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convergence

Livelihoods and microfinance convergence

The microfinance service provision by SMS Federation has provided a significant base for implementing livelihood intervention services. CCFID's livelihood enhancement proposition is also in line with world-wide recognition that microfinance has been a successful vehicle to deliver financial services to the vulnerable and poor, however multiple livelihood intervention strategies are required to ensure social and economic impact at community/member level.

CCFID's focus on microfinance and livelihood is complimenting. The SMS Federation lends to the "economically active" poor in a sustainable manner. The convergence is also being sought through development of Livelihood Financing as a novel approach to finance product development, self employment promotion, employment generation and capacity building.

Microcredit approach to microfinance promotion is based on the assumption that . the credit is answer to all the problems of the poor people and it will help them for sustaining their livelihoods. However, livelihood is a much more complex and the way poor people manage their cash flows is important and that other non-financial services are required for sustainable livelihood solutions.

Academic researchers such as Jonathan Morduch opine that the impact of microcredit on the target households is exaggerated. As against Livelihood Financing adapts a much more holistic approach to microfinance promotion and that it can help the people to earn their livelihoods on a sustainable basis. The focus of livelihood financing is to design and develop customized products for the people.