19 Facts About Microfinance

Microfinance is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related services.

Microfinance includes microcredit, the provision of small loans to poor clients; savings and checking accounts; microinsurance; and payment systems, among other services.

Microfinance services are designed to reach excluded customers, usually poorer population segments, possibly socially marginalized, or geographically more isolated, and to help them become self-sufficient.

Microfinance initially had a limited definition: the provision of microloans to poor entrepreneurs and small businesses lacking access to credit.

Microfinance is the proper tool to reduce income inequality, allowing citizens from lower socio-economical classes to participate in the economy.

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However, Microfinance is not the magical solution to take people out of poverty; it is merely a tool that the poor can use to raise their prospects for an escape from poverty.

Microfinance practitioners have long argued that such high interest rates are simply unavoidable, because the cost of making each loan cannot be reduced below a certain level while still allowing the lender to cover costs such as offices and staff salaries.

Microfinance provides women around the world with financial and non-financial services, especially in the most rural areas that do not have access to traditional banking and other basic financial infrastructure.

Microfinance is a sustainable process that creates real jobs, opens opportunities for future investments and helps the women clients provide for the education to their children.

Microfinance generally agree that women should be the primary focus of service delivery.

Microfinance is considered a tool for socio-economic development, and can be clearly distinguished from charity.

Microfinance is limited by the rules and limitations surrounding money-lending.

Microfinance Network is a network of 20 to 25 of the world's largest microfinance institutions, spread across Asia, Africa, the Middle East, Europe and Latin America.

Today as the sector enters a new period of transition, with the rise of digital financial technology that increasingly competes with traditional microfinance institutions, the Microfinance Network provides a space to discuss opportunities and challenges that arise from emerging technological innovations in inclusive finance.

Microfinance services including Easy Paisa by Telenor and Temeer Microfinance Bank, Jazz Cash by Jazz Telecom, and Zindigi have all been introduced by various telecom companies in Pakistan.

European Microfinance Network was established in response to many legal and political obstacles affecting the microfinance sector in Europe.

Microfinance Centre has a membership of over 100 organisations, and is particularly strong in Eastern Europe, the Balkans and Central Asia.

Microfinance has been combined with business education and with other packages of health interventions.

Microfinance's suggests that it happens because of the interplay between the company's mission, the cost differential between poor and unbanked wealthier clients and region specific characteristics pertaining the heterogeneity of their clientele.