Microfinance… ever heard about it ?
Know it and seize your opportunity
What Microfinance is about
Microfinance is the activity or business of providing financial services to poor people or new businesses that cannot access traditional banking services in developing Countries (mainly in Africa, Latin America and South Asia). It includes a set of financial services such as microcredit, loans and insurance services that are important tools to combat poverty, reach autonomy, provide funds for housing, educational services or starting a new business.
The entirety of financial services that derive from it have contributed to sensibly improving living conditions of the populations, in particular by increasing the access to the banking system of certain countries. Those services are one of the success factors of Sustainable Development Goals
What is the origin of Microfinance and who are MF institutions?
It is known as a very young business brought in by Muhammad Yunus in the 1970s when he founded the first micro-credit institution in Bangladesh.
In reality such an institution is known to exist since 1849, when the first savings and credit cooperative was founded in Switzerland.
Usually MF institutions consist of non-governmental organisation and no-profit associations;
nowadays the marketplace has evolved and do exist for-profit organizations as well.
Microfinance Barometer – key figures analysis
- 1.7 billion is estimated to be the number of people who do not have access to the traditional finance system;
- 140+ millions are the borrowers who benefited in 2018 from microfinance institutions’ services;
- 80% of borrowers are women, mainly coming from rural areas in developing Countries;
- $ 124+ billions is the credit portfolio in 2018
- Largest market of loan volume is Latin America followed by South Asia, Africa and Eastern Europe.
Source: Microfinance Barometer 2019
Success Story and Inspirations
What is often lacking in emerging countries are not initiatives to get by, but money necessary to start the new business. Microfinance institutions respond to such needs and give opportunities to those people making their ideas a reality, giving them the chance to start as entrepreneurs and to reach autonomy.
Microfinance is effective because services are provided incrementally, so that low-income families and individuals can afford them.
Some success story:
– Tanzania – the idea of selling clean water became reality: with a loan of just $360 the new entrepreneur could buy 3 tracks for water distribution and increase his business to become independent, have better nutrition and school education for family.
– Jordan – selling gas cylinders – with a limited loan that helped her buy two cars to make deliveries, in two years only Nadya created a real company with 7 employees, securing seven households besides her own in Amman.
– India – with a loan of $50 to $100 to buy rickshaws for transporting wheat to market, a group of women have significantly raised their income level away from poverty, and now have their own business.
– Pakistan – with $ 70 loan, a very poor and illiterate mother could start a jewelry business that quickly took off. Now she also owns a restaurant and catering business that employs eight people, meaning 8 families out of extreme poverty.
As we see, in such countries the initial investment is quite limited – if we consider it from a developed country perspective.
Of course most of those people do not have the right ability and skill to initiate and manage alone the new business;
That’s why Microfinance institutions intervene not only by funding but also providing the managerial and human support to guide them in the new adventure. Most of these services are provided by volunteers but also by employees of the for-profit companies.
Your opportunities- seize your chance now!
Either you’re an expert in finance or a young person with basic finance skills, loving charity work and passionate about working with people, you have a lot of job opportunities within the Microfinance world.
Microfinance requires considerable knowledge and experience in economics, business or finance, but also a great communication capability, ability to adapt to different cultures and difficult human and environmental situations.
The role of the credit agent is also interesting as he is the direct link to the client, travelling daily in or
der to meet them at their workplace or home.
He has multiple roles. He recuperates the refunds of ongoing credits, proposes new services, grants credits and also helps families to manage their money. In doing so he also plays the role of an educator.
Of course you can’t invent yourself as a Microfinance worker, so there are a lot of Microfinance Volunteer Programs and other business training available.
To Know more ….
Register now at:
Rovelli Chiara 4G