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Technical Guidelines: Microfinance against child labour - (pdf 335 Kb)
Judith van Doorn and Craig Churchill, 2004

Microfinance can contribute to progressively eliminate and prevent child labour in two ways: the most common approach is to provide microcredit to parents or guardians of child labourers to help them start or expand an income-generating activity to replace the income formerly earned by child labourers. These loans would be conditional based on school attendance. Second, besides stimulating additional income, microfinance can also play an even more important coping role for vulnerable households. Through appropriate risk-managing financial services, such as savings, emergency loans and possibly insurance, microfinance helps poor families to weather the storms of unpredictable expenses and income droughts without having to resort to child labour.

This paper illustrates the circumstances in which microfinance can effectively support the elimination and prevention of child labour, as well as it describes instances in which microfinance is not an appropriate intervention. It provides guidance to organizations involved in eliminating child labour as to how best to utilize this tool so that the targeted households continue to have access to both productive and protective financial services after a donor-sponsored intervention has ended.