Unearthing the impact of remote social institutions on poverty and social inequality as development challenges

The case of micro-credit in South Africa

Abstract

Development and the trajectory to development discourses place overwhelming emphasis on the  characteristics of the “developed countries” and how they became what they are. Agricultural mechanization, industrialization and good governance have been identified as some of the drivers  of development. Developing countries are advised to follow the same path if they intend to  develop. Underlying this view of development is the subscription to the imperative of economic  growth as a pre-requisite for development. However, economic growth has not always resulted in  inclusive development, hence, the prevalence of intra-national and international inequalities. The prevalence of inequality undermines the gains of economic growth and development, in that there are winners and losers. The limitation of this approach is that human development is viewed as what a society does when they achieve significant economic growth or development. This is a view that sees economic policy as superior to social policy. In a context with high rate of poverty, such as Africa, poverty reduction drives focused on identifying remote institutions that might create or reduce it could be important for achieving inclusive development. This is based on the view that poverty is a development challenge in Africa and its reduction is an important step to the reduction of inequality. The case of the consumption of micro-credit in South Africa is used to
illustrate how a seemingly remote social institution could foster or reduce poverty in concerned households.