Rethinking the Impact of Microfinance in Africa: ‘Business Change’ or Social Emancipation

This paper questions received wisdom that the benefits of microfinance start with poverty reduction and are subsequently followed by social emancipation. Taking the case of Uganda and by using a consensual people-centred relevance test to assess the impact of microfinance on poverty alleviation, microfinance is shown not to improve much the well-being of microfinance clients. Only marginal well-being gains are achieved by clients. However, a subsequent (gender) power relations analysis reveals that in spite of these marginal well-being gains, the women clients achieved more emancipation. The paper calls for a rethinking of the microfinance (outreach) campaign in Africa and of the controversy between a business or welfarist approach to microfinance. The paper suggests that social emancipation should be pursued in its own right rather than waiting for poverty reduction to occur first.