What is Microfinance?
Microfinance is the provision of financial services such as loans, savings, insurance, and training to people living in poverty. Many diverse types of organizations are involved in this sector. Although dedicated Microfinance Institutions are the largest percentage, they are followed by Non-Governmental Organizations (NGOs), financial co-operatives, development projects, all practicing microfinance. Banks are not extensively involved in this function.
Microfinance is one of the great success stories in the developing world in the last 30 years and is widely recognized as a just and sustainable solution in alleviating global poverty. Over the last decade the microfinance sector in Africa has expanded its financial service offerings to better meet client needs. For example, The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has $4 billion invested in various kinds of financial institutions in 88 countries: including banks, leasing companies, credit rating agencies, and pension funds.
Jobs in the microfinance sector are very interesting and varied. There are opportunities for business development officers that drive and manage business activities at regional and branch level, branch managers and loans officers that assess and fulfill client requirements.
Personal attributes that are prized in microfinance are self-motivation, maturity and interest in social and economic issues.
Microfinance organizations make it a priority to serve the particular needs of women, since more than 70 percent of all those living in extreme poverty are female. Women are often excluded from education, the workplace, owning property and equal participation in politics. They produce one half of the world’s food, but own just one percent of its farmland. When women improve their circumstances, they also improve the lives of their children. By investing in nutrition and education, they help to create a better future for their children and their communities.
The World Bank says that the industry is not close to meeting the demand despite excellent progress. Five hundred million people living in poverty could benefit from a small business loan and only one-third of the world’s population has access to any kind of bank account. The lack of access is particularly severe in sub-Saharan Africa providing attractive work opportunities in microfinance in Africa.
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