Microfinance is the supply of basic financial services such as savings accounts, insurance, and small loans to low-income people in the developing world; people who do not have access to traditional banking services. 

One of the most significant aspects of microfinance is providing small loans with low collateral for individuals to build or expand upon a small, self-sustaining business. These loans are often less than $200 and are often granted to women ₍₁₎. As these loans are repaid, the money is then cycled to other families, providing a sustainable method to achieve economic growth and empowerment.

In 2006, the Nobel Peace Prize was awarded to the pioneers of microfinance, Dr. Mohammad Yunus and the Grameen Bank. The Grameen Bank was founded in Jobra, Bangladesh, in 1976. In 1983 it was transformed into a formal bank under a special law and is owned by the poor borrowers of the bank, who are mostly women. Borrowers from Grameen Bank own 94 percent of the equity of the bank. The remaining six percent is owned by the government ₍₂₎.

Today, as many as 70 countries, both developing and developed have microfinance programs, and it is estimated that over 67 million poor people had access to microfinance services in 2003 alone (3). Microfinance is a proven method of reducing poverty. Studies have shown that microfinance serves as a powerful poverty-alleviation tool, increasing income, protecting against risk and empowering women in the continuing and wide-ranging struggle against poverty in the and its teeming millions.

More facts about Microfinance:

-The Microcredit Summit estimates that US$21.6 billion is needed to provide microfinance to 100 million of the world's poorest families ₍₄₎.

-Many microfinance institutions experience a loan repayment rate of above 97% - thats better than the repayment rate of loans from most traditional banks ₍₅₎.

-Studies have shown that during an eight year period, among the poorest in Bangladesh with no credit service of any type, only 4 percent pulled themselves above the poverty line. But with individuals and families with credit from Grameen Bank, more than 48% rose above the poverty line ₍₆₎.

-In Indonesia, borrowers increased their incomes by 12.9 percent compared to increases of 3 percent in control-group incomes. Another study on Bank Rakyat Indonesia borrowers on the island of Lombok in Indonesia reports that the average incomes of clients had increased by 112 percent and that 90 percent of households had moved out of poverty ₍₆₎.

-Data from the Micro Banking Bulletin reports that 63 of the world's top MFIs had an average rate of return, after adjusting for inflation and after taking out subsidies programs might have received, of about 2.5% of total assets. This compares favorably with returns in the commercial banking sector and gives credence to the hope of many that microfinance can be sufficiently attractive to mainstream into the retail banking sector ₍₆₎

Learn more about microfinance:

www.villagebanking.org

www.planetfinance.org

www.microfinancegateway.org

http://www.uncdf.org/english/microfinance/

www.grameenfoundation.org

As part of the 2007 WSU Honors Institute Symposium on Poverty and Society, the Student Microfinance Campaign is a student-led effort to raise at least $5,000 in order to establish a Village Bank through FINCA International in the African country of Malawi. The Village Bank will provide basic financial services, such as insurance, savings accounts, and loans, all of which are necessary for economic growth.

• contribute to the collection containers located throughout campus
• make a TAX DEDUCTIBLE gift to the Student Microfinance Campaign (see back for more information)
• contact us and volunteer with the fundraising efforts
• learn more about the issue by attending the Honors Institute Symposium on Poverty and Society (www.wright.edu/honorsinstitute/2007 to learn more and register)

Help Us Reach the Goal of al Least $5,000 US

Contact us

Student Microfinance Campaign
243 Millet Hall
Phone: (937) 775-2660
Borchers.17@wright.edu

Checks should be made out to:

Malawi Village Bank Fund

and send to:

Malawi Village Bank Fund
Wright-Patt Credit Union, Inc.
ATTN: Terrie Miller
P.O. Box 286
Fairborn, OH 45324