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MicroFinancial Services and Risk Management for Food Security: A Vulnerable Household Perspective

Jyoti Navare


Microfinance has been perceived as a positive force in stimulating entrepreneurship, and regional and national development. Essentially there is a strong belief that other than narrowing the gap between the rich and the poor, access to microfinance creates a culture or a movement towards social responsibility for the subset of the population that is subjected to both social and financial exclusion (Lacalle-Calderon and Rico Garrido 2006).

The concept of financing people out of the poverty gap is not a new one. History does show that there have been many instances where financing schemes have been deemed necessary (Siebel 2005). Post the Grameen Bank’s success of enabling micro-credit to female entrepreneurs in Bangladesh (Yunus 1999), there has been an acceleration of microfinancing schemes internationally in the attempt to regenerate small businesses and

J. Navare (h)

Department of Economics, Middlesex University Business School, London, NW4 4BT, UK e-mail: This email address is being protected from spam bots, you need Javascript enabled to view it

© The Author(s) 2017

G. Mergos, M. Papanastassiou (eds.), Food Security and Sustainability, DOI 10.1007/978-3-319-40790-6_7

reduce poverty. These schemes have brought about a paradigm shift and a new modernity from classical financing through the provision of loan credit to creditworthy (low-risk) individuals to the microfinancing of loans and the provision of microfinancial services to vulnerable (high-risk) individuals.

Beck’s (1992) thinking has been that in the new modernity there is a need to be reflexive in a sense that involves not only structural changes but “changing relationships between social structures and social agents” (p. 2). Microfinancial services by their very nature of financing service provision involve small sectors of individuals with tight links to the local social structures, with a focus on sub-sector entrepreneurs such as women entrepreneurs, capacity enhancement through financial and other education and, importantly, food production and management. The socially and financially excluded groups or vulnerable groups, however, have largely remained invisible. Schemes created by the Grameen Bank in Bangladesh and Velugu in India have been proactive in raising the profiles of such groups.

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