Microfinance is a vital and growing counterpart to development aid - directly reaching those in need and promoting lifelong self-reliance
Loans, not aid
By providing fair loans instead of aid disbursements, microfinance institutions are a sustainable, long-term solution.
Today’s microfinance is largely based on the Grameen Bank model, made famous by Nobel Prize winner Muhammad Yunus. Local field offices work with borrowers in small groups. Collective responsibility within the group serves as collateral to safeguard the loans.
Filling the gap
Microfinance steps in where traditional banks are unwilling or unable to operate, providing loans and services where they would otherwise be unavailable.
Borrowers without collateral are viewed negatively by ordinary banks and the amounts involved in microfinance offer them insufficient returns. Microfinance fills a gap in the market otherwise claimed by predatory moneylenders.
Today´s microfinance is the helping hand that lets individuals turn their own lives around. No one exemplifies this better than Nguyen Thi Naht, a struggling single mother in Vietnam.
Sha saw there was no seamstress in her village, so she borrowed less than € 100 from the local Oikocredit project partner and signed up for a dressmaking course. After paying that off, she borrowed € 135 to byu a sewing machine.
Today, she is proud to have a stable income that provides for life's necessities, meets her repayment schedule, and pays school fees to educate her two children.