Microfinance a poverty trap or solution? : A study of the development strategies operational NGOs use to help entrepreneurs in developing countries escape the povetry trap

Abstract: Microfinance is many times used as a developmental tool to tackle hunger and other issues related to poverty. The adoption of microfinance as a tool to raise welfare in communities is rising in the sector of Non-Governmental organizations (NGOs). In recent times, development projects by Non-Governmental Organizations have been criticized for lacking financial sustainability and for leading people into a poverty trap created from a vicious cycle of borrowing. For entrepreneurship to flourish, micro-financial clients must first escape the poverty trap by becoming self-sufficient.The purpose of this thesis is to comprehend what strategies operational Non-Governmental Organizations use in developing countries in order for clients to escape the poverty trap with the help of sustainable microfinance.The stakeholder theory is the comprehensive approach used in this thesis to understand how a Non-Governmental Organization’s stakeholders influence their Microfinance Program and vice versa. The Non-Governmental Organizations need to incorporate all the stakeholders and assist these stakeholders to strive for a common goal. A qualitative case study was conducted on the global, non-profit, strategic organization; The Hunger Project.Our findings resulted in identifying the integrated holistic Epicenter strategy as The Hunger Project’s solution to tackling economic- and development inhibiting barriers. The findings indicate that a sustainable Microfinance Program may need to be integrated into all surrounding aspects influencing the micro-financial stakeholders.The implications of this study is that microfinance providers can gain an understanding of the requirements for sustainable Microfinance Programs. This understanding will result in organizations being able to contribute to a more sustainable development for underprivileged entrepreneurs. Our dissertation contributes in creating awareness in potential solutions for overcoming micro-financial criticism, by implementing and integrating sustainable principles along with the society.