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MicroFinance Market

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MicroFinance Market MicroFinance Market Today, microfinance plays a major role in the development of many African, Asian, and Latin American nations. – PowerPoint PPT presentation

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Title: MicroFinance Market


1
MicroFinance Market
2
MicroFinance MarketToday, microfinance plays a
major role in the development of many African,
Asian, and Latin American nations. Its impact is
substantial enough to have warranted
acknowledgement by the United Nations who
declared 2005 The international year of
microfinance, reminding people that millions
worldwide benefit from microfinance activities.
3
(No Transcript)
4
What is microfinance?Sometimes called banking
for the poor, microfinance is an amazingly
simple approach that has been proven to empower
very poor people around the world to pull
themselves out of poverty. Relying on their
traditional skills and entrepreneurial instincts,
very poor people, mostly women, use small loans
(usually less than US200), other financial
services, and support from local organizations
called microfinance institutions (MFIs) to start,
establish, sustain, or expand very small,
self-supporting businesses.
5
What do local microfinance institutions (MFIs)
do?These front line organizations reach out to
the very poor and deliver microfinance services
to local clients daily. They educate local
communities about the opportunity to improve
their lives with microfinance make microloans
and provide other financial services such as
savings accounts and insurance collect weekly
loan payments and assist clients in solving some
of the life challenges they may face.
6
Why is this different from other loan
programs?Unlike other loan programs, clients
are not required to provide collateral to receive
loans. This allows people who would not qualify
for loans at traditional financial institutions
to receive credit. MFIs are also very
client-friendly most usually go to their clients
to provide loans and receive payments, rather
than requiring their clients to come to them. A
few of them also use focal centers where clients
gather to conduct financial transactions and
receive other social services. The peer support
system practiced by many microfinance programs is
another unique feature. When clients gather
weekly at center meetings to make loan
payments, or informally in smaller support
groups, they share successes and discuss ideas
for solving business and personal problems.
Maybe most importantly, they empower each other
to stay on the path out of poverty. This mutual
support strengthens their resolve.
7
Why do you focus on women?Women have proven to
be the best poverty fighters. Experience and
studies have shown that they use the profits from
their businesses to send their children to
school, improve their families living conditions
and nutrition, and expand their businesses.
8
Can very poor people actually start and run a
successful business?Absolutely. Many poor
people have skills that can quickly become an
income producing activity. With small sums of
money, they are able to purchase the inventory,
supplies and tools needed to start or expand
microbusinesses that range from weaving, sewing,
grinding grain, reselling produce, and growing
and selling vegetables, to catching and selling
fishing, wholesaling dried fish, raising chickens
to sell eggs, and breeding livestock. We also
help the rural poor start technology
microbusinesses, such as selling cell phone time
to other villagers, which also provides valuable
means of communications and access to vital
information.
9
Do people really get out of poverty?Microfinance
is not a silver bullet. It will not defeat
global poverty by itself. But, it is an
important part of the solution. Microfinance
provides a stable and sustainable source of
income that enables clients to climb steadily out
of poverty, while providing better living
conditions and opportunities for their families.
A 1998 World Bank study showed that, in
Bangladesh, Grameen Banks clients were escaping
poverty at the rate of 10,000 per month.
10
Globally, microfinance organizations have loans
of more than 23 billion outstanding to more than
52 million people at the end of 2006. The
current estimate is 30 billion.
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