Microfinance Alliance
UNDP Microfinance Facts
The existing 10,000 Microfinance Institutes (MFIs) reach only 4% of the potential market.
- (2001 World Bank Statistics)
At least 90% of eligible self-employed lack access to microcredit programs. Unmet demand is around 270,000,000.
- (Unitus)
Fewer than 2% of poor people have access to financial services (credit or savings) from sources other than money lenders.
- (Data Snapshots on Microfinance – The Virtual Library on Microcredit)
Data from the Micro Banking Bulletin reports that 63 of the world's top MFIs had an average rate of return, after adjusting for inflation and after taking out subsidies programs might have received, of about 2.5% of total assets. This compares favorably with returns in the commercial banking sector and gives credence to the hope of many that microfinance can be sufficiently attractive to mainstream into the retail banking sector.
- (CGAP)
Click one of the links below, or simply scroll down the page to learn more.
Introduction to MicrofinanceHistory of Microfinance
Microfinance Links/Resources
Introduction to Microfinance
Giving people the means to achieve their dreams through access to financial capital.
Microfinance can be defined as financial services targeting and catering to clients who are excluded from the traditional financial system on account of their lower economic status. Microfinance can include Microcredit, Micro-savings, Micro-insurance and payment services.
Microcredit is the extension of small loans to micro-entrepreneurs who lack collateral and do not qualify for traditional bank loans. In developing countries especially, Microcredit enables very poor people to engage in self-employment projects that generate income. Microcredit is crucial to the microfinance field by providing access to financial capital.
History of Microfinance
The global microfinance movement emerged in the mid-1970s with a series of lending experiments in poor villages throughout Asia and Latin America. Perhaps, the most celebrated milestone in the development of microfinance was the introduction of the Grameen Bank in Bangladesh.
In 1976, economics professor Muhammad Yunus began experimenting with the concept of microcredit by making small loans to poor households in a rural Bangladeshi village. He found that the loans not only enabled borrowers to run and grow simple businesses like bamboo-weaving and rice-husking but the borrowers also repaid their loans reliably – despite the fact that they possessed no collateral to guarantee their loans. This discovery defied conventional banking wisdom of the time, in which the poor were viewed as ‘unbankable’ due to their lack of collateral and non-existent credit histories. Because they were viewed as a high risk to lenders, poor populations worldwide were systematically excluded from their countries’ formal financial systems. Their only banking options were to borrow from local money lenders, who charged annual interest rates as high as 100 percent, or to borrow from family members.
The success of Yunus’ lending experiments led to the establishment of the Grameen Bank in 1983. As of March 2006, the Grameen Bank had 1,952 branches across India and Bangladesh, worked in 63,712 villages, and employed 17,686 staff. The Bank serves approximately 5.98 million borrowers, 96 percent of whom are women, and reports a repayment rate of 98 percent. In 2006, Muhammad Yunus was awarded the Nobel Peace Prize for his contributions to the global microfinance movement.
Microfinance Links/Resources
General Information
The Consultative Group to Assist the Poor (CGAP)Microfinance Gateway
Microfinance Information Exchange (MIX)
Microbanking Bulletin
Microcredit Summit Campaign
Development Gateway
Technical Assistance and Rating
Micro Insurance CenterMicrofin Technical Support
MicroRate
PlaNet Finance
FIELD, Microenterprise Fund for Innovation, Effectiveness, Learning and Dissemination.
Microfinance Organizations and Networks
Acción InternationalActionAid International
African Development Center(Local)
American Refugee Comittee(Located Locally)
Association for Enterprise Opportunity (AEO) - (USA)
Catholic Relief Services (CRS)
Cooperative for Assistance and Relief Everywhere (CARE)
Foundation for International Community Assistance (FINCA)
Freedom from Hunger
Grameen Foundation (USA)
Latino Economic Development Center(Local)
Minneapolis Consortium of Community Developers(Local)
Neighborhood Development Center(Local)
Opportunity International (USA)
Oxfam International (UK)
Pact
Save the Children
Small Enterprise Education and Promotion (SEEP) Network
Trickle Up
Whittier Community Development Corporation(Local)
Women's World Banking (WWB)
Women Venture(Local)
World Councile of Credit Unions, Inc (WOCCU)
United Nations
International Year of MicrocreditUnited Nations Development Programme (UNDP)
United Nations Capital Development Fund (UNCDF)
Local Sponosor Links
Minnesota International CenterBusiness Professional Women Minnesota (BPW)