The role of microfinance
Today, more than 1 billion people live in extreme poverty (less than 1.25 dollar/day); almost 2.5 billion live in poverty (less than 2 dollars/day). Eighty per cent of the world’s population do not have access to financial services, yet some 500 million people manage a profitable business.
Poverty remains a crucial challenge in Africa. Of the 996 million people living on the continent (World Bank 2008), 386 million live with less than two dollars/day.
The fight against poverty has pushed development actors to seek out new tools : microfinance is one of them.
According to the World Bank, microcredit refers to small loans poor families use to develop their economic activities. Microcredit can be used for working capital and small investments, or to expand domestic activity.
The term microfinance refers to the range of financial services provided to the poor and usually implies the development of an existing income generating activity (90% of the time) or the launching of a new business.
« Microfinance has proved its value, in many countries, as a weapon against poverty and hunger. It really can change people’s lives for the better, especially of those who need it most.”
Kofi Annan, UN Secretary-General, opening of the International Year of Microcredit, November 18, 2004.