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    Legan R. Bequillo Bsba-Mfa 3A Introduction To Microfinance

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    Microfinance originated in the 1970s through organizations like the Grameen Bank that pioneered providing small loans to poor people. Over time, microfinance expanded to include other financial services like savings and insurance. Key figures like Muhammad Yunus and organizations like Grameen Bank demonstrated that poor people could repay loans and access financial services. Today, over 16 million people are served by more than 7,000 microfinance institutions worldwide. The United Nations designated 2005 as the International Year of Microcredit to promote microfinance as an important part of development. Muhammad Yunus and Grameen Bank were awarded the Nobel Peace Prize in 2006 for their work creating economic and social development through microcredit.

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    Legan R. Bequillo Bsba-Mfa 3A Introduction To Microfinance

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    Microfinance originated in the 1970s through organizations like the Grameen Bank that pioneered providing small loans to poor people. Over time, microfinance expanded to include other financial services like savings and insurance. Key figures like Muhammad Yunus and organizations like Grameen Bank demonstrated that poor people could repay loans and access financial services. Today, over 16 million people are served by more than 7,000 microfinance institutions worldwide. The United Nations designated 2005 as the International Year of Microcredit to promote microfinance as an important part of development. Muhammad Yunus and Grameen Bank were awarded the Nobel Peace Prize in 2006 for their work creating economic and social development through microcredit.

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    Microfinance originated in the 1970s through organizations like the Grameen Bank that pioneered providing small loans to poor people. Over time, microfinance expanded to include other financial services like savings and insurance. Key figures like Muhammad Yunus and organizations like Grameen Bank demonstrated that poor people could repay loans and access financial services. Today, over 16 million people are served by more than 7,000 microfinance institutions worldwide. The United Nations designated 2005 as the International Year of Microcredit to promote microfinance as an important part of development. Muhammad Yunus and Grameen Bank were awarded the Nobel Peace Prize in 2006 for their work creating economic and social development through microcredit.

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    23 views3 pages

    Legan R. Bequillo Bsba-Mfa 3A Introduction To Microfinance

    Uploaded by

    beng
    Microfinance originated in the 1970s through organizations like the Grameen Bank that pioneered providing small loans to poor people. Over time, microfinance expanded to include other financial services like savings and insurance. Key figures like Muhammad Yunus and organizations like Grameen Bank demonstrated that poor people could repay loans and access financial services. Today, over 16 million people are served by more than 7,000 microfinance institutions worldwide. The United Nations designated 2005 as the International Year of Microcredit to promote microfinance as an important part of development. Muhammad Yunus and Grameen Bank were awarded the Nobel Peace Prize in 2006 for their work creating economic and social development through microcredit.

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    Legan R.

    Bequillo
    BSBA-MFA 3A

    INTRODUCTION TO MICROFINANCE

    How microfinance was created?


    The today use of the expression microfinancing has it roots in the 1970s when
    organizations, such as Grameen Bank of Bangladesh with the microfinance pioneer
    Mohammad Yunus, where starting and shaping the modern industry of microfinancing.
    Another pioneer in this sector is Akhtar Hameed Khan. At that time a new wave of
    microfinance initiatives introduced many new innovations into the sector.

    Many pioneering enterprises began experimenting with loaning to the underserved


    people. The main reason why microfinance is dated to the 1970s is that the programs
    could show that people can be relied on to repay their loans and that its possible to
    provide financial services to poor people through marketbased enterprises without
    subsidy. Shorebank was the first microfinance and community development bank
    founded 1974 in Chicago.

    An economical historian at Yale named Timothy Guinnane has been doing some
    research on Friedrich Wilhelm Raiffeisens village bank movement in Germany which
    started in 1864 an by the year 1901 the bank had reached 2million rural farmers.
    Timothy Guinnane means that already then it was proved that microcredit could pass
    the two tests concerning people payback moral and the possibility to provide the
    financial service to poor people.

    Another organization, The caisse populaire movement grounded by Alphone and


    Dorimne Desjardins in Quebec, was also concerned about the poverty, and passed
    those two tests. Between 1900 to 1906 when they founded the first caisse, they passed
    a law governing them in the Quebec assembly; they risked their private assets and must
    have been very sure about the idea about microcredit.

    Today the World Bank estimates that more than 16 million people are served by some
    7000 microfinance institutions all over the world. CGAP experts means that about 500
    million families benefits from these small loans making new business possible. In a
    gathering at a Microcredit Summit in Washington DC the goal was reaching 100 million
    of the worlds poorest people by credits from the world leaders and major financial
    institutions.

    The year 2005 was proclaimed as the International year of Microcredit by The Economic
    and Social Council of the United Nations in a call for the financial and building sector to
    fuel the strong entrepreneurial spirit of the poor people around the world.
    The International year of Microcredit consists of five goals:

    Assess and promote the contribution of microfinance to the MFIs


    Make microfinance more visible for public awareness und understanding as a very
    important part of the development situation
    The promotion should be inclusive the financial sector
    Make a supporting system for sustainable access to financial services
    Support strategic partnerships by encouraging new partnerships and innovation to
    build and expand the outreach and success of microfinance for all
    The economics professor Mohammad Yunus and the founder of Grameen Bank were
    awarded the Nobel Prize 2006 for his efforts. The press release from nobelprize.org
    states:

    The Norwegian Nobel Committee has decided to award the Nobel Peace Prize for
    2006, divided into two equal parts, to Muhammad Yunus and Grameen Bank for their
    efforts to create economic and social development from below. Lasting peace can not
    be achieved unless large population groups find ways in which to break out of poverty.
    Micro-credit is one such means. Development from below also serves to advance
    democracy and human rights. Muhammad Yunus has shown himself to be a leader who
    has managed to translate visions into practical action for the benefit of millions of
    people, not only in Bangladesh , but also in many other countries. Loans to poor people
    without any financial security had appeared to be an impossible idea. From modest
    beginnings three decades ago, Yunus has, first and foremost through Grameen Bank,
    developed micro-credit into an ever more important instrument in the struggle against
    poverty. Grameen Bank has been a source of ideas and models for the many
    institutions in the field of micro-credit that have sprung up around the world.
    Every single individual on earth has both the potential and the right to live a decent life.
    Across cultures and civilizations, Yunus and Grameen Bank have shown that even the
    poorest of the poor can work to bring about their own development.
    Micro-credit has proved to be an important liberating force in societies where women in
    particular have to struggle against repressive social and economic conditions. Economic
    growth and political democracy can not achieve their full potential unless the female half
    of humanity participates on an equal footing with the male.
    Yunuss long-term vision is to eliminate poverty in the world. That vision can not be
    realised by means of micro-credit alone. But Muhammad Yunus and Grameen Bank
    have shown that, in the continuing efforts to achieve it, micro-credit must play a major
    part.

    What is difference of microfinance and microcredit?


    Microfinance means the broad spectrum of financial services such as loans,
    insurance, savings etc. provided to the people of low-income groups.
    Conversely,Microcredit alludes to a small loan provided, at a low-interest rate, to
    the persons of below poverty line to make them self-employed, i.e. to help the
    small entrepreneurs start their own business.

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