Author(s):
Ashok Das* - San Francisco State University
Abstract:
Microfinance is now being widely utilized as a viable poverty alleviation tool in developing countries. It is increasingly becoming central to community-based, urban economic and physical development. However, there is still scarce evidence of what factors make microfinance succeed greatly in some cases and less so in others. This paper attempts to further our understanding of some of these factors by investigating and comparing the microfinance components of two comprehensive slum upgrading programs in India and Indonesia. While microfinance for development has been used extensively in both countries, in India it has generally been promoted by non-governmental organizations whereas in Indoensia the state has been instrumental in formalizing microfinance. The analysis of these programs, based on eight months of fieldwork, shows that the level of community participation and acceptance, the intensity of interaction between the community and the external facilitator, the state-civil society synergy, as well as the larger socio-political context and its structural elements significantly determine the efficacy of microfinance for urban development. Like many other popular development ideas, microfinance can be a powerful development booster only when it responds effectively to the uniqueness of places, their institutions, and their people.
