Sometimes called “banking for the poor,” microfinance is an amazingly simple approach that has been proven to empower very poor people around the world to pull themselves out of poverty. Relying on their traditional skills and entrepreneurial instincts, very poor people, mostly women, use small loans (usually less than US$200), other financial services, and support from local organizations called microfinance institutions (MFIs) to start, establish, sustain, or expand very small, self-supporting businesses. A key to microfinance is the recycling of loan dollars. As each loan is repaid—usually within six months to a year—the money is recycled as another loan, thus multiplying the value of each dollar in defeating global poverty, and changing lives and communities.
Pioneered by Dr. Muhammad Yunus more than 30 years ago, microfinance has flourished around the globe and is currently reaching more than 150,000 million adults through more than 3,500 microfinance institutions around the globe. Despite its remarkable success, only 11% of adults living on less than $2/day have access to financial services – the remaining 89% or more than 1.3 billion adults are in need of the empowerment and rise from poverty that microfinance can provide. Technology has been a barrier to the growth of microfinance; Grameen Foundation is commited to transforming this barrier into an accelerator for the growth and impact of microfinance through our open Mifos platform and community.
