The Microfinance Idea
shared by charlotte11 on Nov 22
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Microfinance works around the idea that people living in extreme poverty do so because they face a systemic lack of access to cheap credit and should they have access to credit then they would be able...
to buy the things they need start a small enterprise to make more money and lift themselves and their family out of poverty. This idea is easy to follow with a very simple example, take a small village in Bangladesh of a very close-knit community all of whom are living in extreme poverty. Regular banks will not loan to them because they are too high risk. say there is a woman in the village doesn't have a formal job but can sew which she does by hand, she occasionally fixes clothes for others and may be paid with a bartering system. Now if that woman is given a loan of $70 to buy a sewing machine she can now fix and make more clothes a service which she can sell. She quickly makes back the initial loan plus interest which she then pays off in the short term. The hope is then that this small business can help to make that woman and her family financially independent so she can buy the things they need without relying on aid or the government
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