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Abstract

The microfinance refers to small-scale financial services (primarily credit and savings) provided to people who engage in the farming, fishing and operate micro-enterprises to gain subsistence income from these activities and subsequently support the rural economy. Microfinance is a highly accepted and recognized development tool. It has been playing a vital role in many developing countries of the world. The women are considered to be a pillar of the society and economy. For example, 45 per cent of the measurable Gross Domestic Income comes from the work of women in the world's richest countries. Eritrea, a poor but young nation in Africa got Independence in 1993. Women constitute more than 50 percent of the country's population. The role of women in thirty years war of independence brought major changes in the present demography and economy of the country. Eritrea has extreme poverty and more than 66 percent of people live below poverty line. Many are women-headed households, whose husbands died during the conflicts or who are now serving in the National Service. Women-headed households are particularly vulnerable because of adverse socio-economic conditions the country after the border conflict with Ethiopia in 1998. To reduce the poverty and to cope with the growing number of female-headed households, Eritrea needs to increase the earning potential of women. The Savings and Micro Credit Program (SMCP) provides major microfinance to women entrepreneurs. A small group of women and men were interviewed to ascertain their successes and problems with micro credit and enterprise development. This paper examines how the women benefited from the microfinance program and got rid of their poverty. The paper also analyses various other institutions that provide microfinance to the women and other beneficiaries. The paper concludes that the women entrepreneurs are considerably supported and benefited by the microfinance program.

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