Abstract
The main aim of this paper is to propose the development of a new microfinance model that can approximate sustainability in Zimbabwe. The secondary purpose is to find out whether the same model can be replicated in other developing countries. The paper adopted a mixed methodology. A crosssectional data collection method was preferred because data was collected during the time of high volatility in the country. Questionnaires, interview schedules were combined to collect data from villagers involved in microfinance programmes. Data were collected from 250 households in the Masvingo rural district area of Zimbabwe. The findings show that the two polar models are biased, hence the need for the ‘middle of the road approach’/‘hybrid model’ for the provision of microfinance services to the poor in order to achieve the twin objectives of poverty alleviation and sustainability. The paper is limited to a Masvingo district of Zimbabwe, thus replication could become a challenge. This article attempts to develop a ‘middle of the road’ model for microfinance in Zimbabwe. According to our knowledge, there is no study that has attempted to do the same.
Highlights
This paper’s task is the development of a micro-finance model that is suitable for the Zimbabwean socioeconomic environment-with possibility of replicating it in other contexts
The Association for Social Advancement (ASA) in Bangladesh developed a set of different procedures for microfinance delivery that were different from the Grameen Bank (GB) model (Ahmed, 2010)
Justification for the New Model: On one hand, microfinance is seen as an intervention for poverty alleviation and on the other, the sustainable livelihoods framework gives a clear presentation of the key factors that have an effect on the livelihoods of people
Summary
This paper’s task is the development of a micro-finance model that is suitable for the Zimbabwean socioeconomic environment-with possibility of replicating it in other contexts. The Association for Social Advancement (ASA) in Bangladesh developed a set of different procedures for microfinance delivery that were different from the GB model (Ahmed, 2010). It would neither be feasible nor progressive to develop a static or fixed model. Two polar models explain microfinance as a poverty alleviation strategy These are the Poverty Lending (PLA) and Financial Systems Approach (FSA). Gulli’s argument comes as a critique of the two polar models it gives a basis for the crafting of an alternative or middle of the road model An analysis of these models will give direction towards the development of a new or alternative model for microfinance in Zimbabwe. Development of an alternative model will give a contribution to the microfinance industry that is in urgent need of achieving the poverty alleviation objective in a sustainable way
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