Give a Poor Woman a Fish? No. A Fishing Pole? No. A Loan? Yes.

ALICIA PAUCAR TAPIA knows the power of a $100 loan to buy a poor woman a sewing machine.

Three years ago, the veteran Nicaraguan aid worker overcame economic aftershocks of a civil war, government skepticism, and male resistance to a bank that grants small loans to aspiring women entrepreneurs in Managua's slums.

The program is part of a hot trend in economic development known as ''micro-credit.''

Micro-credit, or small loans to the poor to help them earn on their own, is in vogue as cash-strapped governments cut poverty aid, socialism gives way to capitalism, and the growing ranks of jobless worldwide seek new ways to survive.

This month, the UN Fourth World Conference on Women in Beijing was abuzz with an idea that has proved to be one of few success stories in fighting poverty.

The idea of micro-credit represents a major shift in helping uplift the world's poor. Frustrated by the failure of large loans and projects to ease destitution, Western governments are trying to find ways to get funds directly to the poor, in hopes of bypassing bureaucrats.

''I had worked with many [nongovernmental organizations, or NGOs], always giving out small charity grants that never amounted to much. I was frustrated because I just felt like I never really helped people get out of poverty,'' recalls Ms. Paucar Tapia. ''I realized that what people need is not charity. What they need is to feel part of the system.''

That first bank has now grown into a network of a hundred, and plans are under way to expand to 380 banks nationwide. But halfway through a three-year, $1.5 million United States Agency for International Development (AID) grant, International Foundation for Community Assistance, a private aid group known as FINCA, worries that planned US funding cuts could hurt the infant banking network as it nears self-sufficiency. The group is financially backed by the AID, Rotary Clubs, and some European governments.

''Eventually, we want to survive on our interest income. But now we still need seed capital,'' says Paucar Tapia, an economist who works with FINCA, which also hopes to eventually raise money from commercial banks. ''What we are concerned about is sustaining the program when the donations end.''

An alternative for the West

Even in developed countries like the United States, micro-credit is seen as a politically viable alternative to welfare and unemployment that has gained credence in recent years.

''As options for public and private employment have narrowed ... everyone wants to have some say over their work,'' says Marie Wilson, a pioneer in micro-financing at Ms. Foundation for Women. ''We know [the US] is never going to be able to create enough jobs again.''

The micro-credit method of helping poor women help themselves was pioneered almost two decades ago by Muhammad Yunus, a politically savvy economics professor from Bangladesh. Mr. Yunus was honored at the Beijing conference and even shared a podium with Hillary Rodham Clinton, an enthusiastic supporter.

In a program that has since been used as a model worldwide, Yunus's Grameen Bank has shown that targeting women with small loans used to buy a cow, open a food stall, or launch a fishing boat is the best way to help a poor family.

While studies in Asia and Eastern Europe show that men tend to squander loans on drinking and gambling, women boast repayment rates of almost 100 percent when borrowing at market rates lower than extortionist interest charged by local moneylenders. Given enough financial support and time to develop, most Bangladeshi village banks have become self-sustaining in five years, advocates say.

''All we can do from our side is make credit available,'' says Yunus. ''We say, 'We cannot change the world for you. But if you want to change the world, here is the money to help you do it.' ''

''We have demonstrated that low-income women are the best credit risk in the world,'' says Nancy Barry, president of Women's World Banking in New York, a small loan specialist with affiliates in more than 40 countries.

Although micro-credit currently reaches less than 2 percent of the world's 550 million poor, Ms. Barry, a former World Bank official, hopes to encompass 100 million poor women, half of the world's total, within the next 10 years.

To do that, she says, governments would need to commit 10 percent of total development aid to micro-lending organizations for seed capital, up from 2 percent currently. The money would be repaid as village banks loan enough to develop economies of scale and are eventually able to raise funds from commercial banks. ''The beauty of this is that it pays for itself,'' she says.

But expanding what are still small programs into a massive global initiative faces obstacles. Experts caution that micro-financing cannot be the panacea that some advocates hope for. While institutions like AID and the World Bank have jumped on the bandwagon, funding shortages will prevent aid-fatigued governments from making a huge commitment.

Since 1988, AID funding for small-scale lending has jumped to $140 million from $50 million. Currently, two-thirds of borrowers are women, up from 35 percent seven years ago. But micro-financing still represents only a small portion of the agency's $7 billion budget and could lose momentum next year as AID faces possible budget cuts of up to 40 percent.

Women's activists are also at odds over the idea. Critics argue that credit programs cannot supplant more traditional aid for housing and education. The focus on small enterprise downplays the huge financial needs still facing women, they say.

At the women's conference, delegates from Africa and other developing countries have pushed for more funds to implement the ''Plan of Action'' now being drawn up at the conclave. But they have met resistance from Western donors who say the money just isn't available.

Micro-credit programs are ''on a steep learning curve and will get significantly bigger over the next few years,'' says Beth Rhyne, head of Micro-enterprise Development at AID. ''But it won't be the panacea for economic development.''

As NGOs focusing on micro-credit have cropped up and grown, they have often encountered skepticism from governments and international institutions, advocates say. For example, in some countries like Bolivia, private groups are not allowed to collect deposits, a key step in building larger micro-financing programs that can stand on their own without subsidies.

This summer, the World Bank, which traditionally lends to governments, launched a $200 million micro-financing initiative through private organizations and special banks for the poor. The program was applauded as long-overdue recognition of this global lending force and the private organizations that are shaping it.

But bank critics contend there is still resistance within the staid institution, which is more comfortable dealing with governments than with grass-roots groups. In a recent report, the International Center for Research on Women in Washington, has criticized the World Bank for a reluctance to abandon its traditional emphasis on policy, rather than projects. The bank also has stuck to the belief that ''women are not productive, that the things that women do do not contribute directly to economic growth, and that's wrong,'' says Mayra Buvinic, president of the research institute.

More talk than action

Despite World Bank rhetoric, there is little funding for micro-credit and a limited emphasis on women. ''In fact, they should be paying more attention at a time when the [budget] pie is shrinking because this is an efficient way to deal with poverty,'' Ms. Buvinic adds.

''It is very difficult to get the World Bank to provide resources because the bank works through governments, and most governments are not good at providing credit,'' says Lawrence Yanovich of FINCA.

Minh Chau Nguyen, the World Bank's manager of gender analysis and policy, rejects the criticism as a red herring and says the bank is moving cautiously because of a shortage of micro-lenders that can handle expanded programs.

In trying to develop more viable private micro-credit organizations, the bank is pushing them to tighten up financial accounting, improve its financial management, and separate banking from social-welfare projects. Despite the bank's measured approach, she says ''it comes out loud and clear that these intermediaries are the prime force in poverty reduction in the near term.''