Microfinance

I made a list of people who needed just a little bit of money. And when the list was complete, there were 42 names. The total amount of money they needed was $27. I was shocked.

— Muhammad Yunus, economist and founder of the Grameen Bank (describing how microfinance began)

Microfinance is the process of extending small loans and other financial and business services, such as savings, to very poor people, so that they can start up or expand tiny businesses, thus allowing them to care for themselves and their families.

In many developing countries, the self-employed comprise more than 50 percent of the labor force, and many are forced to rely on loan sharks who charge exorbitant interest rates. Microcredit or microfinance programs, on the other hand, provide reasonable interest rates to their clients. In most cases, programs also offer a combination of services and resources to their clients, including savings facilities, health and literacy training, networking, and peer support. In this way, microfinance allows families to work to end their own poverty — with dignity.

Microfinance programs around the world, using a variety of models, have shown that poor people achieve strong repayment records — often higher than those of conventional borrowers. Repayment rates are high because, through a system of peer support and pressure used by many programs, borrowers are responsible for each other’s loans.

RESULTS and Microfinance Advocacy

U.S. Advocacy

For more than 25 years, RESULTS has been a leading advocate for microfinance for the very poor (life on less than $1.25 a day). We were instrumental in passing key laws that mandate that half of all U.S. foreign aid spending on microfinance must benefit the very poor and continue to work to ensure it is fulfilled. We are the leading advocacy group requesting that Congress increase funding for microfinance in our annual appropriations (foreign aid spending) bill.

We are supporting new microfinance legislation in Congress. Learn more and take action.

World Bank Advocacy

RESULTS is also working to urge the World Bank to focus greater resources to help the very poor access financial services. Learn more about our Microfinance and World Bank Campaign.