Microfinance

Microfinance is an important tool in alleviating global poverty and positively impacted the lives of countless people worldwide.  We invite you to read below and learn more.

What is microfinance

Like entrepreneurs here, local entrepreneurs there need to invest in order to keep their business going, however it is scarcely possible on an average income of one euro per day and nothing to put down as collateral. But if they get a financial injection, they have plenty of opportunities to expand their business.

Microfinance is designed to give these micro entrepreneurs the necessary financial injection. Microfinance is the general term covering financial services offering very modest amounts (an average of € 300) to poor people in developing countries. Microfinance includes microcredit as well as insurance, savings and mortgages.

The importance of microfinance

Professor C.K. Prahalad from University of Michigan Business School says: "If we stop thinking of the poor as victims or as a burden and start recognizing them as resilient and creative entrepreneurs and value-conscious consumers, a whole world of new opportunities will open up."

By providing local entrepreneurs with knowledge and capital, they can participate in promoting global prosperity and are no longer excluded from development. And, in turn, we too can learn from developing countries. There are fields in which certain developing countries enjoy rich knowledge. India’s shortage of fixed telephone lines and conventional banking facilities has led the country to pioneer mobile banking. And there are many more examples...

A world of difference

Because small entrepreneurs in developing countries usually have no access to traditional financial services, microfinance products such as microcredit means a world of difference. The money they borrow can be invested in livestock, a sewing machine, a small boat or a shop. With an improved financial position, small businesses grow bigger creating more employment opportunities for others.