Though many like to see microfinance as a silver bullet to ending poverty, there should be more understanding of the vulnerabilities of livelihoods before such assistance is given out, said a lecturer at BRAC University on Monday.
There are other factors at play which affects how one takes such credit such as how one will feed and tackle shocks during this period of intended growth, said Christian Girard at the Department Economics and Social Sciences.
Poor households mostly tend to prioritise health and education while trying to balance tradeoffs amidst structural constraints, he said.
A majority of credit taken is to absorb shocks and despite the availability of post-incidence security, people tend to go for low-risk plans that give lower but safer returns, added Girard.
Vulnerability and poverty are causes and consequences of each other and growth just reduces the latter, he said.
Girard was giving a lecture on “When Policies Neglect Evidence: Poverty Reduction Through Credit and Titling and What Microentrepreneurs in Informal Settlements Actually Do” organised by the department on its premises.
He holds a PhD in planning and urban studies from the Université de Montréal specialising in development and has taught at the Asian University for Women as an assistant professor of philosophy, politics and economics.