ABSTRACT
The chapter presents the theoretical underpinnings of the concepts of livelihoods, their evolution along the various economic paradigms and the rhetoric of poverty reduction as well as microfinance as a development tool. The development of the microfinance livelisystem framework (MLF), bridging the gap between the microfinance industry and the domestic and international financial system; the household livelisystem model (HLM), based on the interactions of household resources and activities with localized societal welfare-promoting institutions; as well as an expanded Schreiner framework for product design is presented in this chapter. The evolution of the concept of livelihood, its causal factors as postulated by the various economic paradigms, including the classical, neo-classical, Liberal and Marxists, and their policy prescriptions are reviewed. On poverty, the monetary, capability, social exclusion and participatory approaches and measurement criteria are also reviewed and contextualized. On microfinance, both the financial systems and poverty-lending approaches are reviewed within the context of the theoretical evolution of rural financial markets, including the usurious moneylender, the perfect information, the imperfect information and the psychological theory that is firmly situated in-between Adams Smith’s Theory of Moral Sentiments and his …Inquiry into the Nature and Causes of the Wealth of Nations.
