Microfinance, as defined by Kiva.org, is financial services to low-income individuals or those who do not have access to typical banking services. Microfinance helps individuals lift themselves out of poverty by promoting entrepreneurial skills. There are several non-profits who use microfinance as their main tool of helping the poor. Four different organizations in Cairo, Mumbai, Dhaka, and São Paulo use solutions that work very well.
- Grameen Bank: Created in 1976 by Professor Muhammad Yunus, Grameen Bank now reaches over 8 million lenders in Dhaka and the surrounding regions. Grameen Bank offers microloans to the region’s poorest, of which 97% are women. It encourages these lenders to follow their “16 Decisions” program which can be life changing for the many women who borrow from Grameen Bank.
- Swadhaar FinServe: Founded in 2008 to help Mumbai’s poor, Swadhaar FinServe has been incredibly effective in helping those who have limited or no access to financial services. Most Indian microfinance institutions only focus on the rural poor and not migrant populations, which make up the majority of city life. Swadhaar FinServe has helped these migrant populations gain access to financial assistance and become more self-sufficient.
- São Paulo Confia: Established by the São Paulo community, São Paulo Confia is managed and supported financially by the city’s local government. On top of providing loans to low-income individuals the São Paulo Confia require each beneficiary to complete a basic training session on entrepreneurship. The São Paulo Confia also forms “solidarity groups” with three to ten beneficiaries supporting and holding each other accountable, which lowers the credit risk of microfinance.
- Cairo Economic Livelihoods Program: CELP provides microfinance, a very effective tool for helping Egypt’s poor, to residents of Darb el Ahmar. This district is characterized by its production of oriental crafts. CELP provides credit to residents to help them develop their crafts as well as connecting the artisans to buyers by organizing exhibitions.
Microfinance has been proven as one of the most effective ways to fight poverty. These four organizations have found the best solutions to help the people in their respective regions.
– Catherine Ulrich
Source: Huffington Post
Photo: Global Giving