What is Microfinance?
Microfinance is the name given to financial services targeted at individuals from low income groups who wish to set up or develop their own small businesses to provide for themselves and their families. Some of the services offered include savings, business development programs, housing loans and general purpose loans, as well as loans for education. Microfinance practices began in Bangladesh and Bolivia thirty years ago and spread to many countries in Asia, Africa, Central Europe and South America in the 1980s. There are currently over 3700 microfinance organizations serving 204 million people worldwide. More than 115 million of those borrowers were amongst the most economically disadvantaged in their countries when they obtained their first microloans. Over 83% of the most economically disadvantaged individuals are women (Source: Microfinance Summit, 2012, https://stateofthecampaign.org/
Benefits of micro lending:
- Increased income for economically disadvantaged individuals and their dependents;
- Wider access to financial services;
- Increase in the number of individuals contributing to the economy;
- A gradual transition of individuals from the informal to the formal economy.
- Economic development that benefits a larger number of people