The benefits of microfinance
Access: Banks will not extend loans to individuals with few or no assets (these
individuals are disproportionately women) and generally don’t engage in the small loans associated
with microfinancing. Microfinancing is based on the philosophy that even small amounts of credit
can help end the cycle of poverty.
Better loan-repayment rates: Microfinance tends to target women borrowers, who are
statistically less likely to default on their loans than men. These loans help foster the economic
agency of women and are often safer investments for those loaning the funds.
Gender equality: Through microfinance opportunities, women are able to increase
their economic participation, income generation, agency and autonomy, which in turn contribute to
breaking down harmful gender norms and practices.
Extending education and health: Families with access to microfinancing are less
likely to pull their children out of school for economic reasons and more likely to have resources
to pay for school fees or health services.
Sustainability: Even a small working capital loan can be enough to launch a
business and help someone lift themselves out of poverty. Small businesses can create new
employment opportunities and have a positive impact on the local economy.
Improved income and nutrition: Through small loans, individuals are able to acquire
agricultural supplies such as improved seeds and fertilizers, increasing the productivity and
nutritional content of crops and generating more income from their sale.
