About Micro Financing
Microfinancing involves financing that provides access to small-scale loans (micro-credits) to low-income families to enable business start-ups or maintain ongoing business activities through which family members generate income. Microfinance is a sustainable credit model that needs to meet the financial needs of the poor and marginalized segments of society. The importance of the micro-loan was highlighted in 1970 through the efforts of Muhammad Jonus, a microfinance pioneer and founder of the Bank Grameen in Bangladesh. His efforts to create economic and social development of societies through microfinance received his recognition through the awarding of the Nobel Prize in 2006.
A Microfinancing Institution (MFI) is an organization that provides financial services for low-income families. Even though each microfinancing organization is different, all Microfinance Organizations share a common feature in terms of providing financial services to a clientele that is more vulnerable and more marginalized than standard bank customers.
An entrepreneur is a person running a small business or a micro enterprise. These businesses most often involve less than 5 people and their head office may be outside the household. Such businesses can be the only source of family income or denote an addition to other types of family income. [/accordion_toggle] ArrayTypical micro entrepreneurial businesses include retail kiosks and grocery shops, sewing workshops, carpentry shops, market stands, and the like.
For economies to grow and progress, women have to be involved in every level. This is particularly real in most developing countries where women constitute the majority of poverty, unemployment and social and economic marginalization. Research shows that women tend to invest the money they earn in their families, education, and households which over time reinforce and stabilize the social and economic aspects of their communities.
The inclusion of interest is necessary to create a self-financing, sustainable and viable credit program that will continue to generate more capital to allow more people to access loans.