Palms for Life Fund - Microfinance

Microfinance

One of the most effective ways of engaging the poor in their economies is to give them access to financial products and services to help them build wealth and achieve their goals. Microfinance provides small loans – often as small as $100.00 – at a minimal interest rate to very poor people who cannot have access to traditional credit. Microfinance produces amazing returns: entrepreneurs in poor countries are finally able to set up profitable businesses that generate enough income to lift themselves and the whole family out of poverty. As businesses grow and thrive, financial support is provided, including savings, training, and peer support. Microfinance is often considered one of the most effective and flexible ways to fight against global poverty. It is sustainable and can be implemented on a massive scale.

Microfinance offers hope to the self-employed in developing countries, comprising more than 50% of the labor force, and tends to focus on women. It has been shown that women have higher repayment rates and are more likely to use their income for the needs of their family, directly benefiting their children while also raising their own status. Examples of businesses that have been creating from microfinance loans range from sewing and weaving to raising chickens and breeding livestock.

Two of the earliest organizations involved in microfinance are Accion International, first operating in Brazil, and the Grameen Bank, focusing on Bangladesh. Today, the World Bank estimates that there are more than 7,000 microfinance organizations, benefiting over 16 million poor people. These programs have become so successful that large financial institutions that once discounted their success are currently contemplating microfinance programs. In countries where poverty is greatest, micro-enterprises are estimated to represent more than 80% of all wealth-building enterprises and more than 20% of GNP.

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Microfinance

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