MicroFinancing...say what?

Microfinancing is what you ask? Yes it sounds boring and something that is not interesting. When actually it is quite a revelation. Here is the definition:

"Microfinance is the supply of loans, savings, and other basic financial services to the poor." (CGAP)

As the financial services of microfinance usually involve small amounts of money – small loans, small savings etc. – the term "microfinance" helps to differentiate these services from those which formal banks provide.

Why are they small? Someone who doesn't have a lot of money isn't likely to want to take out a $5,000 loan, or be able to open a savings account with an opening balance of $1,000. Hence – "micro". (Kiva, 2008).

Why is Microfinancing important? It gives people in poverty the opportunity to make a life for themselves and/or their family. People in small villages may not have "credit" to go to the bank and get a loan to start their own business, therefore microfinancing ables them to do so. Here is a woman in need of a loan.

Kate Efejokwu is 40 years old, married with two children and lives in Benin City, Nigeria, where she makes a living selling groceries. She studied this business for 12 months before opening her store in 1999. She is requesting a loan of $1,200 to buy more supplies to sell. She has been a LAPO client for six years.

This woman is seeking only $1200. They are not seeking $20,000 loans to buy a nice new car or to buy a house. They are only needing money to sustain themselves and even expand their business.

How can you help? By going to Kiva.org you can learn more about how to help out and provide people like Kate money. Kate still needs $275. Remember these are loans, so they repay you and you can withdraw your funds or you can re-invest it to someone else (the better choice of course). There are many different types of people out there, so go learn about them and simply invest and provide people like Kate a positive future.

A friend of my family's who has invested with Kiva wrote me an email the other day. She said her loan to the Kigandazi group is almost repaid! Therefore it does work :) Another side note is Kiva is located in San Francisco, however they have people all over the world who are being provided loans and Kiva's organization is one of the grantees from my job, yet another reason to invest with Kiva.

I would love to hear what you think and if you have invested, plus if anyone wants to all invest in someone, share with us and we can do it!

Happy Investing!