In a general sense, microfinance a term used to describe financial services to low-income individuals or to people without access to conventional banking services.
It can also refer to represent the idea that those in low income communities can lift themselves out of poverty if given access to simple financial services.
There are a few various organizations around that provide microfinancial services to poor countries. The idea is that someone in say the U.S. or Australia or England that is better off can make a loan to someone in a poorer country so that they can fund their small business, buy seeds for their farm, improve irrigation systems etc. and once that money is turned in to profit, the money is returned to the lender. It is the concept that making an investment can sometimes better the world and not necessarily create a return for the lender. It is a great concept that creates accountability and is not simply handing money to those who need it and hoping they will do good with it. Kiva is one of the leading organizations doing this. You can find a link to their site below.
Microfinance also a form of microcredit is a provision of financial services for low-income clients or solidarity lending groups including consumers and the self-employed, who lacks acess to banking and related services. This movement is helping rural villages in third world countries build up small business by receiving loans from money lenders. They can also use this knowledge to understand “banking systems.” I believe this system is great, because it takes people out of the poverty level by teaching people how to use money properly. Sometimes people can fall out of the system by borrowing money from unfair middle men (who charges them at a unfair interest rate). People who can’t afford to pay the middle man back would be threaten to have their belongings taken away. Microfinance and microcredit gives the poor a chance to earn money the right way. Hope this helps! & Good luck.
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