What’s it all about?
Self-employment in what is often called the informal sector has always provided the main economic haven for the disenfranchised and marginalized. Self-employment allows an entrepreneur to use the skills and resources at hand, whether to provide services such as food preparation or domestic work, or whether the work is more market focused, such as agriculture or petty trading and selling. Women flock to the informal sector, where an enterprising spirit and the willingness to work may earn a measure of self-reliance and respect. The informal sector is where micro credit makes a huge difference. Micro credit provides fair business financing to enterprising women for whom a home-based business offers the only opportunity to achieve a degree of economic independence and security.
The microfinance institutions that Micro Credit NOW collaborates with offer financial support to women borrowers in countries where women do not have property rights, and where they are extremely limited in their personal lives by rigid social and moral codes that restrict their activities within the family and particularly in the outside world. Assuming conventional banking was even available in the slums of Mumbai, the Andean highlands or refugee camps in Sierra Leone, poverty, lack of collateral, and illiteracy would disqualify nearly all informal sector businesses run by women from receiving financial services. In such circumstances, poor women would have no hope of acquiring the capital necessary to start an appropriate home-based business. If not for micro credit, many millions of women who have used their ingenuity and persistence to start a business would still be living at a bare subsistence level despite their hard work. Micro credit has enabled them to move their business up a notch and to bring their families from subsistence to sustenance. Many microfinance institutions provide ancillary services to their women borrowers, such as education and health screenings or business training. Some microfinance institutions are able to offer their borrowers additional appropriate financial products, such as insurance and savings accounts.
Around the world in the last 5 years, microfinance has reached over 150 million borrowers, and most of them are women. That is not to say that the job is done, but it proves the job can be done. However, constraints on the availability of loan capital and lack of understanding and appreciation of the value of the microfinance industry by the donor community are still hampering the achievement of stronger outcomes for even more poor women. If you look at the group of people living closest to the edge of survival, 70% of them are women. Micro credit, for all its success, is still not serving all those who would benefit from a small business loan, and capital constraint is at the center of that problem.
Ask small business people anywhere and they will tell you: fair business financing is vital to starting or growing a business. Consequently, the lack of available credit keeps women from making the most of their hard work. We think expanding opportunity for poor women to gain more economic security is a key factor to empower women now and someday achieve gender pairity. Women will nuture and nourish this generation and the next. Improving their ability to do so is a crucial element in improving the human condition.
This is why we at Micro Credit NOW are committed to creating New Opportunities for Women by advocating for and participating actively to increase the capacity and spread the reach of microfinance.
We work for micro credit because micro credit works for women!