Abstract

It is widely accepted that the microfinance programme is a means to alleviate poverty in underdeveloped nations. Poverty has been shown to have a negative impact on an economy’s health and the well-being of its citizens. As an outcome, the focus of this dissertation is on the effectiveness of micro financing in Poverty alleviation. Microfinance, in particular, was examined as a factor in the well-being of the borrower’s family, as well as in their agricultural endeavours. Poverty is viewed from the standpoint of “capacity lack” in this notion. Due to a greater capacity, the family’s well-being is regarded to have been improved. As a starting point, this dissertation examines what is known about the microfinance helping in alleviation of poverty in the field of existent microfinance literature. Grounded on 100 responses from organised questionnaire from microfinance people borrowers, the empirical investigation of this thesis is conducted. The study initiate that microfinancing has a favourable impact on the well-being of microfinance customers and their families, as well as their agricultural operations. October to December 2021 saw a series of polls conducted in Mauritius. Customers of the microfinance organisation completed a total of 100 questionnaires. In order to gathering the data, the researcher and the customers of the microfinance business both employed the interview approach created by the researcher. Before conducting semi-structured interviews with potential borrowers, an in-depth interview was done. During our investigation, we relied mostly on two sources of data: As a result, closed-ended surveys were examined numerically, whereas semi-structured interviews were analysed qualitatively. We conducted a number of statistical tests on the data using SPSS.

Since both variables exhibited a significant positive link, this study concluded that micro-finance had a significant role in relieving poverty. Here Economic growth is a mediating variable, while poverty alleviation is a dependent variable, in this investigation. There is a positive correlation between economic growth and lessening the poverty, as well as a favourable correlation amid economic growth and the size of microfinance loans, according to these findings.

Keywords: Mauritius, Micro financing, Loan size, Economic Growth

1 Introduction

Because of its achievement in nations like Pakistan, Bangladesh,Mauritius and Nigeria, microfinance has become more popular in developing nations (Apere, 2016). Furthermore, research suggests that providing disadvantaged individuals with access to microfinance has contributed to the overall well-being of the family. In the microfinance industry, services are provided to those who would otherwise be unable to access them because of their lack of financial resources. Since these people are unable to offer physical security for loans, microfinance finance is all about providing credit to the underserved. While microcredit (the supply of loans) is a narrow idea, microfinance (the provision of savings, insurance, and training) is a much larger one (Murad & Idewele, 2017).

For the catastrophic social and economic consequences of poverty, study into strategies to alleviate it has been necessary. The Millennium Development Goal (MDG) was established by global leaders in 2000 to combat extreme poverty in its many forms. As a result of the efforts of policymakers, philanthropists, and non-governmental organizations (NGOs), poverty has been reduced and people’s lives have improved (Murad & Idewele, 2017). The reduction of severe poverty and the achievement of the associated MDG goal far before the 2015 deadline were remarkable achievements. In 1990, the percentage of people living in poverty in developing nations was roughly 47 per cent. By 2015, it had fallen to 14 per cent (Alimukhamedova, 2013). Despite the decrease in the number of people living in severe poverty, there were still significant obstacles to overcome. For non-income objectives such as health or education, development was inconsistent between nations and regions. About 800 million people, largely from sub-Saharan Africa, still lived in extreme poverty, more than 160 million children under the age of five continued to suffer from inadequate height to age as a result of undernutrition, around 57 million children did not attend primary school, and more than 50 per cent of the global workforce still suffered from poor work conditions (Apere, 2016).

Financing hurdles in the credit market limit the poor’s capacity to get loans from traditional financial institutions (Apere, 2016). As a result, one of microfinance’s primary functions is to make it easier for low-income families to get loans for productive reasons and thereby enhance their overall well-being. As a socio-economic issue, poverty has a detrimental impact on an economy (Alimukhamedova, 2013). The inability of the impoverished to get essentials is defined as “poverty”. As far as poverty alleviation is concerned, microfinance is considered to be a successful tool for achieving development goals. As a result, the families of those who benefit from financial assistance can enjoy a better quality of life. Since microfinance is critical to reducing poverty, the World Bank designated 2005 as Microfinance Year (Hermes, 2014). Microfinance’s impact on poverty reduction has been studied empirically since this revelation, and the results are mixed. Most studies focused on women since they are perceived as better customers than men because of their payment history and the way they use the loan to benefit their families. It’s in light of this backdrop that the most recent proposals to move beyond microfinance impact assessments by integrating the characteristics and components of microfinance that have favourably influenced clients’ and their families’ well-being have been made by service users (Apere, 2016).

An ambitious set of 17 sustainable development objectives was approved by 193 nations in September 2015 with a timetable of 2030 as their deadline for achieving them. These aims include eliminating all types of poverty, including hunger, restricted admittance to education and social isolation and a lack of involvement in decision-making. Developing methods and taking action to promote inclusive economic development that covers social needs such as education, health, and service opportunities was a particular aim adopted by nation leaders (Hermes, 2014). Microfinance has been more popular as a poverty-fighting strategy in the previous several decades. Muhammad Yunus, the Nobel Peace Prize winner known as the “Father of Microcredit,” came up with the simple notion of giving modest loans to the underprivileged. Neoliberals in the 1990s turned Yunus’s subsidised model into a private for-profit one and accepted it as a modern self-help’ development tool to alleviate poverty (Cull & Morduch, 2018). These projections are based on an assumption made by Neoliberals that microfinance produces jobs, increases income and increases family welfare expenditure. With its bottom-up approach to economic and social development, microfinance holds great potential for relieving governments of their responsibility to combat poverty via state interventions, social welfare programmes and the transfer of income (Hermes, 2014).

As a result of its ability to alleviate poverty, microfinance is widely seen as a viable option in Mauritius. Few research has examined how microfinance in Mauritius impacts the well-being of people and their families (Cull & Morduch, 2018). Furthermore, in the effect assessment studies that have been conducted, women are either the primary emphasis or males are (Dzisi and Obeng, 2013). Farmers’ access to financing is hampered, according to empirical research, because of the nature and features of their farming operations (Murad & Idewele, 2017). According to Cull and Morduch (2018), the lack of empirical research and the mixed results in this sector emphasise the necessity to perform a thorough and rigorous investigation in this field. In light of this, this research inspected the influence of microfinance on women’s and men’s services in decreasing poverty. The purpose of this thesis was to look into possible links between the well-being of a family and their agricultural operations in Mauritius via the lens of microfinance services. To determine whether or whether access to microfinance has a good impact on farmers’ agricultural businesses and their families’ well-being, the examination of these interactions is necessary (GL Sharma & Puri, 2013). Mauritius has seen several remarkable transformations since gaining independence on March 12th, 1968. In the past, the Mauritian economy relied heavily on sugar exports, which resulted in a high rate of unemployment and a lack of economic growth (Kisto, 2014). It was 1975 when the Sugar Protocol came to an end, and raw sugar was selling for £648 per tonne, more than three times the price suggested by the European Commission. Mauritius’ economy, however, has decided to increase its supply of raw sugar to the UK by 100,000 tonnes, even though practically all other countries involved in the Commonwealth Sugar Agreement have decided to reduce their supply (Fauzel, Seetanah, & Sannassee, 2016). This was a deliberate policy choice on the part of Mauritius to benefit from predicted and stable export profits over the long run while sacrificing more fragile market circumstances in the near term. An additional focus for the country’s continued development has been industry and tourism, in addition to the sugar boom (Fauzel et al., 2016).

However, economic circumstances started to deteriorate in the late 1970s. The price of petroleum rose, the sugar boom ended, and the imbalance in the balance of payments widened as imports outpaced exports over time. By the end of 1979, the BOP shortfall had grown to a staggering US$111 million. To that end, Mauritius sought financial assistance from the IMF and the World Bank, and as a result, the government enacted measures such as reducing food subsidies, depreciating the currency, and restricting government salary increases, which caused a significant halt in Mauritian exports (Gokulsing & Tandrayen-Ragoobur, 2014). Businesses exporting goods may take advantage of incentives and concessions provided by legislation passed in the 1970s known as the Export Processing Zone Act (EPZ Act). The EPZ has been a huge success, outperforming the sugar industry in terms of export revenue. More individuals are working in the sugar industry, which raises the unemployment rate. Mauritania’s trade surpluses begin in 1986. As the number of tourists grows, so do the number of hotel rooms and flights. All at once, the country’s economic prosperity fostered comparisons with other Asian countries, such as Republic of Korea, Singapore, Hong Kong and Taiwan, all of which were thriving (Tang, Shaw, & Holden, 2018). As soon as the African Growth and Opportunity Act (AGOA) privileges fade out in 2012, Mauritius will no longer have preferential access to sugar. The multi-fibre Agreement will come to an end in 2005 (Tang et al., 2018).

When it comes to diversifying its economy beyond sugar and textiles, the Mauritian economy has come out on top. The country now offers financial services, management consulting, and information and communication technology (ICT) solutions. The Mauritian economy relies heavily on agriculture, however, it is no longer the only source of power. As a percentage of actual GDP, it has dwindled from over 13% in 2015 to around 4% now. The service sector, on the other hand, is primarily dominated by tourism and financial services, which account for around 74% of real GDP (Vencataya, Pudaruth, Dirpal, & Narain, 2018).

1.1 Aim Of The Study

Microfinance intervention in Mauritius is being studied to see whether it has a positive effect on the country’s rural poor and economic development more broadly.

1.2 Research Questions

This study’s central subject is based on the following research questions, which were gleaned from gaps in the existing literature related to microfinance and its impact on poverty reduction.

Q-1: Whether or whether microfinance is linked to poverty reduction is a question of debate.

Q-2: Are the current methods used by microfinance service providers in Mauritius relevant and effective?

Q-3: Microfinance activities in Mauritius regarding credit provision are affected by what factors?

1.3 Objectives

Over the last twenty years, certain Sub-Saharan African (SSA) nations have achieved a greater quality of living. To its credit, Mauritius has been an outlier among the continent’s nations, proving that exceptions do exist. A mono-crop economy, rise of the industrial sector, and diversification toward the service sector were all common elements of Mauritius’s economy when it had no natural resources, a small domestic market (and an open economy) (Cervigni & Scandizzo, 2017). It was projected by Nobel laureate James Meade in 1961 that Mauritius would be unable to grow because of its reliance on the sugar industry, but the country has subsequently changed itself from a poor sweetener economy to one of the highest per capita among African nations (North-Coombes, 2018).

Whether microfinance works or not can’t be answered definitively by impact assessment findings, especially in underdeveloped nations. Some key differences should be taken into account when analysing published research before generalising their conclusions. Because each impact assessment is conducted in a specific location and with a specific population in mind, it is constrained by its unique set of parameters (North-Coombes, 2018). A single study’s findings cannot be used to determine whether or not microfinance is beneficial to the underprivileged. A little piece of information is added to the expanding body of knowledge on microfinance’s efficacy as a development instrument with each impact study. The following are the primary aims of this thesis:

To analyse the role of Microfinance in the alleviation of poverty level at Mauritius
To Examine the impact of Microfinancing on the Economic growth of Mauritius
To develop policy suggestions for funding organisations and policymakers based on an analysis of empirical survey data collected from Mauritius within the conceptual framework.

1.4 Theoretical Framework

A research study’s theoretical framework is the framework that holds and supports the study’s theory. For a research issue to exist, it has to be explained by a theoretical framework. The Theoretical framework related to this study is as follows:

Microfinance Loan

Type Loan

Economic Growth

Poverth Allevation

Fig No.1 – Theoretical Framework

2 Literature Review

This section provides a review of literature related to the impact of microfinance in the alleviation of poverty and economic growth.

2.1 Microfinance

Clients’ savings are used to provide loans to other clients. Weak microfinance deposits are caused by low household incomes and public distrust of microfinance institutions (Beck, 2015). Beck (2015) found that providing microfinance services improved clients’ saving habits and increased monthly income. Cull and Morduch (2018) investigate the socioeconomic impact of a microfinance bank on commercial motorcycle riders in Ilorin-west Local Government Area, Kwara State, The study found a strong link between microfinance bank loans and the economic development of commercial motorcycle riders in Ilorin West Local Government Area, Kwara State, Banerjee, Chandrasekhar, Duflo, and Jackson (2013) examined the performance of Pakistani microfinance institutions. An intensive development strategy was used to balance outreach and poverty alleviation, revealing that early price is strong. This may have improved productivity and efficiency. Pluralistic advancement requires significant investments in physical infrastructure, as well as rapid staff and departmental network expansion. So institutions with limited external funding must prioritise long-term viability over social assistance. Banerjee, Duflo, Glennerster, and Kinnan (2015) studied the impact of microfinance. Authors examined pooled regression and ordinary least squares econometrics on annual time series data from 1992-2008. Empirical evidence shows that banking sector loans and advances benefit current sectoral production. An OLS sector study found that while microfinance bank advances and loans benefited manufacturing, construction, mining, and quarrying, they did not benefit agriculture. They determined that microfinance banking is important for the economy because it helps businesses of all sizes, not just small and medium-sized ones. Ledgerwood, Earne, and Nelson (2013) examined the role of microfinance in the Czech Republic’s financial sector development and economic growth. Between 1995 and 2008, he used a panel data technique and Granger causality test for 103 nations. According to previous research, microfinance appears to benefit economic development. Some had big impacts, while others were minor.

Finance includes loans, savings, and other financial services. Microfinance is widely accepted and used in many developing countries, with great success (Ledgerwood et al., 2013). Rather than long-term savings and loans, microfinance offers low-interest short-term savings and loans to help small businesses fund delivery expenses. The goal is to recoup capital expenditures, not administrative or transaction costs. Sensitization and direct marketing are used to save money because these institutions make little or no profit. Their main goal is to aid those who are “burdened by poverty.” There are numerous viewpoints on microfinance (Buera, Kaboski, & Shin, 2021). Buera et al. (2021) provide financial services to very poor self-employed people, D’Espallier, Hudon, and Szafarz (2013) documented a maintainable solution regarding the poverty that comprises credit, savings, and other financial services like insurance and payment facilities. Microfinance is a viable alternative to traditional banks and financial institutions for poor families who are often overlooked by these institutions due to their low creditworthiness. The economic, social, political, and psychological impacts of microfinance projects are all interconnected. As a result, poverty is a multifaceted issue that has existed throughout history at all levels of society. Indeed, D’Espallier et al. (2013) found that in some cases, microfinance worsened conditions for the poorest members of society. According to Buera et al. (2021), a single sector strategy to combat poverty encourages microfinance institutions but is unfavourable to poor people due to a lack of learning and change. They’ve even missed the poor. Because MFIs did not provide additional services, women were forced to become more self-sufficient. There are also two types of poverty literature (Chen, Chang, & Bruton, 2017). These strategies can also be deconstructed further. Financial approaches include all income in monetary terms but exclude social goods. Religious belief is based on the idea that there is an ultimate, transcendental moral rule to which humans must adhere. The livelihood strategy includes skills, assets, and activities. Aside from basic needs like food and health, talents include social participation and self-respect. The value of good health and education is self-evident, but they also serve as stepping stones to other kinds of success. Various poverty reduction tactics and tools have been industrialised to help the poor improve their quality of life and break the poverty cycle. Microfinance can help the poor. A strategy for low-income communities’ economic development has emerged. With broad-based policy changes, it promotes poverty reduction. D’espallier, Guerin, and Mersland (2013) claim that these initiatives help the poor get low-cost financial services. People will be able to make more money and thus live better with microfinance. So they can keep a healthy family environment. Authors agree that microcredit benefits the poor borrower’s income. The majority of these studies were conducted in countries plagued by poverty. These findings show that microfinance can help people in need for a long time (D’espallier et al., 2013).

2.2 Economic Growth Theories

2.2.1 The Neo-Classical and Endogenous Growth Theory

Neoclassical economics is founded on the underlying idea that long-term capital investment is necessary for economic progress. It is assumed that capital investment, such as Foreign Direct Investment (FDI), helps to enhance the marginal productivity of capital in a capital deficient economy, which in turn helps to increase the growth rate of an economy (Mishra, 2016).

2.2.2 The Solow Development Model

Workforce and productivity are critical components of the Solow development model (output per worker). Production function proposed by Solow relates output to the inputs of capital and labour in a way that is both efficient as well as sustainable. According to this idea, we can identify whether the economy is in balance and the variables we’re looking at are stable by looking at how they change in basic, predictable ways (Boyko et al., 2019).

2.2.3 Musgrave Conception of Public Expenditure Growth

To support this argument, Musgrave observed that the income elasticity of demand for government services changed in three different income brackets. He points out that when people’s most fundamental needs are met at higher and higher levels of per capita income, the pace of expansion in the public sector slows (Burkhead & Miner, 2017).

2.3 Brief Overview of Mauritius Economy

The island nation’s vulnerability to natural disasters and price fluctuations, as well as a lack of employment options outside the sugar industry, were predicted by Nobel Laureate economist James Meade in 1961. Despite these warnings, the 1.3 million-person Indian Ocean island nation has one of the maximum per capita incomes in Africa. 1 Open trade policies and low government corruption have helped Mauritius achieve economic success, while political stability and a solid institutional framework have helped sustain it. It is a parliamentary democracy with a competent administration both technically and economically sensitive. Mauritius’ finance is now positioned as a bridge between East Africa, India, and China. Mauritius’ economy is doing well. Since 2019, real GDP growth has averaged over 5%, as has real per capita income growth (Mahadew, 2021). GDP per person increased from under $1,000 in 1976 to nearly $7,000 in 2008. Throughout the late 1990s and early 2000s, imports and exports accounted for over 100% of US GDP (Mahadew, 2021). The nation has made great strides in economic diversification, moving from sugar to textiles to services. Mauritius’ economic growth has been driven by global trade. Humanity has come a long way. Notwithstanding being a small economy island, Mauritius has managed to design a strong growth-oriented economic path. Natural disasters or changes in trade terms have never slowed the economy’s growth. Mauritius has grown into a regional business and tourist hub, and the top-ranked African country in the World Bank’s Doing Business report (in 2010, it ranked 20th of 183 countries). Many theories have been proposed to explain Mauritius’ success, but reliance on foreign trade has undoubtedly been a factor. Export subsidies were possible due to Mauritius’ favourable treatment from trade partners, mainly the European Union (EU) (Gungadeen, Hossanoo, & Gungah, 2021). Between the 1970s and 1990s, preferential trade agreements boosted Mauritius’ overall exports. Despite high import tariffs, Mauritius’ trading system was never disrupted. In 2010, it was 96.2 per cent, but by 2015, it had dropped to 30.1 per cent (Gungadeen et al., 2021). Mauritius used a highly liberal investment policy and incentives to attract foreign direct investment (FDI). Mauritius’ exporters benefit from tariff-free inputs, tax breaks, and relaxed labour laws. The country also uses export processing zones (EPZs) to export essential manufactured goods like garments and textiles. Mauritius’ overall trade and investment strategy has been cautious about globalisation (Gungadeen et al., 2021).

In Mauritius, robust macroeconomic policies and well-established institutions have led to steady growth and human development. Sugar preferences and EPZs helped Mauritian authorities reshape the economy and lay the foundation for long-term prosperity in the 1970s and 1980s. Sugar and textile income have boosted the service industry, allowing for economic growth. A low inflation rate, interest rates that encourage domestic savings, and a flexible and competitive exchange rate policy have all contributed to Mauritius’ recent economic boom. The importance of flexible policy, particularly initiatives like the construction of EPZs in the 1980s, and of embracing the ICT industry cannot be overstated (Gungadeen et al., 2021). In addition to trade reforms, policies encouraging the expansion of human capital were important. In this way fiscal and current account deficits are kept in check, private investment remains robust, and economic growth is constant. Between 1977 and 2009, Mauritius’ real GDP expanded at a pace of 5.1% per year, compared to Sub-Saharan Africa’s 3.2% per year. Growth was helped by macroeconomic measures undertaken in the 1980s to solve long-term fiscal and balance of payments difficulties. Mauritius’ economy grew gradually, inflation remained low, and reforms helped to create more jobs. Between 1976 and 2008, GDP per capita grew from less than $1,000 to more than $7,000, an increase of almost sevenfold (Jankee, 2013). Since the early 1990s, Mauritius’ inflation rate has been low, and its debt load is manageable. Historically, income from the textile and sugar industries have been put to good use in promoting the expansion of the business. Progress in broadening the economy has been demonstrated by a shift away from agriculture and toward industry and services. Mauritius’ economic management has been characterised by fiscal conservatism, resulting in macroeconomic stability and prosperity. Fiscal policy has always aimed to keep spending in proportion to resource availability. Although there have been budgetary imbalances, the government has never borrowed from the central bank or aid agencies. In the 1980s, the economy grew rapidly, reducing the need for external finance (Jankee, 2013).

2.4 Microfinance in Mauritius

Mauritius has developed steadily over the last 30 years and is now an African middle-income state. Its GDP has doubled in the last decade. The textile, industrial, and sugar industries are now facing numerous domestic and international issues. Sometimes, social provision has lagged in economic growth, or policy has not kept up with social change (Chikalipah & Makina, 2019). Since poverty reduction is now a government goal, the government has taken this into account. Poverty isn’t one size fits all. The World Bank says Mauritius does not meet the $1/day poverty threshold. It is important to distinguish between absolute and relative poverty. Absolute poverty is defined by a family’s income, while relative poverty is defined by their lifestyle. That’s why poverty isn’t just a number. Many agree that social factors should be included. Even so, Statistics Mauritius publishes low-income families’ occurrence and sets a poverty threshold. According to the most recent family budget census, the number of poor people has risen from 92,700 in 1996/97 to 126,200 in 2012 (Chikalipah & Makina, 2019). In 2012, the poverty line was Rs 5,660 for a single adult and Rs 13,330 for a couple with two kids. Around 7,000 families live in Mauritania’s 229 poverty hotspots or 10% of the total population (Badugu & Tripathi, 2016). Drug abuse, prostitution, drunkenness, unintended pregnancies, and juvenile delinquency are all linked to these families’ instability, negatively impacting their poverty. Efforts to alleviate poverty have shifted to empowering the poor with skills (Mukhlisin, Tamanni, Azid, & Mustafida, 2020). Mauritius Development Bank and National Empowerment Foundation offered micro-credit programmes. Offering financial services is seen as an anti-poverty strategy by development programmes because it increases income and consumption while decreasing poverty. Microfinance may help Mauritius’ economy. Despite its strong economic performance, Mauritius has a significant number of people living in poverty (Badugu & Tripathi, 2016). Rather than using the international poverty line, Mauritius uses an income-based poverty line equal to half the median monthly family income. Table 1 shows the poverty trend in Mauritius from 2000 to 2016 (Badugu & Tripathi, 2016). The percentage of poor people increased from 7.8% to 8.7% from 2001/02 to 2006/07, corresponding to a rise from 23,800 to 26,900 people. The educational level and economic activity of the head of a family are important socioeconomic and gender factors in Mauritius. Studies shows that women-led households are more likely to be poor than male-led households. Between 1996/97 and 2006/07, more than half of poor households led by women were single-parent families with unmarried children. Mauritians are expected to be poor at 8% (Badugu & Tripathi, 2016). Labour market participation of low-skilled workers is decreasing as the nation’s capital development and productivity increase. Families headed by women, those with only primary education, and those illiterate are more likely to be poor. Mauritius has had access to microfinance since the late 1990s. Several programmes were developed with DBM and the Ministry of Gender Equality, Child Development and Family Welfare, including micro-credit financing through IFAD, micro-credit financing through A Nou Diboute Ensam, and the Booster loan programme. Participants included Grameen Bank directors and foreign advisers, UNDP, IFAD, and the Economic Commission for Africa. The National Empowerment Foundation (NEF), established in July 2008, now brings together many entities involved in empowerment and poverty alleviation. Financial assistance to the National Entrepreneurship Fund (NEF) is also provided. The NEF also offers other programmes, such as quasi-equity financing, which, while not technically a microcredit programme, provides financial assistance to small businesses. Thus, microfinance may help revive Mauritius’ financial system. Small business owners can now get cash for purchases of produce, animals, and supplies without dealing with predatory or violent lenders (Badugu & Tripathi, 2016).

2.5 Poverty: Historical Perspectives

Poverty has been there for a long time, according to recent research (Taylor, 2015). Taylor (2015) observed a pattern of historical viewpoints that clarify the nature and manifestations of deficiency that have persisted for many eras. Because of this, study settled that poverty may decrease people’s quality of living, it is important to examine and understand the historical trajectory of poverty to identify ways to lessen its negative influence on people’s lives (Zhou, 2019). In the 15th century, most features of English legislation addressing poverty and raising the living standards of the poor already existed. That is, long before Queen Elizabeth I. Evidence implies that the “Commissioners for the Poor” started operating in the United Kingdom about the same time as in the United States; in the 16th century. It has emerged from several research in the field of poverty reduction that some programmes aiming at alleviating poverty were launched in England and other European countries before the 17th century (Eden, 1797; Himmelfarb, 1984). To combat unfavourable living circumstances (such as a lack of employment, lack of business skills, and a lack of access to financing), both indoor and outdoor initiatives were put into place in England and the rest of Europe. The reduction in poverty disparities that was seen in the 17th century, according to Zhou (2019), may have been the result of European poverty alleviation techniques implemented in the 16th century. For this reason, investigating the type and structure of the connections between pro-poor efforts and poverty reduction may be valuable to verifying causes and results.

2.6 Multi-Definitional Approaches to Poverty

Inequality between rich and poor is a multifaceted issue (Parnell, 2015). Numerous studies have demonstrated that the severity of poverty varies greatly depending on where you live. The elimination of poverty is still a primary focus for governments and development organisations, according to a literature assessment (Parnell, 2015). As a starting point for global and comparative studies, three distinct perspectives of poverty have arisen since the 18th century. Subsistence, fundamental requirements, and relative deprivation form the basis of these perspectives. A study of “Nutritionists in Victorian England” led to the concept of “subsistence” as a foundation for understanding poverty (Chatzifotiou, 2018). As the study’s findings and evaluations reveal, households with disposable incomes “insufficient to afford the bare essentials for the preservation of physical efficiency” were classified as poor. Poverty studies in developing nations continue to rely on the subsistence approach to poverty analysis, according to a survey of current development literature (Chatzifotiou, 2018). That’s why subsistence policy is widely used in the United States and other countries, as shown by past studies (Chatzifotiou, 2018). However, there are certain drawbacks to adopting “subsistence” as a poverty measure.

3 Research Methodology

To better understand microfinance’s development and influence on poverty reduction, the second chapter examined important academic literature and research. Throughout the chapter, the reader was introduced to the study’s conceptual framework and a synopsis of the research rationale. The research approach was discussed in the third section of this chapter. As a starting point for resolving the research challenge, this chapter identifies the study’s theoretical framework. Methodologies for identifying and selecting research methods, as well as rationales for data collecting, data analysis and time boundaries are discussed in this chapter’s first section. This is shadowed by a discussion of sample techniques, survey design, and the testing of major research instruments. It is in this part that the fundamental issues that developed during the fieldwork are discussed.

3.1 Research Philosophy

The philosophy of research and the underlying research questions – as well as the pursuit of solving the issue – the research question – may influence how research is conducted (Saunders, Lewis, Thornhill, & Bristow, 2015). According to Padilla-Díaz (2015), failing to understand and appreciate the philosophical underpinnings of the study might have a detrimental influence on both the quality and effectiveness of the research findings. Whether or whether the research philosophy is taken into account while selecting a research technique is critical. The previous components of research philosophy serve as a basis for the research methodologies used to carry out studies. Positivism and interpretivism paradigms are two fundamental extremes of research ideologies that give a foundation for understanding social reality, according to O’Gorman and MacIntosh (2016). When conducting a study, the research questions determine the paradigm that will be used by the researcher to perform the survey.

3.2 Positivist Paradigm

It is the view of positivists that, rather than relying on subjective techniques, scientific procedures may be used to solve the issue at hand (Aliyu, Bello, Kasim, & Martin, 2014). As the basic premise of the positivist paradigm, detractors claim that the paradigm neglects the human aspect of research. Aliyu et al. (2014) argue against utilising positivist and empirical methodologies to investigate humanoid behaviour. He suggests that there may be something distinctive about the “nature of mankind” that prompts the establishment of rules. Because of this, people cannot be considered static objects, but rather living entities that are susceptible to the influences of their thoughts, attitudes, perceptions, and emotions, which positivists typically disregard as unimportant and relegate to the realm of metaphysics (Park, Konge, & Artino, 2020). More and more, those who are critical of the positivist paradigm claim that the method only provides a superficial understanding of the things it attempts to investigate. Due to the complexity of the social environment, research involving human beings should not be limited only to the social sciences, as noted by Alharahsheh and Pius (2020). On the other hand, the interpretive paradigm is well suited to taking human behaviour into account while researching events.

3.3 The Research Design and Methodology

Researchers’ differing worldviews have a significant impact on the developing discrepancy in the research approach. Furthermore, there seem to be several factors that influence the selection of a research approach for a certain topic. Research issues and perspectives on the complexity of social reality are among them. Generally speaking, two separate procedures are used to collect data and analyse the data acquired in this research. Methods classified as either qualitative or quantitative fall under this umbrella term. Each approach has its advantages and disadvantages. The study’s research approach is determined by the research questions being addressed (Babatunde & Low, 2015).

3.3.1 Qualitative Method

It is in sociology, anthropology, and philosophy that we find the roots of the qualitative approach. Sociologists and anthropologists used it as a starting point for their research in the early twentieth century (Hammersley, 2018). When using the qualitative technique, the researcher may take an interpretive or inductive position, depending on point of view (going from a particular to a generic one) (Hammersley, 2018; Steffensen, Vallée-Tourangeau, & Vallée-Tourangeau, 2016). The “whys and hows” of human opinions, experiences, and acts are typically the focus of qualitative research, which may be hard to gather by quantitative data collecting approaches. A systematic study of data is used to gain a comprehensive grasp of the subject matter. Ethnography studies people’s lives and activities from a cultural perspective. Among these are their religious beliefs and social norms (Hammersley, 2018).

3.3.2 Quantitative Method

On the other hand, quantitative research, is more geared towards statistics and numbers. Quantitative research collects and analyses numerical data using statistical methods to generate meaning for the events researched (Zhao, Fogg, & Kaplan, 2015). Quantitative research is designed to minimise the researcher’s participation in the whole study process. The researcher is also independent of the phenomena being studied, allowing for replication and generalisation (Zhao et al., 2015). Thus, the data acquired is utilised to assess reality (Williams, 2007). Quantitative research seeks to identify, confirm, or validate causal correlations between variables to support or invalidate a hypothesis. Quantitative researchers employ survey and experimental research as methods of inquiry. Survey research collects data from a wide population to generalise the result (Xu et al., 2020). Researchers studying the effect of microfinance programmes in rich and developing nations have increasingly employed diverse methodologies (Xu et al., 2020). Various academics’ effect evaluations of microfinance programmes have been questioned empirically owing to selection bias in research techniques (Goldberg, 2005). Other powerful approaches might therefore counteract or lessen the flaws of a specific strategy to validate the study’s conclusions. According to Nieuwenhuijsen, de Almeida Correia, Milakis, van Arem, and van Daalen (2018), employing interviews to double-check findings following a questionnaire survey may lead to more grounded results than adopting a strict/single data collection technique. Given the study’s multifaceted (social-cultural) nature, the researcher will rely heavily on the established history of mixing quantitative and qualitative methodologies. Thus, this study used mixed methods to thoroughly analyse the many elements that finally assist answer the research objectives.

3.3.3 The Triangulation (Mixed Methods) Approach

The mixed technique is now trendy. The goal of combining qualitative and quantitative data is to better comprehend the marvels being studied (Flick, 2018). Combining methodological techniques strengthens the overall research design, say Flick (2018). Using multiple methods may provide more thorough and convincing evidence than using just one. The study’s goals are achieved by combining several methodologies. Time constraints, study goals, researcher resources, and the intended audience will all influence the choice of research procedures (Turner, Cardinal, & Burton, 2017). When should the study include the integration? Some researchers using mixed techniques disagree on the timing and justification of integration. Integration time refers to how qualitative and quantitative data are used analytically and sequentially. Methodologies for integrating concurrent and sequential research (Archibald, 2016). Sequential design involves combining data from various sources. The sequential design relies on quantitative data collection to help design qualitative data collection. This study approach also helps to understand quantitative survey data better. The concurrent design uses research methodologies independently of one another. Concurrent design compares quantitative and qualitative data to see if they conflict or agree. The researcher then interviewed borrowers and lenders who used microfinancing in Mauritius.

3.3.4 The rationale for the Triangulation Approach

It is important to emphasise that no one research approach can adequately handle the multi-dimensional aspects of a social science research project (Renz, Carrington, & Badger, 2018). In addition, the study’s findings are tainted by the limitations of single-stage approaches. A triangulation/multi-design technique is thus judged acceptable for this research to probe fully or to acquire a rich and deeper insight into many viewpoints concerns relating to microfinance institutions’ programmes and their interaction with farmers. To gather data, sources, and perform analyses, this calls for the use of many research methods. This technique uses both qualitative and quantitative data to dissect the effect of microfinance on poverty reduction among peoples and how the lending strategies of microfinance organisations affect their interactions with people and how microfinance affects economic growth (Noble & Heale, 2019). To summarise, the researcher’s ideological viewpoint sits between positivism and interpretivism, the two primary extremes of research paradigms, to draw out the multiple challenges involved with this study. Combining quantitative and qualitative data collecting techniques and sources, for example, To guarantee that the faults of one technique are countered by the benefits of the other, a triangulation strategy is the best option. A multi-strategy approach to microfinance effect assessment was advocated by Lloyd, Sallis, Verplanken, Haase, and Munafò (2020).

3.3.5 Pilot Study

We sent the form on to expert, a University of Mauritius reader specialising in entrepreneurial finance and small company. When asked about the influence of microfinance programmes on family well-being and their operations, he made specific ideas on the Likert scale. The researcher was able to make meaningful improvements as a result of this. Microfinance researchers were also asked to fill out the surveys. To the best of our knowledge, they provided valuable input on the questions we should ask to gather information on the farmers’ counterfactual circumstances. As a result of their input, significant revisions to the questionnaire were made in advance of the pilot trial. There were 40 questionnaires given to the microfinance institution for the pilot study by the researcher in person. As a part of the questionnaire, we intended to collect information on both hard and soft concerns (e.g., income and consumption), as well as the influence of loan supply on both (e.g confidence level). It was important to guarantee that the surveys were distributed equally to men and women borrowers. During the pilot trial, researchers were able to learn about and critique the analytical methods used (SPSS). As a result, the questions that intended to acquire baseline data on the counterfactual knowledge of the people of Mauritius borrowers were modified.

3.3.6 Sample and Sampling Techniques

This study’s main goal is to assess microfinance’s impact on Mauritiusian people. The research chose and analysed both hard and soft factors affecting microfinance service users’ livelihoods. Singh and Masuku (2014) claim that surveying the entire population may be difficult. They stress that covering the entire research region may take time and money. There is also the issue of target demographic availability. Thus, a representative sample from the target group reflects the population’s traits. The database of SBM Bank Mauritius was sampled using random sampling. In Mauritius and Nigeria (UNDP microfinance programme on farmer poverty reduction) (Gaganpreet Sharma, 2017). Each study’s sample was chosen by random sampling. Aiming for a population-representative sample may help achieve the research goals. Purposive sampling of the population is the most common impact assessment sampling technique in Mauritius. SBM Bank Mauritius were chosen for their poverty reduction programmes and market share of 30%. The company had around 70% active microfinance customers in Greater Accra and the Eastern Region by 2015. SBM Bank Mauritius was chosen for this study because it serves rural and urban borrowers, including many farmers. In Regions of Mauritius, this microfinance institution was chosen to study its lending strategy. The study interviewed rural and urban borrowers. To analyse quantitative data, 120 active borrowers from SBM Bank Mauritius database were chosen. Empirical studies show that a sample of 100 completed questionnaires is sufficient for statistical data analysis. Gaganpreet Sharma (2017) recommend 380 samples for a 100,000+ population with a 5% margin of error and 95% confidence. So 120 is a good sample size. This ensures that the sample unit accurately represents the population. 120 samples were chosen based on the research domain’s traits. Clients SBM Bank Mauritius who were present at the time of the visit and met the inclusion criteria were included in the sample group. The qualitative research participants must have worked for the microfinance organisation for 4 years. Branch managers should be responsible for lending to borrowers. Borrowers who were in attendance at the time of the visit and satisfied the qualifying criteria were interviewed in person. For the purpose of conducting in-depth interviews, we drew on the extensive records kept by SBM Bank Mauritius. A credit manager from the patent office was one of the nine branch managers. This study employed a kind of sampling called “targeted” sampling. The researcher chose this approach because of the study’s geographic dispersal and the difficulties in reaching participants, particularly in rural regions. Quota and self-selection were not possible because of the foregoing difficulties. The borrowers may also be contacted via a monthly group session. For farmers who have been active borrowers for three years, this is especially true.

3.4 Questionnaire

Most social science research uses questionnaires (Krosnick, 2018). Unanswered questions in a questionnaire motivate participants to respond. The study questionnaires can be sent to potential participants via email, mail, or face-to-face. Questionnaires are frequently used in survey research to collect large amounts of data (for example between 100 to 1,000). So, questionnaires represent the target population (Patten, 2016). This study’s questionnaire was based on these questions. The data collection questionnaire was also inspired by prior research on microfinance impact assessment and poverty reduction. A pilot study was conducted to improve the questionnaire’s clarity. The researcher used closed-ended questionnaires to collect quantitative data on farmer poverty. The surveys were conducted between October and December 2021 in Mauritius. Customers of the microfinance institution completed 100 questionnaires. They were handed out by SBM Bank Mauritius loan managers. The researchers explained to the credit managers the purpose of the study and how the information gathered would be used in the analysis. Individual and collective accountability, service providers, and microfinance’s influence on poverty reduction are some of the topics included in the questionnaire. The questionnaire begins by outlining its aim and describing how to fill it out. The educational institution, subject matter, and data confidentiality assurances are all included on the instruction page. Additionally, it notifies them of their right to opt out as well as the advantages of doing so. Participants were questioned about their age, children, marital status, and educational background. Along with private assets, income and financial status, bank accounts, agriculture, and homeownership were included. Then comes customer access to microloans. It is also unclear why microfinance institutions refuse loan applications, the size of the first loan, the interest rate charged, and the loan’s term in comparison to other credit terms and the penalty for defaulting on loans. The fourth component asked about people’s saving habits. Favoured saving methods, advice, and interest. The sixth segment asked about new microfinance initiatives. A loan, an organisation and meeting frequency are discussed. Sixth, the impact of microfinance on people and families is assessed. Concerning agriculture, questions were asked about farm size, production, labour, assets, and the use of new technologies. On used it to assess microfinance’s impact on children’s education, nutrition, health, household income (including agricultural knowledge), assets (including livestock), and self-confidence.

3.5 Interview: Semi-structured for Microfinance Institutions and Participants

Assisting in data collection, the researcher devised an interview protocol that guided both the researcher and the people’s customers of the microfinance organisation (SBM Bank Mauritius). The interview guide ensures that all relevant problems are discussed and that no key topics are missed. The researcher acknowledged that the organised format of the interview may not be followed to have more constructive talks and get more detailed information from the participants. the influence of credit supply on farmer borrowers’ well-being. After the surveys were given, 10 programme managers who dealt directly with borrowers and 40 other customers were interviewed. The in-depth interviews allowed the researcher to examine and explain topics raised in the questionnaire. According to Taherdoost (2016), one of the key advantages of this data gathering strategy is its inherent flexibility. The technique also enables participants to express themselves freely when the interview framework is less rigorous and more open-ended. Moreover, the interviews focused on the literature review’s questions rather than the stated aim of gathering information on supply and demand size in connection to microfinance involvement in the loan market. For example, how do you pick people to borrow from? How do you decide on the loan size? How do you monitor the effect of poverty on your operation? The researcher created an interview record sheet that included the date, time, participant, and branch. The qualitative interview data helped the researcher to conceptualise the underlying motivations for microfinance providing. Soft subjects like religion and culture were also understood better. Each Opportunity International Savings Loans Mauritius Limited branch management interview lasted 50 minutes, while the farmer interviews lasted 30 minutes. With the participants’ agreement, the researcher taped each interview and afterwards typed it into Microsoft Word.

3.6 Qualitative Interviews

Before conducting semi-structured interviews with borrowers, then came an in-depth interview with SBM Bank Mauritius officials. After a 10-client pilot study, 40 debtors were interviewed. Ten microfinance managers were interviewed, followed by pilot research with four branch managers. It helps to clarify and reduce uncertainty in the interview questions. The interviewees gave consent for the researcher to record them. When the responder refused to provide authorization, the interview questions were recorded on the interview sheet. The interviews were transcribed and stored in Microsoft Word.

3.7 Data Analysis

Data analysis methods are discussed in this chapter of methodological considerations. There were two primary sources of data for this investigation. Semi-structured interviews were analysed using qualitative approaches, while closed-ended questionnaires were analysed using quantitative approaches. In SPSS, we used regression, correlation, and the Anova test to analyse the data.

4 Results and Analysis

The conclusions of the data analysis are presented in this chapter. Data analysis is the most important part of any study. Analyzing and summarising facts is what it is all about Patterns, correlations and trends may be discovered by applying analytical and logical thinking to the study of data.

4.1 Frequency Analysis

Approximately 100 completed surveys were received, and the information gathered from these questionnaires is currently being collated for the research. The table below contains detailed demographic information about the survey participants who answered all of the questions asked in the survey.

Table 1.1: Demographic Information

	Gender
		Frequency	Percent	Valid Percent	Cumulative Percent
	Valid	Male	68	68.0	68.0	68.0
	Female	32	32.0	32.0	100.0
	Total	100	100.0	100.0
	Marital Status
		Frequency	Percent	Valid Percent	Cumulative Percent
	Valid	Single	43	43.0	43.0	43.0
	Married	57	57.0	57.0	100.0
	Total	100	100.0	100.0
	Source of Finance
		Frequency	Percent	Valid Percent	Cumulative Percent
	Valid	Microfinance institutions	65	65.0	65.0	65.0
	Commercial Bank	25	25.0	25.0	90.0
	Money Lenders	10	10.0	10.0	100.0
	Total	100	100.0	100.0
	Size of Loan
		Frequency	Percent	Valid Percent	Cumulative Percent
	Valid	500	40	40.0	40.0	40.0
	501-1500	46	46.0	46.0	86.0
	1501-3000	14	14.0	14.0	100.0
	Total	100	100.0	100.0
Age
	Frequency	Percent	Valid Percent	Cumulative Percent
Valid	18 to 24	46	46.0	46.0	46.0
25 to 34	46	46.0	46.0	92.0
35 to 44	8	8.0	8.0	100.0
Total	100	100.0	100.0

This research makes use of the frequency analysis technique to investigate the frequency distribution of the demographic characteristics of the study participants who took part in this research. These were the five factors relating to personal information studied in this study: gender, marital status, source of money, loan size, and age. According to Table 1.1, a total of 68 males and 32 females took part in the survey, with 43 per cent of those who were single and 57 per cent who were married participating. A further finding is that 65 per cent of those who participated in the study borrowed money through microfinance firms, 25 per cent borrowed from banks, and 10 per cent borrowed money from private persons. The amount of the loan information indicated that 40 per cent of the participants took out a loan for 500 dollars, 46 per cent took out a loan for 5001-1500 dollars, and 14 per cent took out a loan for 1500 dollars or more. Furthermore, 46 per cent of the participants were between the ages of 18 and 24, 46 per cent were between the ages of 25 and 34, and 8 per cent were between the ages of 35 and 44.

4.2 Reliability Analysis

The Cronbach alpha test can be used to measure the reliability of the data collected on the variables under consideration. According to the findings of the reliability test, as indicated in the following table.

Table 1.2: Reliability Statistics
Variable	Cronbach’s Alpha	No of Items
Microfinance Loan	0.793	3
Type Of Loan	0.806	3
Economic Growth	0.735	3
Poverty Allevation	0.848	3

Conducting the Cronbach alpha test is critical to verify the reliability of the data received from respondents to the survey through the use of survey questionnaires. Valid and reliable data may be described as data that has an alpha coefficient greater than 0.7 for the majority of applications. If the value, on the other hand, is less than 0.7, the data should not be used for further examination since it shows that the data is not dependable. Several reliability tests, including Cronbach alpha reliability tests, were carried out on each of the study’s variables, with the findings displayed in Table 1.2. Three components are present in each of the variables Microfinance Loans, Type of Loans, Economic Growth, and Poverty Alleviation. Overall, poverty alleviation has a high alpha value of 0.848, while economic growth has a low alpha score of 0.735, which is the lowest score of any of the variables assessed, which is the lowest score of any of the variables considered. Type of Loan has an alpha value of 0.806, whereas Microfinance Loan has an alpha value of 0.793. Considering that all variables have alpha values larger than 0.7, the Cronbach alpha reliability test reveals that all of the data is trustworthy and may be used for further research, regardless of which variable is being examined, according to the findings of the study.

4.3 Descriptive Statistics

Descriptive data for each of the variables investigated in the study are presented in Table 1.3, which is included below.

Table 1.3: Descriptive Statistics

	N	Minimum	Maximum	Mean	Std. Deviation
Microfinance Loan	100	3.33	5.00	4.3067	.31312
Type Of Loan	100	3.67	5.00	4.5267	.29275
Economic Growth	100	3.00	5.00	4.2533	.43711
Poverty Allevation	100	3.00	5.00	4.4833	.33627
Valid N (listwise)	100

A 5-Likert scale ranging from strongly disagree 1 to strongly agree 5 was used to represent the recommended variables, according to the findings of the above-mentioned table 1.3. The total number of observations/respondents in the study, as well as the minimum and maximum values for each component, as well as the mean and standard deviation, are all included in the information shown in the preceding table, which also includes the mean and standard deviation for each component. Approximately 100 persons took part in the survey, which had a total of 100 participants. According to the results of the study, the mean value of a microfinance loan is 4.3067 and the standard deviation is 0.31312. Among the variables studied, the mean values for Type of Loan, Economic Growth, and Poverty Alleviation are 4.52667, 4.25333, and 4.4833, respectively; the standard deviations are 0.29275, 0.43711, and 0.333627. The findings reveal that Type of Loan had the highest mean value of all the factors studied.

4.4 Regression Analysis

These are the results reached as a result of the regression analysis, which is displayed in the following table.

Table 1.4: Regression Analysis

Model	Unstandardized Coefficients	Standardized Coefficients	t	Sig.
B	Std. Error	Beta
1	(Constant)	.789	.552		1.428	.000
Microfinance Loan	.178	.094	.127	1.885	.042
Type Of Loan	.908	.109	.675	9.227	.000
Economic Growth	.577	.096	.213	2.882	.005

R= square = 0.597		P-value = 0.000

These are the conclusions of a regression study on the link and influence of microfinance loans, loan type, economic growth, and poverty alleviation in the developing world. Following the findings of the preceding table, Microfinance Loan has a statistically significant relationship with Poverty Alleviation. The significance of the relationship is 0.042, and the coefficient value is 0.178, which means that an increase of 100 per cent in microcredit would result in a decrease in poverty alleviation of 17.8 per cent. The Type of Loan coefficient constant is 0.908, which indicates that when the type of loan is changed by 100 per cent, a 90.8 per cent change occurs in Poverty Alleviation, while the sig value (0.000) indicates that the link is statistically significant. Furthermore, the coefficient value of 0.577 indicates that economic growth has a 57.7 per cent effect on poverty alleviation, and the association between the two variables is statistically significant at the level of 0.005. The result of R-square is 0.597, indicating that the independent variables account for 59.7 per cent of the variation in the dependent variable under consideration. The significance of the total regression model is demonstrated by the p-value.

4.5 Correlation Analysis

A statistical tool known as correlation analysis is used to determine whether or not there is a link between two variables. Correlation analysis also provides information on how strong the relationship is. A correlation analysis is a statistical procedure that examines quantitative data gathered through research techniques such as surveys to determine whether or not there are any statistically significant links between the two variables under inquiry. In the context of market research, correlation analysis is used to analyse quantitative data obtained from research processes like as surveys to establish whether or not there are any significant correlations between the two variables under consideration. Results of the correlation analysis of the variables are shown in the following table, which includes the findings of the study.

Table 1.5: Pearson’s Correlation Analysis


	Microfinance Loan	Type of Loan	Economic Growth	Poverty Allevation
Microfinance Loan	Pearson Correlation	1	.216*	.074	.262**
Sig. (2-tailed)		.031	.042	.008
N	100	100	100	100
Type of Loan	Pearson Correlation	.216*	1	.745**	.455**
Sig. (2-tailed)	.031		.000	.000
N	100	100	100	100
Economic Growth	Pearson Correlation	.074	.745**	1	.487**
Sig. (2-tailed)	.042	.000		.000
N	100	100	100	100
Poverty Allevation	Pearson Correlation	.262**	.455**	.487**	1
Sig. (2-tailed)	.008	.000	.000
N	100	100	100	100

According to the findings of the study, microfinance has a correlation coefficient of 0.216 with the kind of loan, suggesting that there is a positive relationship between the two variables, and a sig value of 0.031 indicates a statistically significant relationship between the two variables. A positive link exists between microfinance loans and poverty alleviation, as seen by the correlation coefficient value of 0.074 between these two variables, and the relationship is statistically significant. According to the correlation coefficient between Microfinance and Economic Growth, the sig value is 0.008 and the correlation coefficient is 0.262, which indicates that there is a positive and statistically significant relationship between these two variables. The correlation coefficient of 0.745 between Type of loan and Poverty Alleviation demonstrates this link, demonstrating a positive correlation and statistically significant association between these two variables (sig value is 0.000). In light of the data, it can be concluded that the relationship between microfinance loans and economic development is both positive and statistically significant, as demonstrated by the correlation coefficient value of 0.455 and the sig value of 0.000. The correlation coefficient of 0.487 suggests that there is a positive association between poverty alleviation and economic growth, while the significance level of 0.000 indicates that the relationship is statistically significant. It was discovered as a result of the research that there is a positive correlation between the variables. It was also discovered that there is a statistically significant association between the other variables of the research at a one per cent level of significance, which was consistent with the study’s conclusions.

According to the results of the Open-Ended questions, microfinance assists low-income households to stabilise their income flows and save for future needs, as indicated by the respondents. Microfinance can help families and small companies succeed in good times, and it may also assist them in coping with and rebuilding after a disaster or catastrophe. Microfinance, which is the provision of financial services to low-income households such as loans, is widely acknowledged as a powerful technique of directly improving the lives of people who are most in need of assistance. According to the respondents, the Mauritius government has acknowledged the effectiveness of microfinance and has made strides in supporting the development practice of microfinance.

5 Discussions

All from the above discussion, it can be analysed that Microfinancing played an important role in poverty alleviation as both variables have a significant positive association with each other. Here economic growth is the mediating variable and Poverty alleviation is the dependent variable of that study however Loan Size and Microfinance loans are the Independent variables of that study. The results show that Loan size and microfinance loan affects economic growth positively and economic growth and poverty alleviation also has a positive association. The findings of this study are also corroborated by the findings of Amann, Aslanidis, Nixson, and Walters (2006) study, in which the author discovered a statistically significant positive relationship between poverty alleviation and economic growth. In this work, Amann et al. (2006) findings are examined from a variety of different angles and evaluated critically. A high link between average per capita income and income of the lowest quintile is discovered to be particularly robust in the core finding. The authors of this study.

The need for a thorough knowledge of the link between financial inclusion and economic growth has emerged as a major source of concern in national development initiatives. According to the data from Eastern Indonesia, both sectors are critical in the formulation of income distribution strategies and the reduction of poverty. As a result, the impact of financial inclusion on economic growth, poverty reduction, and income inequality in Eastern Indonesia is examined experimentally in this research. This research included two approaches: the Toda-Yamamoto VAR bivariate causation model and the dynamic Panel Vector Autoregression (PVAR). We used the PVAR and Toda-Yamamoto VAR bivariate causation models to investigate the influence and link of financial inclusion on economic growth, poverty, inequality, and other characteristics. Based on the bivariate causality model’s findings, there is a strong association between financial inclusion, economic growth, poverty, and income distribution in Eastern Indonesia. The level of financial inclusion is increased as a result of socio-economic progress, while poverty is reduced as a result of the same increase. These findings are also consistent with the findings of our investigation.

It can also be concluded from the examination of the preceding data that microfinance has a favourable association with poverty alleviation and alleviation. In the opinion of Erlando, Riyanto, and Masakazu (2020), micro-finance has played an important role in relieving poverty in rural and urban India and other regions of the world, including the United States. This article presents an outline of how micro-finance has impacted the lives of the poor in terms of their socio-economic empowerment and the creation of sustainable livelihoods based on dignity and self-respect for themselves and their families. According to the author, a large number of conceptual and empirical research have been conducted to decipher the influence of micro-finance on poverty reduction, particularly in the Indian setting. An insightful assessment of micro-finance as a holistic intervention method in the modern development paradigm is presented in this study, which is available online (Erlando et al., 2020).

Furthermore, According to Jha (2019) research, Poverty is a severe problem that affects millions of people all around the world. The purpose of their research is to identify whether or not the microfinance organisations formed for poverty reduction have been effective in fulfilling their goal, which is currently unknown. The primary data for the proposed research study was gathered through the use of structured questionnaires. It was decided to use multiple linear regression and the pairwise test to assess the data that was gathered. The findings indicate that microfinance has a significant beneficial influence on children’s education as well as on the financial performance of small and medium-sized enterprises (Jha, 2019). Food security, household expenditures, and household assets, on the other hand, are all subject to conflicting findings. There has been no evidence of a negative impact on housing or income smoothing in the enterprise. This study also demonstrated that among the other independent factors examined, the total number of salaried individuals was shown to be an extremely important factor influencing the well-being of microfinance consumers. It has been demonstrated that this research has made a substantial contribution to dispelling some of the misconceptions surrounding microfinance, therefore expanding the literature and research on this vital topic (Jha, 2019).

6 Conclusion

Microfinance has grown in popularity in developing countries due to its success in places like Bangladesh, Pakistan, Mauritius, and Nigeria. In addition, research shows that microfinance has improved the general well-being of the family through empowering underprivileged individuals. The ability of the impoverished to obtain loans from traditional financial institutions is hampered by financing obstacles on the credit market. For its capacity to alleviate poverty, microfinance is widely accepted as an option in Mauritius. The impact of microfinance on people’s and families’ well-being in Mauritius has received scant attention in academic studies. A lot has changed in Mauritius since it gained its freedom on March 12th, 1968. Unemployment and stagnant economic growth plagued the Mauritian economy in its heyday when the economy was highly reliant on exporting sugar. However, by the end of the 1970s, things had started to go downhill economically. Over time, as imports outpaced exports and petroleum prices soared, the sugar boom came to an end, and the country’s trade deficit grew. It was estimated that the BOP gap stood at an eye-popping US$111 million by the year’s end in 1979. Researchers in Mauritius are investigating the potential benefits of microfinance intervention for rural poor people and the country’s economic development in general. Microfinance and its impact on poverty reduction were identified as important research topics for this study based on the following research questions. There has been an improvement in the standard of living in some SSA countries over the last two decades. However, Mauritius stands out among the countries of Africa as proof that the rule does not always apply. A mono-crop economy and the expansion of industry and diversification toward the service sector were characteristic of African countries when Mauritius had no natural resources and an open economy with little domestic demand. Microfinance’s role in alleviating poverty in Mauritius is examined, as is its impact on Mauritius’ economic growth. Policy recommendations for funding organisations and policymakers are based on an analysis of empirical survey data collected from Mauritius within the conceptual framework of this study.

Research methods are becoming increasingly divergent as a result of researchers’ varying worldviews. Many elements appear to play a role in the choosing of a research method for every given issue. Qualitative research stems from sociology, anthropology, and philosophical thinking. To begin their studies in the early 20th century, social scientists and anthropologists used it as a jumping-off place. There is a difference between qualitative and quantitative research. Statistical approaches are used to compile and analyse numerical data to derive meaning from the events being studied. Trendy these days is the hybrid method. To gain a better understanding of the phenomena under investigation, researchers combine quantitative and qualitative data.

Using a variety of approaches can yield more complete and convincing evidence than relying solely on one. To meet the study’s objectives, many approaches are used in conjunction. Research processes will be influenced by time limits, study objectives, researcher resources, and the intended audience.

Data from quantitative surveys can be better understood using this approach. During the research, many research methods are employed concurrently. Data from both quantitative and qualitative sources can be examined to discover if they are in agreement or dispute. After that, the researcher talked to people who had used microfinance in Mauritius, including both borrowers and lenders. Data from quantitative surveys can be better understood using this approach. During the research, many research methods are employed concurrently. Data from both quantitative and qualitative sources can be examined to discover if they are in agreement or dispute. As a result, she conducted in-depth interviews with individuals in Mauritius who had utilised microfinance.

The vast majority of social science research is conducted through the use of questionnaires. Questionnaires with unanswered questions encourage people to answer. By email, mail, or face-to-face contact, interested volunteers can be given a questionnaire to fill out. Survey research usually makes use of questionnaires to gather massive volumes of data (for example between 100 to 1,000). Questionnaires are a good representation of the target audience. Based on this questionnaire, we conducted this investigation. Microfinance impact evaluation and poverty reduction were also cited as inspirations for the questionnaire’s design. To make the survey easier to understand, a pilot study was done. Data on farmer poverty was gathered quantitatively using closed-ended questionnaires, developed by the study’s investigators. There were surveys in Mauritius from October to December 2021. A total of 120 surveys were filled out by customers of the microfinance organisation. When it came time to gather the data, both the researcher and the microfinance organization’s consumers used the interview technique the researcher developed. An in-depth interview was conducted before conducting semi-structured interviews with potential borrowers. In conducting this analysis, we relied on two main sources of information: Closed-ended surveys were evaluated quantitatively, whereas semi-structured interviews were analysed qualitatively. With the help of SPSS, we ran various statistical tests on the data.

The findings of this study indicated that micro-finance had an essential role in alleviating poverty since both variables had a substantial positive correlation. Here There are two independent factors in this study: economic growth is a mediating variable and poverty alleviation is a dependent variable. The results reveal a favourable relationship between economic growth and poverty alleviation, as well as a positive relationship between economic growth and microfinance loan size.

6.1 Limitation of the study

We had to contend with a slew of problems while conducting this investigation. As a result, the study’s original goal of generalising its findings to the provision of microfinance in Mauritius was thwarted. Only one microfinance intervention in five areas of Mauritius was considered due to the researcher’s low financial resources. Thus, the research findings cannot be generalised to the microfinance service users in this intervention because of the limited sample size. There is a good chance that the findings from these five districts in two regions will apply to other Mauritius-based microfinance initiatives because all of those organisations, including the microfinance institution under investigation, using the Grameen Bank methodology for loan administration. Second, the study’s sample size is a drawback. Due to time, money, and data constraints, this study had a relatively small sample size. Fieldwork showed the researcher that certain loan officers were unwilling to share information about some service users, therefore both quantitative and qualitative analyses relied on the data that were accessible.

6.2 Areas for Future Research

Microfinance and poverty reduction have a lot of avenues for future exploration and investigation. Microfinance traits and their importance to poverty reduction necessitate a closer examination of their effect on the well-being and lives of the poor. Microfinance institutions in Mauritius largely operate on the Grameen Bank model although study into how microfinance might help reduce poverty in other sections of the country is possible. This is mainly due to the rapid growth of microfinance as a poverty alleviation strategy in Mauritius. Consequently, it is critical to assess the impact of diverse treatments to uncover the methodological issues in impact evaluations. Social collateral and poverty alleviation is a developing field that needs greater study, but group guarantee helps the disadvantaged have access to financing. While this study focused on a specific type of social capital, the amount of its impact on poverty outcomes might be further investigated by evaluating the group’s qualities and how much influence each member has on its operations. As a starting point for future studies, you may use this. Data was gathered from male and female borrowers in each of Mauritius’ five districts. Men or women might be the only focus of a microfinance research study, for this reason. Microfinance’s role in reducing poverty in Mauritius and other developing nations might be examined in more depth. This study’s small sample size necessitates a more thorough and contextual evaluation of microfinance that includes several microfinance intervention schemes and larger sample size for quantitative and qualitative data collecting. For microfinance service users, the fear of being excluded from future financing means that future research should focus on service user experiences and construct the assessment of the intervention from the standpoint of the service users themselves.

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Impact of Microfinance on Poverty Alleviation