Microfinance: helping the poor to help themselves
Microfinance: helping the poor to help themselves
For most of us the words finance, credit, savings and investment call to mind the world of big business and banking activities on a very large scale. The idea that these major financial circuits could somehow be miniaturized might seem to fly in the face of reason. For some time, however, this is what has been happening.
Finance and poverty no longer inhabit two different worlds. On every continent tens of millions of families who once lived on the margins of soci¬ ety now have access to facilities for credit, savings and investment on a very small scale. The term microfinance has been coined to describe their transactions. So important has microfinance become that a world summit is being devoted to it this coming February in Washington, D.C.
What has happened to bring about this departure from traditional banking practice? What are the real conditions that underlie this change? What can be expected from it, especially as a weapon in the war on poverty? This issue of the Unesco Couríer attempts to answer these and other important questions about microfinance.
No one imagines that microfinance is a panacea for poverty. But it can indubitably bring hope to men and especially to women, many of them illiterate, whose economic activities have hitherto been so precarious and sporadic that they have never been statistically recorded. The hope is that they can break out of the vicious circle of destitution and escape from the humiliations of lifelong rejection by society.
But what is really new is not that these people are beginning to feel the stirrings of hope, but that certain banks are starting to take them seriously and are responding by reviewing their goals and methods and adjusting to the demands of small-scale economic activity.
Perhaps this is because poverty in many countries has reached such proportions that it is threatening to throttle economic activity, destroy social cohesion and sabotage development. When the gap between poverty and prosperity becomes so flagrantly wide, when the numbers of the unemployed, of society's outsiders and rejects become so high, there comes a moment when the only question worth asking is what can be done to bring them back into the community.