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What is Microfinance?
“Microfinance is supply of loans, and other basic financial services to the poor”. (CGAP)

Microfinance Institutions
Microfinance Institution (MFI) can be broadly defined as any Organisation – Credit Union, down-scaled Commercial Bank, Financial NGO, or Credit Cooperative-that provides financial services for the poor. (CGAP)

The objective of Microfinance
Microfinance is one of the tools in poverty alleviation.

ASA Initiative Microfinance employs group lending methodology in reaching out to the unreached. Group solidarity and dynamisms are effective ingredients for group methodology in microfinance.

The group members have to select their own members to ensure member acceptance and commitment. They have their own internal management, regulation and procedures. Trust, geographical proximity and economic activities become the basis of group formation among the poor households.

Micro enterprise
This is a small-scale business in the informal sector which employs less than 5 people and can be based out of home.  Microentreprises are often the sole source of household income for the productive poor but can also act as a supplement to other forms of income. Examples include market stalls, artisan shops, small fruit stands, food bar,  hair dressing saloon, retail kiosks, and sewing shops.  Owners of these small –scale businesses are known as Micro Entrepreneurs.

Why microfinance?

  • bullMicrofinance is one of the means of achieving the Millennium Development Goal of making financial services more accessible to the poor.
  • bullIt helps in financial inclusion of the large population, the poor, which has been excluded from the financial sector.
  • bullWhen efficiently employed microfinance helps to alleviate poverty.
  • bullMicrofinance assists in the promotion and development of micro enterprises.
  • bullThe use of microfinance enhances employment creation at the grassroot level among poor households.

 

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