Grameen Foundation : What we do : Microfinance in Action
Microfinance
Microfinance success stories
Odette, Haiti
Yuli, Indonesia
Andrea, Mexico
Chaibia, Morocco
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An effective poverty reduction strategy
Microfinance is often considered one of the most effective and flexible strategies in the fight against global poverty. It is sustainable and can be implemented on the massive scale necessary to respond to the urgent needs of those living on less than $1 a day, the World’s poorest.
Microfinance consists of making small loans, usually less than $200, to individuals, usually women, to establish or expand a small, self-sustaining business. For example, a woman may borrow $50 to buy chickens so she can sell eggs. As the chickens multiply, she will have more eggs to sell. Soon she can sell the chicks. Each expansion pulls her further from the devastation of poverty.
Microfinance, the Grameen way, includes several support systems that contribute greatly to its success. Microfinance institutions offer business advice and counseling, while clients provide peer support for each other through solidarity circles. For example, if a client falls ill, her circle helps with her business until she is well. If a client gets discouraged, the support group pulls her through. This contributes substantially to the extremely high repayment rate of loans made to microfinance entrepreneurs.
An equally important part of microfinance is the recycling of funds. As loans are repaid, usually in six months to a year, they are re-loaned. This continual reinvestment multiplies the impact of each dollar loaned.
Microfinance has a positive impact far beyond the individual client. The vast majority of the loans go to women because studies have shown that women are more likely to reinvest their earnings in the business and in their families. As families cross the poverty line and micro-businesses expand, their communities benefit. Jobs are created, knowledge is shared, civic participation increases, and women are recognized as valuable members of their families and communities.
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Frequently Asked Questions about microfinance >
Grameen Foundation : What we do : Microfinance in Action
Grameen Foundation uses microfinance and innovative technology to fight global poverty and
bring opportunities to the world's poorest people. With tiny loans and financial services, we help the poor, mostly women, start
businesses and escape poverty. Our global network of 52 microfinance institution (MFI) partners including our Growth Guarantee partners has touched more than 31 million people in 23 countries. In addition, we introduced and now sustain technology initiatives (Mifos and Village Phone) in Cameroon, Kenya, Rwanda, and Uganda, bringing our total country outreach to 27.
+1-202-628-3560 www.grameenfoundation.org
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