdadi and Bruntrup, 2002).

To minimize recurring costs and improve operational efficiency, and in order for clients to effectively invest microcredit funds into productive income-generating initiatives, almost all microcredit institutions in Ethiopia have established training formats for their clients. Though a survey conducted by Amha et al., indicates that business development services (BDS) “ had very limited vocational and technical training (before starting business), received few short-term training, extension and counseling, and marketing services” (2006), the African Village Academy’s claims to provide the following seven step training methods. These are:

Step one introduces various types of financial institutions and tools. Step two encourages participants to discuss and examine themselves and their markets to identify potential microenterprise activities, which they then research individuals. In step three, participants discuss in detail their market findings (i.e. materials, transportation, and market costs), and then re asked to form groups of typically four or five people. Step four elaborates the purpose of group formation in creating support and collateral for individuals, as well as developing specific business plans and budget planning. In step five, participants meet each other’s groups in units of up to ten groups, and discuss specific credit arrangements and requirements of Savings and Credit for enterprise Development program .In step six, group members present their basic plans for final approval of the unit, and in step seven all steps are reviewed to reinforce understanding of the program. (Un/OSCAL Model, 2002, p. 80-81).

To assess the outcomes of an Ethiopian Microfinance program (which was established in Ethiopia, as an affiliate of the World Vision microfinance–WISDOM) on the livelihoods of poor populations , a survey studied 819 rural households in Southern Ethiopia (i.e., Adama, located in the East Shewa Zone of the Oromiya Regional State and Sodo branches, located in Wolayita, in the State of Southern Nations, Nationalities , and peoples region). The indicators used to asses the socioeconomic status of the respondents were a) monthly households income, b) per capita monthly household income, c) household assets and livestock value, d) household asset, and e) livestock index score. In addition to assess the food security status of the respondents were assessed using household diet, child nutrition status, and food aid receipt. As stated by Doocy et al., (2005) in its methodological design:

The study compared two groups of clients that received loans (incoming clients who had completed one loan cycle or less and had been participating in the program for no more than ten months, and established clients who had completed two or more loan cycle) and one group of community controls who were eligible to participate in the WISDOM lending program but had not received a loan within the past year and were not seeking a loan. A total of 408 established clients, 205 incoming clients, and 206 community controls participated in the survey. The sample was stratified by survey site and clients sex, participants were systematically selected from client lists of the microfinance institutions. (p.82)

As pointed out by the researchers the two case studies are based on a cross-sectional design, thus it was very difficult for the researchers to ascertain whether the clients in the two regions have moved towards sustainability or away from it. However, the aggregate findings of the questionnaire-based interviews indicate that “While the majority of WISDOM clients reported an increase in asset value since enrolling in the lending program, differences in household asset data between clients and community controls were statically insignificant. Findings from this study also indicate that participation in the WISDOM microfinance program did not result in increased household wealth” (Doocy, 2005, p. 87). In terms of wealth, “No significant correlations were observed between length of program participation (time in months or loan cycles) and either measure of change in asset value suggesting that participation in the lending program is not associated with an increase in client wealth” (Doocy et al., 2005, p. 88). Similarly, it was ascertained that there was no association between participation in the program and monthly household income. Nonetheless, in their conclusion, Doocy (2005) and his group showed that the WISDOM microfinance programs (i.e. in Adam and Sodo, Ethiopia,) improved client retention, increased savings, and increased the active participation of women.

Another study conducted in the Wereda of Atsbi-wemberta in the Tigray Regional State, northern Ethiopia in 2002 analyzed the impact of formal and informal credit on households’ livelihoods. As reported by Vilei and Chisholm (2002), the results of a survey in 97 households and 5 group discussions showed that the interviewed households perceived that having access to credit had a positive impact. It contributed to enhancing the self-esteem of the beneficiaries by becoming less dependent on food aid. However, several of the interviewed households indicated that the local microfinance institutions such as the Dedebit Saving and Credit Institution (DESCI) lent higher sums of money but they imposed inflexible repayment conditions and lacked the skills to monitor successfully the invested loans. Many clients used the credits for food consumption and eventually the beneficiaries were forced to sell their livestock in order to repay their loans on time. Also it was reported that though informal credit from money lenders at interest rates of up to 60 percent are generally very small sums when compared with formal microcredits, they are widely used to cover food consumption or pay for additional social events such as marriage and funeral services.

Table 1: Microcredit programs for Sustainability in selected African countries

Case	Author	Purpose	Examples of projects	Findings	Observation
Rwanda’s Eastern Province, Kigali city Northern Provinces and Huye District in the Southern Province.	Rwanda Red Cross ( 2009)	Reduce in land degradation and the development of less destructive farming practices	Preparing agro-forestry ; forestry nurseries for cooperatives; distribution of proper tools, seeds and fertilizers	Improved agricultural production; improved household nutrition ; small shops and stock available in the community	The study showed that for sustainability to be achieved stock holders need to participate in the planning and implementation process.
Machakos District of Kenya	Duran , International Federation of Red Cross (2001)	To tackle the impact of drought and famine before problems developed	Farming drought-resistant crops, education on storing and developing seed banks on a community level, development of small-scale water systems	Microcredit helped to mobilize the community and support the local initiatives	The case study identified that 50 percent of the district were absolute poor and could not afford to meet basic minimum food requirements.
Tanzania	International Fund for Agricultural Development (IFAD) , 2002	Eradicate rural poverty	Mobilize savings and disbursed as credits to poor women and the poor	Microcredits resulted food security and empowerment of women as users	The study was not conducted to show how micro credit empowered the poor women
Gambia	IFAD (2002)	An increase in rice growing in different villages	Rice growing	Microcredits contributed to a rapid increase of rice growers with the increase in different villages ranging from 50% to 200%	The case study failed to demonstrate if the poor benefited from an Increase in rice production and did not ascertain the impact on resource utilization on the clients.
Nigeria	IFAD (2002)	To increase the production of Cassava	The cassava Multiplication Program	Cassava production in the country increased from 14 million tons in 1987 to over 30 million tons in 1998, as a result Nigeria became the world’s largest producer of cassava	The case study might have contribute both backwards and forward linkages. But it has failed to show the beneficiaries of the increase in cassava production. In addition, an analysis of the impact of fertilizers on the environmental degradation was not attempted.
Mozambique	IFAD (2002)	Increase food security of fishermen and their families	Microcredits for fishing inputs and credit	Microcredits improved the level of income, employment and food security of fishermen and families	The fish project in Mozambique seems to be focused on mostly on those whose income is above the poverty line.
Mathabatha, Kgautswane, oudtshoorn and Mtshabe villages in South africa	Adams et al ( 2002)	Investigate the outreach of micro-finance institutions reach the poor	Most of Microcredit lending operation (Oudtshoorn village) deepen the poverty level of the poor. The women participants did not get enough attention. .		Though extensive, the study failed to demonstrate the extent of poverty level of the clients on the studied households. The focus of the case studies seems to be more on the sustainability of microcredit village banks rather the effects of sustainability-focused microcredit on the participants and the community.
Adama , Oromiya Regional state and Sodo , State of Southern nations…, Ethiopia	Doocy etal (2005)	To assess the outcome of an micro finance program on the livelihoods of poor population	The indicators used to assess the socioeconomic status of the respondents in the sample were: 1)Monthly households income 2)per capita monthly household income 3) household assets and livestock value 4)household asset 5) livestock index score 6) household diet 7)child nutrition status 8) food aid receipt	As a result of the WIDOM micro credit: 1) the majority reported that their assets the market value of the participants increased. 2)No significant correlations was observed between length of program participation 3) No association was ascertained between participation in the microcredit program and monthly household income.	1) The Adama and Sodo case studies were well-designed and very instructive. As admitted by the researchers since the case studies are based on cross-sectional design , the researchers seem to have difficulty to ascertain whether the clients in the two regions have ever moved toward sustainability or away from it. 2) The case studies did not attempt to demonstrate if the participants were / or not pursuing environmentally-friendly approaches in their productive activities.
Atsbi-wemberta, Tigray Regional State	Sonja Vilei and Nick Chisholm February –March 2002	To assess the impact of formal and informal credit on households	65 male headed and 32 female-headed households whose age ranged from 18-65. . The survey covered about respondents’ assets, livelihoods, size and use of credit.	The results of a survey in 97 households and 5 group discussions showed that the interviewed households perceived that having access to credit had positive impact. It contributed to enhancing the self-esteem of the beneficiaries to be less dependent on food aid.	The study identified the participants in the study based on household asset s indicator. The study indicates that formal credits were used for the purchase of oxen, cows,, cereal trade , basket making and home-made beer. However, since the study was conducted in about six months, it failed to address the environmental impact of the various activities on the region.

As shown in Table 1, it is very important to note that the efforts made by the case studies presented above show that the various microcredit projects initiated in a number of African countries have attempted to minimize the degree of poverty of the participants. However, since the core concept of poverty and sustainability development are not fully operationally defined and the case studies were based on cross-sectional rather than on longitudinal designs, they lagged to help their readers realize how Microcredit be made to minimize poverty and foster sustainable development in the long run.

Conclusions, Policy and Research Implications

The United Nations declared 2005 the international Year of Microcredit. Microcredit is a provision for very small loans and deposit services to predominantly poor, under-served, rural borrowers, who are excluded from the financial system. It has achieved a preponderant place as a lending instrument in the sphere of international finance in the last three decades (Jain, 2003). Microcredit or microfinance programs have become a popular approach, especially to reach those with low income, who would normally be excluded from formal lending institutions because they lack the collateral and credit history, necessary to borrow and establish their own businesses and become innovative entrepreneurs.

Though microcredit is not seen as a panacea for poverty and development, but rather as an important tool in the mission of poverty eradication (UN/OSCAL MODEL, 2002), it has captured the imagination of policy-makers and development practitioners. In addition, Africa’s policy-makers fully understand that there no blueprint for microcredit initiatives and each program must adjust to the specific socio-cultural and economic setting in which it operates. Realizing this, a number of African countries have introduced microcredit programs to replicate the delivery system of Grameen Bank of Bangladesh as a strategy for poverty alleviation in rural areas (where a large portion of Africa’s population lives), and as a means for fostering environmentally sustainable development goals for the 21^st Century.

Given the ambiguity of poverty and sustainable development as concepts, it is challenging to evaluate and map out the progress made by the beneficiaries of microcredit towards sustainability so that decision makers can be able to monitor and evaluate the effectiveness of the program and adjust it as necessary. In simple terms, the effectiveness of any policy of poverty needs to be articulated around the definition of poverty in order to evaluate the number of poor and design a microcredit program of intervention to alleviate poverty and foster sustainable development in the long run. To be effective, the idea of environmentally sustainable development “…is the persistence of certain necessary and desired characteristics of people, their communities and organization, and the surrounding ecosystem over a very long period of time” (Hardi and Zdan, 1997).

The central evaluating and monitoring requirements need to be seen as the association between microcredit programs as a strategy, and sustainability as an outcome, so that they can be tracked systematically over time (Hardi and Zdan, 1997). More specifically, if microcredit programs are to act as a foundation for the hard core poor to develop products and services to increase their wellbeing while integrating sustainability, the pertinent questions that need to be addressed for Africa should include: a) Are the chronically poor segments of the population involved in microcredit programs? If so, b) How are the beneficiaries affecting the ecosystem? and c) Do the activities of the microcredit beneficiaries contribute to environmental sustainability?

As shown in Table 1, the African case studies conducted by the microcredit researchers rightly show that the various microcredit projects were designed to tackle poverty in the rural setting of Africa (where majority of the Southern African population lives and subsistence farming is the main stay of the economy). With the exception of the Ethiopian case studies conducted by Doocy et al., (2005), and Vilel and Chisholm (2002), which operationally measured poverty income using the beneficiaries’ income and assets of households, the other case studies did not specifically identify the poverty status of the microcredit clients. In general, based on the notion that the existence of a ‘poverty-environment trap’ in Africa could be minimized by the implementation of micro credit programs most researchers targeted their microcredit research to focus on all rural people regardless whether or not they were supposed to be beneficiaries of micro credit programs. In other words, with their sampling techniques, the case studies failed to identify that the actual beneficiaries of the microcredit programs in Africa were indeed hard core poor.

In addition, as the Asian studies briefly mentioned before, the microcredit programs in Africa didn’t seem to help significantly to lift the poor out of poverty. The case studies did not attempt to show whether or not the micro studies yielded an income effect or manifested positive/negative spillover effects on the local communities. That is, the researchers presented above seem to be focusing mainly on borrowers living above the poverty line rather than the hard core poor. In addition, most of the case studies conducted in Africa were based on cross-sectional rather than on longitudinal data. So the studies did not effectively demonstrate that the various microcredit activities of the participants could be environmentally sustainable. Household-level impacts in rural Africa should have been incorporated in their studies when new enterprises began, to determine if the identified microcredit programs ever increased the amounts spent on durable assets and if the beneficiaries ever used environmentally-sensitive inputs in their various activities.

Table2: The Composite Core theme and indicators of Human –well being, Economic, social

and Environmental well-being Sustainability Index

Core Theme	Indicator	Achievement in years
		T1	T4
Human wellbeing Index*	a) Living below poverty line (earning US $1 per day) b) Subjective assessment of felt need c) Access to land d) Nutritional status of children e) Mortality rate under 5 years old f) Access to housing facilities/ floor area per person g) Access to sanitary latrine h) Access to safe drinking water i) Regularly employed person in the family j) Children going to school k) Access to primary health care facilities l) Adult literacy rate
Eco-system wellbeing**	a) Activities impact on land b) Activities impact on water quantity c) Activities on water quality d) Activities impact on Air quality e) Activities on energy use f) Activities on water use g) Activities impact on species h) Activities impact on genes a) Activities impact on Biodiversity i) Resource use
Environmentally Sustainability Index**	1) Environmental systems: a) deforestation b) Carbon emissions c) Sulfur emissions d) Toxic waste 2) Reducing environmental stress: a) Air pollution b) Water stresses c) Ecosystem stress d) Waste e) Consumption pressures f) Population growth 3) Reducing human vulnerability: a) Basic human sustenance b) Environmental health 4) Social and institutional capacity: a) Environmental governance b) Eco-efficiency c) Economic and Human loss due to natural disaster

Source: *V.P. Raghavan, “ Likelihoods and Empowerment: The Kudumbashree Projects in Kerala, India-A New Paradigm of Participatory Economy. International Association for the Economics of Participation, July 13-15, 2006.

**Thomas M. Parris and Robert W. Kates, “Characterizing and Measuring Sustainable Development.” Annual Review of Economic Resources (2003).

Though worthwhile, the African case studies reviewed above should have tracked systematically the activities of the chronically poor people in the sample to determine if they had positively or negatively affected the ecosystem, and to ascertain if the various microcredit activities are environmentally beneficial. As stated by Armendariz and Morduch (2007), “…there is no study yet that has achieved wide consensus as to its reliability; and this reflects the inherent difficulty in evaluating programs in which participation is voluntary and different customers use the services with varying degree of intensity” (p. 222).

As shown in Table 2, to better serve policy decision-making needs in evaluating the impact of microcredit access and participation on sustainability, the three standardized core themes of a) the human-well being, b) eco-system well-being, and c) environmental index, incorporate the 2015 UN Development Goals suggested to evaluate microcredit programs in the long run in developing countries. More specifically, as suggested by Armendariz and Morduch (2007), to calculate the impacts of microcredit on poverty alleviation and sustainable development any study however, needs to have a Treatment group, poor individuals who get access to microcredit measured in T1 (year 0) and then measured in T2 (after 4 years) to measure the microcredit impact. For the Control group, hard core poor individuals from an area without access to microcredit, measured in time CT0 and CT2 could be used. The difference between T2 and T1 captures the microfinance impact. However, since it might reflect broader economic and social changes that occur between year 0 and year 4, that are independent of microfinance, it is worthwhile to compare T2 and CT2 to address biases due to the broadly felt economic and social changes. Thus, isolating the true microfinance impact requires comparing the difference between T2-T1 with the difference between CT2-CT1 which is a so-called difference-in-difference approach . “… the difference-in-difference approach is adequate to deliver accurate measures of microfinance impacts. But in reality, these characteristics may change over time (perhaps a borrower gets more education or strengthens his/her social networks, for reasons unrelated to microfinance” (Armendariz and Morduch, 2007, p. 205).

The conclusion that can be derived from an analysis of the African case studies presented above is that in order to be useful for policy makers, the core concept of poverty and sustainability development need to be operationally defined. In addition, if microcredit programs are expected to minimize poverty and foster sustainable development in the studied countries, to measure the impact of the microcredit programs, the participants need to be systematically sampled and the framework of the studies need to be based on longitudinal design.

References:

Ageba, Gebrehiwot. “Micro-finance Institutions in Ethiopia: Issues of Portfolio Risk, Institutional Arrangements and Governance.” Retrieved September 31, 2007 from http://www.eeaecon.org/eje/v7n2/gebrehiwot/GEBRH-A.htm

Ajit, D, Sunil, R, and Raman, K.R (2006). “Micro-credit and Repayment Rates: A case study of Kudumbashree Micr-Enterprise Program in Kerala.”

Al-bagdadi H. and Bruntrup, M. (2002). Microfinance Associations: The Case of the Association of Microfinance Institutions Ethiopia(AEMFI). Division 4, Economic Development and Employment Promotion.

Alson J. and Shepherd A (2008-09). “Escaping Poverty Traps” The Chronic Poverty Report 2008-09. Manchester: Chronic Poverty research Centre, 2008-09, p, vii.

Amha, W. et al. (2006). “Business development services (BDS) in Ethiopia; Status, prospects and challenges in the micro and small enterprise sector.” International Journal of Emerging markets. Vol.1, Iss. 4 and ABI/INFORM Global.

Armendariz, B and Morduch, J. (2007). The Economics of Microfinance. Cambridge: Massachusetts Institute of Technology.

Banerjee A. B and Duflo, E. (2006). “The Economic Lives of the Poor,” Journal of Economic Perspectives.

Becker, G. (1991). A Treatise on the Family. Cambridge, Harvard University.

Bradshaw, J. and Finch N. (2003). “Overlaps in Dimensions of Poverty.” Journal of Social Policy. Oct. 2003;32. Pp. 513-525.

Carney, D. (ed.) 1998. Sustainable Rural Livelihoods: What Contributes can We Make? London: Department of International Development (DFID).

Chowdhury, A. Gosh, D. and Wright, R. E. (2005). “ The Impact of Microcredit on Poverty: Evidence from Bangladesh.” Progress in Development Studies. Vol. 5 , No. 4, 298-309.

Desta, A. (1998). Environmentally Sustainable Economic Development. Westport, CT: Praeger Publishers.

Doocy, S. et al, “Outcomes of an Ethiopian Microfinance Program and Management Actions to Improve Services.” Journal of Microfinance, 7.1, Summer 2005.

Duran, J. (2004). “Kenyan Drought: A Community Based Approach With Micro credits.” International Federation of Red Cross, Africa Department.

Elahi, Khandakar Q. i and Danopoulos.Constantine P. “Microfinance and Third World Development: A critical Analysis.” Journal of Political and Military Sociology, Vol. 32, No. 1, summer 2004, pp. 61-77

Ellis, F. 2000. Rural Livelihoods and Diversity in Developing countries. Oxford: Oxford University Press.

Fisher , T and Sriram, M.S. ed.(2002). Putting Development Back into Microfinance: New Delhi: Oxfam r Publishing.

Flynn, P. (2007). “The Newest Financial Technology of the Washington Consensus.” Challenge: The Magazine of Economic Affairs. Vol. 50, No. 2.

Gehlich-Schillabeer, M. (2008). “Poverty alleviation or poverty traps? Microcredits and Vulnerability in Bangladesh.” Disaster Prevention and Management. Vol.17, Iss.3; p. 396.

Gibson, B. Robert, et al. (2007). Sustainability Assessment: Criteria and Processes. London: Earthscan.

Hagenaars, A. (1987). “A Class of Poverty Index”. International Economic Review. Vol 28, no.3, 583-607.

Hardi, P. and Zdan, T. ( 1997). Assessing Sustainable Development: Principles in Practice. International Institute for Sustainable Development. Winnipeg: Canada.

Harkness, S. (2004). “Social and Political Indicators of Human Well-being.” Research Paper No. 2004/33, United Nations University, World Institute for Development Economics Research (WIDER).

Hume, D. and Mosley, P. (1996). Finance Against Poverty (London: Rutledge, 1996.

Hulme, D. and McKay A. (June, 2005). Identifying and Measuring Chronic Poverty: Beyond Monetary Measures, Chronic Poverty Research Centre (CPRC)-IIPA Working Paper 30, Indian Institute of Public Administration.

International Federation of Red Cross and Red Crescent Socities (2009). Case Study: Micro-credit, A Rwandan Experience.

International Institute for Environment and Development (2002). Development Strategies: A resource Book Sustainable. London: EARTHSCAN.

Jain, S. (2003). “The Microfinance Revolution: Sustainable Finance for the Poor.” Journal of Economic Literature, Dec 2003, 41,4; ABI/Inform Global.

Karnani, A. (2007). “Microfinance Misses its Mark.” Stanford Social Innovation Review. Retrieved July 8, 2009 from http://www.ssireview.org/site/printer/micrifinance_misses_its_mark/

Khandker, S.R. (1998). Fighting Poverty with Microcredit Experience in Bangladesh. Washington, D.C.: World Bank

_________, (April, 2003). Microfinance and Poverty: Evidence from Bangladesh. Grameen Dialogue, no. 54.

Lamarre, J. (2000). From a multidimensional to a socio-political definition of poverty.” Understanding Poverty in Vietnam and the Philippiness: Concepts and Context, edited by De Koninck et al. Université de Montreal, 2003. .

Lamarre, J. and Miller, M. (2003). “An Organizational Approach to Poverty.” Understanding Poverty in Vietnam and the Philippiness: Concepts and Context, edited by De Koninck etal. Université de Montreal .

Latifee, H. I. (2003). “Micro-credit and Poverty Reduction.” A paper presented at the International Conference on ‘Poverty Reduction through Micro-credit ‘ held at Ceylon Inter-Continental Hotel, Taksim-Istanbul, Turkey from June 9-10, 2003.

Macfarlane, A. (2002). “The Dimensions of Famine.” Working Paper, Department of Anthropology, Cambridge University.

Microcredit Summit (1997), Declaration and Plan of Action. Retrieved July 2, 2009 from http://www.microcreditsummitt.org

Nazret, “Ethiopia-Amhara Credit and Savings Institution and Dedebit Credit and Savings Institution among Top 50 Microfinance Institutions.” Top Microfinance Institutions. Retrieved December 1, 2009 from http://nazret.com/blog/index.php?title=ethiopia_amhara_and_Dedbit _among _top_50-&mo…

Neff, G. (October 1996). “Microcredit, Micro results.” The Left Business Observer. No. 74.

Njeru, E.H.N. ( 2004). “Bridging the Qualitative-Quantitative Methods of Poverty Analysis. “ Paper written for workshop on saga qualitative-Quantitative Methods for poverty analysis, March 11, 2004.

Oyen, E. et al. (1996). “Poverty Research Rethought.” Poverty, A Global Review. Paris: UNESCO, pp. 3-17.

Parris, M. Thomas and Kates, M. Roberts (2003). “Characterizing and Measuring Sustainable Development.” Annual Review Environmental Resources. 2003, 28: 13.1-13.28.

Pearce, W. David and Warford, J. Jeremy. World without End: Economics, Environment and Sustainable Development. New York: Oxford University Press, 1993.

Prosterman. R. (April 2005). “The U.N.'s empty plan for poverty.” Far Eastern Economic Review, Vol. 168, No. 4, pp. 43-45.

Scoones, I. 1998 “ Sustainable Rural Livelihoods: A framework for Analysis”, IDS Working Paper 72, Institute of Development Studies, University of Sussex.

Sen, A. (1983).”Poor Relatively Speaking.” Oxford Economic Papers, 35, 153-169.

Sen, A. (1985). Commodities and Capabilities, Amesterdam: North Holland.

Sen ,A. (1992). Inequality Reexamined. Oxford: Oxford University Press.

Sen, A. (1999). Development as Freedom. New York: Alfred Knopf.

Shannon Doocy, et al., (2005). “Outcomes of an Ethiopian Microfinance Program and Management Actions to Improve Services.” Journal of Microfinance; Summer 2005; 7, 1. Pp.79-94.

Sharma, M. (2005). “Emerging Contours of Micro Finance: Where do we go from Here?” The Business Review, Cambridge: Summer 2005; 4,1.

Shimeles, A and Thoenen, R. (2005). “Poverty Profiles: A Methodological note on measuring poverty”, Poverty and Social Policy Team, Economic and Social Policy Division, United Nations Economic Commission for Africa, ESPD/NRP/04/05.

Somilleda, A. (2010). “Sustainability-Focused Microcredits: A Temporary Movement or Lasting Solution?” Dominican University of California.

Stiglitz, J.E (1990). “Peer Monitoring and Credit Markets.” World Bank Economic Review. 4, pp. 351-366.

Thinkquest.org , “A Dollar a Day: Poverty Overview: Measuring Poverty.” Retrieved June 28,2009 from http:// library_thinkquest.org/05aug/00282/over measure1.htm

Thirlwall, A.P. (1995). Growth and Development (Fifth Edition). Boulder, Colorado: Lynne Rienner, p. 12.

Tsogbe, Y. Edem (2002). “Microcredit, Agricultural Output, and Food Security” Africa Advocacy Forum II, Microcredit – A solution for Africa? New York: United Nations, 14 November, 2002.

UNDP (2003). World Population Prospect: The 2002 Revision – Highlights, www.un.org/esa/population/puplications /wpp2002/WPP2002-HIGHLIGHTSrev1.PDF.

United Nations, (14 November 2002). Africa Advocacy Forum II: Microcredit—A solution for Africa? New York: United Nations.

United Nations Environmental Programme (UNEP), (1995). Poverty and the Environment. Nairobi, Kenya, p.10.

United Nations World Commissions on Environment and Development, (1987), Our Common Future. New York: Oxford University Press.

Vargas, C. M. (Feb. 2008). “Community development and micro-enterprises: fostering sustainable development.” Sustainable Development. Vol. 8, No. 1; ABI/INFORM Global.

Varian, H. (1990). “Monitoring Agents with Other Agents.” Journal of Institutional and Theoretical Economics. 146, pp. 153-174.

Vilei, S. and Chisholm, N. (2002). “Impact of credit as perceived by resource-poor Ethiopian households.” Department of Food Business and Development, National University of Ireland, Cork.

Wikipedia, the free encyclopedia, “Measuring Poverty.” Retrieved June 28, 2009 from http://en-wikipedia.org/wiki/Measuring_poverty

World Bank, World Development Report. “Development and the Environment.” New York: Oxford University Press, 1992.

United Nations World Summit on Social development, the Copenhagen Declaration……..

Yunus, M. (2003). “Halving Poverty by 2015-We can actually make it happen.” Commonwealth Lecture, Commonwealth Institute, London, March 11, 2003.

Zamperetti, F. and Franca Dalla Costa, G. (2008). Sharing Trust: Women and Microcredit in Eritrea. Trenton, NJ: The Red Sea Press, Inc.