Context
What is Microfinance?
Microfinance implies the offer of financial services to poor populations, who are excluded from the banking system and do not have resources or ownership right, in order to enable them to develop income-generating activities. Microfinance helps poor populations to increase their income, create sustainable businesses and improve the living conditions of microentrepreneurs and their families.
Microfinance includes:
Financial Services: credits for income-generating activities, savings, microinsurance, money transfer, leasing, credit for housing, credit for education, credit for health
Non Financial Services: Business Development Services, or education to health and hygene, etc…
Microfinance Actors
1. Microfinance Institutions (MFIs):
Savings and loan Cooperatives, local or international NGOs, Village banks, programmes set-up by international institutions
2. Governments and local authorities:
- Develop adapted legal frameworks and national sustainable development strategies with a part dedicated to microfinance,
- Support banks, ministries and local authorities to include microfinance in sustainable development projects.
3. Commercial Banks and insurance companies (for an inclusive financial sector, banks will have a larger and larger role in microfinance) - Support existing MFIs through financing - Create a branch or range of microfinance products and services (downscaling).
4. Insurance companies, partnering with microfinance institutions to offer micro-insurance to beneficiaries
5. Investment funds, providing funding to microfinance institutions
Key figures:
- 10 000 microfinance institutions (MFIs) in the world,
- 150 million clients of microfinance in the world in 2006, 84% whom are women,
- 66.6 million clients of microfinance belong to the poorest of the poor,
- The total outstanding portfolio estimated at USD 30 billion in 2006,
- Annual growth of microfinance: over 30%.
Sources : CGAP, BIT, Microcredit Summit, PlaNet Finance