A Model for Microfinance-Supported Education Programs

Determining impact of knowledge in alleviating poverty
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This paper aims to develop a model that provides a framework for microfinance clients to educate their children. The goal is to implement this program and determine the effectiveness of an education-focused microfinance lending program. The paper proposes a lending model that aims to provide capital for clients' business initiatives, while also ensuring that the client's children received proper education. The model works as follows:

  • Clients originally go through a trial period of receiving business loans to establish that they are reliable in terms of repayment;
  • Once the program begins, clients begin to receive the loan at a discount;
  • Scholarship fund will be created for the client's child;
  • Portion of loan repayment will go towards the scholarship fund;
  • MFI and other potential sources will match the client's contribution.

Prospects appear promising as microfinance infrastructure grows in developing countries and incentives for education programs have a successful track record.

About this Publication

By Khumawala, S.