Microfinance

"Microfinance is the supply of loans, savings, and other basic financial services to the poor." (CGAP-Consultant Group to Assist the Poor)

As the financial services of microfinance usually involve small amounts of money – small loans, small savings etc. – the term "microfinance" helps to differentiate these services from those which formal banks provide.
Why are they small? Someone who doesn't have a lot of money isn't likely to want to take out a $5,000 loan, or be able to open a savings account with an opening balance of $1,000. Hence – "micro". (Kiva.org)




We're glad you'd like to learn more about microfinance.
This page contains information we have gathered from colleagues, friends, and microfinance organizations we respect to help answer some of your questions.
To go deeper and see a list of other resources - books, websites, and more - please see our Learn page under Do More. 



Why do so many MFIs focus on women?

"Today I'm a very respected women in the community. I have come out of the crowd of women who are looked down upon. Due to the loan that I received... you have made me to be a champion out of nobody."
- Rose Athieno, Produce Reseller, Uganda
"Microfinance programs have generally targeted poor women. By providing access to financial services only through women—making women responsible for loans, ensuring repayment through women, maintaining savings accounts for women, providing insurance coverage through women—microfinance programs send a strong message to households as well as to communities. Many qualitative and quantitative studies have documented how access to financial services has improved the status of women within the family and the community. Women have become more assertive and confident. In regions where women's mobility is strictly regulated, women have become more visible and are better able to negotiate the public sphere. Women own assets, including land and housing, and play a stronger role in decision making.
In some programs that have been active over many years, there are even reports of declining levels of violence against women." (CGAP)
(Please refer to the website link for discussion on the following questions)


What is microfinance?
What is an MFI?
Why would poor people need financial services?
Why don't they just go to a bank?
Why don't banks accommodate poor people?
Why are microcredit interest rates so high?
What are the effects of microfinance?
When is microcredit not appropriate?
Why do so many MFIs focus on women?
Can microfinance be profitable?
Is microfinance the solution to poverty?

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Posted by Pam Ansingh