Introduction
Poverty alleviation refers to all of the methods, methods, or techniques used by the government, non-governmental organizations, or wealthy individuals to reduce or eliminate poverty.
Poverty is an economic state in which people face scarcity or a lack of certain commodities necessary for human survival, such as money and material goods. As a result, poverty is a multifaceted concept.
We cannot achieve prosperity unless we eliminate poverty.
We cannot address environmental challenges unless we build prosperity.
We cannot eradicate poverty unless the environment is preserved.
Strategies for Poverty Reduction
Despite the fact that poverty is a multifaceted phenomenon, poverty levels are frequently measured using economic dimensions based on income and consumption [1]. Amartya Sen's capability deprivation approach to poverty measurement, on the other hand, defines poverty as an inability to acquire certain minimum capabilities rather than a lack of actual income [2]. This disparity between people's incomes and their abilities is significant because the conversion of actual incomes into actual capabilities varies depending on social context and individual beliefs [2-4]. The United Nations Development Programme (UNDP) also emphasizes Amartya Sen's capabilities approach to poverty measurement [5].
"Ending poverty in all its forms everywhere" is the first of the United Nations' 17 sustainable development goals, with the pledge that no one will be left behind [6]. All over the world, development projects and poverty alleviation programs are primarily aimed at reducing poverty among the poor and vulnerable communities through various participatory and community-demand-driven approaches [7,8]. Economic growth is a key tool for poverty alleviation and lifting the poor out of poverty through productive employment [9,10]. Rapid economic growth lifted a significant number of poor people out of financial poverty between 1970 and 2000, according to studies from Africa, Brazil, China, Costa Rica, and Indonesia [11]. Economic growth, according to Bhagwati and Panagariya, generates the revenues required for
Microfinance, which aims to lift the poor out of poverty, is a popular poverty alleviation strategy. It has spread rapidly and widely over the last few decades, and it is now operational in several developing countries throughout Africa, Asia, and Latin America [12-21]. Many researchers and policymakers believe that access to microfinance in developing countries empowers the poor (particularly women) by supporting income-generating activities, encouraging entrepreneurship, and reducing vulnerability [15, 21-25]. There are, however, fewer studies that provide conclusive and definite evidence of improvements in health, nutrition, and education attributable to microfinance [21,22]. Services such as skill development training, technological support, and strategies related to better education, health, and sanitation, as well as livelihood enhancement measures, must be included for microfinance to be more effective [13,17,19].
Economic growth and microfinance for the poor may shed light on the financial aspects of poverty, but they fail to address its cultural, social, and psychological dimensions [11,21,26]. Although economic growth is critical for improving the living conditions of the poor, it does not always benefit the poor, instead favoring the non-poor and privileged sections of society [4]. Poverty, according to Amartya Sen, is caused by social exclusion and a lack of capabilities [4,27]. His capabilities-based approach aims to improve people's well-being and freedom of choice [4,27]. Sen believes that development should focus on increasing an individual's ability to make more choices [27,28]. The capabilities approach offers a framework for evaluating and assessing various aspects of an individual's well-being.
The World Development Report of 1990 advocated for a poverty-reduction strategy that combines increased economic growth with the provision of essential social services to the poor, as well as the creation of financial and social safety nets [34,35]. Numerous social safety net programs and public spending on social protection, such as social insurance schemes and social assistance payments, continue to serve as poverty alleviation tools in many developing countries around the world [35-39]. These social safety nets and protection programs have a positive impact on poverty, its extent, vulnerability, and a variety of social inequalities in developing countries. However, one major concern about these programs is their long-term viability [35].
Agriculture and related farm activities have been the focus of rural poverty alleviation strategies. However, researchers and policymakers' attention has recently shifted to livelihood diversification [15,40]. Non-farm livelihoods, in conjunction with farm activities, can provide pathways for economic growth and poverty alleviation in developing countries around the world [40-44]. The development of comprehensive value chains and market systems emerged as viable alternatives for poverty alleviation in developing countries in the early 2000s [45]. Multi-sectoral micro-enterprises can be used to increase productivity and profitability through value chains and market systems, and they are important for rural poor income generation while also playing an important role in inclusive poverty eradication in developing countries [46-48].
Over the last few decades, good governance in relation to poverty alleviation has risen to the top of development agendas [49,50]. Because of potential weaknesses in political and administrative governance, developing countries face enormous challenges in social services and security [49,51]. A good governance approach to poverty reduction has become a prerequisite for developing countries in order to receive financial aid from multinational donor agencies [49,50]. If poverty is to be reduced while improving the lives of the poor and vulnerable, a participatory, transparent, and accountable form of governance must be strengthened [50,51]. Despite its importance, very few studies have investigated the direct relationship between good governance and poverty alleviation [50,52,53].
Why can trade finance compete with formal microfinance?
Microcredit is provided by trader-financiers, who work closely with borrowers and connect producers and markets. We found entrepreneurs who had previously borrowed from formal microfinance among their clients. These interviewees' comparisons highlight the need for formal microfinance organizations to improve their competitive offers.
Trader-financiers typically provide microcredit in the form of productive goods rather than cash. Trader-financiers, for example, provide seeds, tools, plastic sheets, fertilizers, or pesticides that are valued so that borrowers owe fixed amounts. Loan amounts are frequently significantly higher than those offered by moneylenders, and borrowers are required to repay by selling their outputs to trader-financiers at prices below market in the surrounding areas. Trader-financiers deliver goods to urban markets where prices (e.g.
Conclusion
The primary goal of this article is to help set the stage for future research and discussion. It makes two complementary contributions. The first step is to identify and characterize informal microcredit beyond formal lenders, which has been studied previously (e.g. Bos and Millone, 2015). Clearly, lending is diverse, and the competition to formal microfinance is not limited to usurious moneylending by loan sharks.
The article's second and most important contribution is the identification of informal intermediation as a significant (current) problem as well as a potential (future) component of sustainable solutions. Microfinance organizations require fewer loan officers who are improperly incentivized and more entrepreneurial individuals with a trader-financier mindset who are designing multiple-source revenue models. Our theoretical contribution is that the availability of formal low-interest microfinance can