What is the objective of microfinance and microfinance institutions (MFIs )? Lending to poor
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Transcript of What is the objective of microfinance and microfinance institutions (MFIs )? Lending to poor
What challenges do poor people face that prevent them access to formal sector banking
institutions?
Very few have accts Limited access
Formal credit Credit cards
Lack of banks in rural areas Bank usage limited Mobile phone transactions¤
What is the objective of microfinance and microfinance institutions (MFIs)?
Lending to poor Offer other services Empower women
How does it work?
Individual or group loan Community clubs
Weekly meetings
What are the pros of microfinance?
Poor – access to banking, credit, services Loans to start businesses Empower women Employment Alternative to moneylenders Offers choices Stability¤
What problems are associated with microfinance?
Monitoring, collection Interest rates Expensive to get started Shady schemes Often doesn’t lead to increased household
income or consumption Use women to get credit Loan size negligible High risk Diff. to challenge macro-level w/ micro-level
approach¤
Problems (cont.)
Lack of effective national governanceLack of infrastructureLack of demand / buying power in
communityLack of business variety Lack of business-building¤
Recap
More like to help communitiesOften increases stabilityRecent meta-study shows progressWay to reach poor peopleWay to empower womenMany obstacles that decrease potential
benefit¤