Exploring Microfinance
An interesting subject to look further into is microfinance. Microfinance is a service available to people who are unemployed or have low income. Financial services are something that’s available to many of us, but unfortunately, many people who are struggling don’t have the money to access services in the financial industry. People who are eligible for microfinance programs are able to gain access to financial help in many different areas. “While institutions participating in the area of microfinance are most often associated with lending (microloans can be anywhere from $100 to $25,000), many offer additional services, including bank accounts and micro-insurance products, and provide financial and business education” (Staff, Investopedia.)
Microfinance is used internationally, with many institutions growing rapidly in Europe, the Middle East, and Africa. According to Habitat for Humanity, nearly half the world’s population lives on less than $2.50 a day, this is an extremely low amount to try and provide daily needs like food and water, it never is in the possibilities of these impoverished people to get a mortgage, but that is what microfinance allows them to do. “Housing microfinance is a promising tool for families to gradually improve their living conditions. Housing microfinance loans have relatively short repayment periods, small loan amounts, and little or no collateral required.” (Microfinance.) Microfinancing a mortgage is a great opportunity for people who don’t have much money to work with because It allows them to spend what little money they are able to and improve their usually tough living conditions. These organizations for microfinance do more than just help people with loans, they also support activities like start-up capital along with educational programs such as money management, bookkeeping, and professional skills. Microfinance organizations are not hard on their customers about loans, instead, they try and help entrepreneurs succeed as much as possible. (Staff)
This is the first time I had ever heard of microfinance, as I read more and more into its benefits, I knew that there had to be some pitfalls to it, and there is. A growing trend is that these organizations are really just making money off the poor. Many banks that started out as nonprofit organizations have become for-profit companies. (Staff) As I talked about before, the main point of this financial service is to give less fortunate individuals low interest loans, but when companies turn to profit and are owned by strong, big money financial institutions, they are likely to turn up the interest rates to make more money. Another criticism that I read about was the fact that these loans aren’t leading more people out of poverty. Some people say that the loans don’t actually make people independent, they just them by day to day. A better approach some would say to be is creating real jobs for these people, this would help people get better wages and constant employment. (Staff)
Another thing that needs to be looked at is how fast microfinance is growing. “According to data from the Microfinance Information Exchange (MIX), the sector expanded at historic rates, with average annual asset growth of 39 percent, accumulating total assets of over US$60 billion by December 2008.” (Chen) Microfinance has been gaining more and more attention, leading to more people taking advantage of this opportunity. The expansion of it is great, but
Microfinance is a fascinating topic, and something that I just now discovered, which was really cool to me. I think that at its foundation, it is a great idea meant to help improve people’s lives. But naturally, I know that people get greedy, and no matter how pure the concept is, there will always be someone looking to take advantage of it, and that is what I see this industry suffering from for as long as it exists. Money can make people evil, when they see an opportunity to prey on the weak, they usually take advantage of it.
VIDEO: https://www.youtube.com/watch?v=bpSNM625LFU
Grant Williams
Works cited
Chen, Greg, Stephen Rasmussen, and Xavier Reille. 2010. “Growth and Vulnerabilities in Microfinance.” Focus Note 61. Washington, D.C.: CGAP, February.
“Microfinance: Good for the Poor? | Africa Renewal Online.” United Nations, United Nations, Aug. 2015, www.un.org/africarenewal/magazine/august-2015/microfinance-good-poor.
“Microfinance.” Habitat For Humanity, Habitat For Humanity INternational, 2017, www.habitat.org/emea/about/what-we-do/microfinance.
Staff, Investopedia. “Microfinance.” Investopedia, 9 Sept. 2017, www.investopedia.com/terms/m/microfinance.asp
Sammi Caramela B2B Staff. “Microfinance: What It Is and Why It Matters.” Business News Daily, 16 Oct. 2017, www.businessnewsdaily.com/4286-microfinance.html. (Image Credit)
Microfinance is used internationally, with many institutions growing rapidly in Europe, the Middle East, and Africa. According to Habitat for Humanity, nearly half the world’s population lives on less than $2.50 a day, this is an extremely low amount to try and provide daily needs like food and water, it never is in the possibilities of these impoverished people to get a mortgage, but that is what microfinance allows them to do. “Housing microfinance is a promising tool for families to gradually improve their living conditions. Housing microfinance loans have relatively short repayment periods, small loan amounts, and little or no collateral required.” (Microfinance.) Microfinancing a mortgage is a great opportunity for people who don’t have much money to work with because It allows them to spend what little money they are able to and improve their usually tough living conditions. These organizations for microfinance do more than just help people with loans, they also support activities like start-up capital along with educational programs such as money management, bookkeeping, and professional skills. Microfinance organizations are not hard on their customers about loans, instead, they try and help entrepreneurs succeed as much as possible. (Staff)
This is the first time I had ever heard of microfinance, as I read more and more into its benefits, I knew that there had to be some pitfalls to it, and there is. A growing trend is that these organizations are really just making money off the poor. Many banks that started out as nonprofit organizations have become for-profit companies. (Staff) As I talked about before, the main point of this financial service is to give less fortunate individuals low interest loans, but when companies turn to profit and are owned by strong, big money financial institutions, they are likely to turn up the interest rates to make more money. Another criticism that I read about was the fact that these loans aren’t leading more people out of poverty. Some people say that the loans don’t actually make people independent, they just them by day to day. A better approach some would say to be is creating real jobs for these people, this would help people get better wages and constant employment. (Staff)
Another thing that needs to be looked at is how fast microfinance is growing. “According to data from the Microfinance Information Exchange (MIX), the sector expanded at historic rates, with average annual asset growth of 39 percent, accumulating total assets of over US$60 billion by December 2008.” (Chen) Microfinance has been gaining more and more attention, leading to more people taking advantage of this opportunity. The expansion of it is great, but
Microfinance is a fascinating topic, and something that I just now discovered, which was really cool to me. I think that at its foundation, it is a great idea meant to help improve people’s lives. But naturally, I know that people get greedy, and no matter how pure the concept is, there will always be someone looking to take advantage of it, and that is what I see this industry suffering from for as long as it exists. Money can make people evil, when they see an opportunity to prey on the weak, they usually take advantage of it.
VIDEO: https://www.youtube.com/watch?v=bpSNM625LFU
Grant Williams
Works cited
Chen, Greg, Stephen Rasmussen, and Xavier Reille. 2010. “Growth and Vulnerabilities in Microfinance.” Focus Note 61. Washington, D.C.: CGAP, February.
“Microfinance: Good for the Poor? | Africa Renewal Online.” United Nations, United Nations, Aug. 2015, www.un.org/africarenewal/magazine/august-2015/microfinance-good-poor.
“Microfinance.” Habitat For Humanity, Habitat For Humanity INternational, 2017, www.habitat.org/emea/about/what-we-do/microfinance.
Staff, Investopedia. “Microfinance.” Investopedia, 9 Sept. 2017, www.investopedia.com/terms/m/microfinance.asp
Sammi Caramela B2B Staff. “Microfinance: What It Is and Why It Matters.” Business News Daily, 16 Oct. 2017, www.businessnewsdaily.com/4286-microfinance.html. (Image Credit)
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