Microcredit programmes for income generation: why not? / Dr. Zuraidah Mohamed Isa, Dr. Dahlia Ibrahim and Zaiful Affendi Ahmad Zabib

Microcredit is a powerful tool for eradicating poverty. In fact, microcredit has been cited as a change agent in developing nations, and in Europe, the rapid growth of the microcredit industry is due to the development of the microcredit programmes. A substantial body of research has demonstrated how microcredit programmes benefit the poor by enhancing their quality of life, life living and social economic indicators. Certainly, research in this area has demonstrated that microcredit programmes significantly affect participants' income levels. According to a 2011 study by Shukran and Rahman, microcredit is a small loan amount given to the poor to help them raise their standard of living, enable them to make money, and thereby end poverty. In other words, the loan provided enables the underprivileged to run a small business and enhances their family's access to housing, food, education, and healthcare. Similar to this, a study by Ahmed et al. (2011) found that the credit given can be used in profitable business ventures, boosting household income and savings while also enabling the households to produce their own capital. In this light, as household income and savings increases, the borrower will stop taking any more loans in future. In addition, a study by Rahman et al. (2008) also found that the length of RDS membership, the number of family members who earn an income, the proportion of food expenses to total expenses, the amount of money spent on health care in the household, and the level of members' ethical and moral development all significantly and positively affect the wellbeing of the members. In a similar vein, Pomi (2019)'s findings revealed a significant and favourable relationship between income and microcredit. Microcredit supports to finance self-employment activities that most often complement income for borrowers (Morduch, 1999). Moreover, microfinance influences on various dimensions of the borrowers’ lifestyle, from building up savings habit, employability and income generation, and growth of microenterprises among the small and microentrepreneurs in Nigeria (Taiwo, 2012). Contrary to the idea that women merely act as a conduit for microcredit (Mahoney 2014) or that microfinance occasionally leads to people accumulating more debt, the majority of them use the entire credit amount for household expenses (Shakya & Rankin 2008), and they typically valued paid work over self-employment through microfinance (Nawaz, 2010). Evidently, there is an overwhelming amount of evidence that shows that involvement in microcredit programmes has increased the participants’ income generation. Apart from this, this study suggests that microcredit alone cannot completely generate income, and that some dependent factors are required for income generation. For a greater impact towards income generations among the borrowers, this study recommends a revision of policies. Policies should be designed to improve skill-based training, educational opportunities, motivational training, vocational training in marketing and promotional services, and basic management skills for borrowers.