Around the world billions of people live without access to basic financial services. Without loans, saving accounts, fund transfers and insurance, attaining financial stability becomes impossible. Traditional banks vastly denied its services to poor people. That is why the microfinance came to existence – to include disadvantaged.
The most recognized and powerful product of microfinance is microcredit, a small loan offered by Microfinance Institutions (MFIs) to people in need. This money often allows people to invest in small business, make themselves self-employed and break the chain of poverty. However, microfinance is not only about lending. It includes all area of services like insurance, bank accounts or fund transfer.
Microfinance helps to lift people out of poverty. However, it is not an ultimate solution to eradicate worldwide poverty. For community to achieve sustainable development, other activities should appear along with microfinance. Financial education, capacity building, investments in infrastructure and legal reforms are also crucial factors of development.
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