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Types of Microfinance Clients

The document discusses four main types of microfinance clients: the economically active poor, low-income households, the unbanked and underserved like women and youth, and informal sector operators. Microfinance clients are typically self-employed entrepreneurs with stable but low incomes who lack access to formal financial institutions due to their poverty. Microfinance aims to serve this excluded market segment through providing financial services tailored to their needs.

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Riyan Elaine
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45 views1 page

Types of Microfinance Clients

The document discusses four main types of microfinance clients: the economically active poor, low-income households, the unbanked and underserved like women and youth, and informal sector operators. Microfinance clients are typically self-employed entrepreneurs with stable but low incomes who lack access to formal financial institutions due to their poverty. Microfinance aims to serve this excluded market segment through providing financial services tailored to their needs.

Uploaded by

Riyan Elaine
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Types of Microfinance Clients

1. The economically active poor.


2. Low-income households
3. The un-banked and underserved people, particularly vulnerable groups such as women, youths and
the physically challenged.
4. Informal sector operators, micro-entrepreneurs and subsistence farmers.

The typical microfinance clients are low-income persons that do not have access to formal financial
institutions. Microfinance clients are typically self-employed, often household-based entrepreneurs.
In rural areas, they are usually small farmers and others who are engaged in small income-
generating activities such as food processing and petty trade. In urban areas, microfinance activities
are more diverse and include shopkeepers, service providers, artisans, street vendors, etc.
Microfinance clients are poor and vulnerable non-poor who have a relatively stable source of
income.

Access to conventional formal financial institutions, for many reasons, is directly related to income:
the poorer you are the less likely that you have access. On the other hand, the chances are that, the
poorer you are the more expensive or onerous informal financial arrangements. Moreover, informal
arrangements may not suitably meet certain financial service needs or may exclude you anyway.
Individuals in this excluded and under-served market segment are the clients of microfinance.

As we broaden the notion of the types of services microfinance encompasses, the potential market
of microfinance clients also expands. For instance, microcredit might have a far more limited market
scope than, say, a more diversified range of financial services which includes various types of
savings products, payment and remittance services, and various insurance products. For example,
many very poor farmers may not really wish to borrow, but rather, would like a safer place to save
the proceeds from their harvest as these are consumed over several months by the requirements of
daily living.

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