Microfinance facts for kids

Community-based savings bank in Cambodia

Microfinance is the idea to provide services banks and insurance companies provide to those people who usually are not served by such businesses. It is an important form of development aid. Serving these people is usually very expensive for banks and insurance companies; that is why they usually do not do it. Speciaized NGOs provide these services:

• Banking and other services are based on a personal relationship, rather than commercial interests.
• Very often, several people apply for a loan or insurance together.

As an example, microfinance allows people in underdeveloped countries to start their own businesses for their family.

Images for kids

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  An Afghan woman doing microfinanced sewing work

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  Financial needs and financial services.

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  Saving up

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  Saving down

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  This shop in South Sudan was opened using money borrowed from the Finance Sudan Limited (FSL) Program. This program was established in 2006 as one of the only microfinance lenders in the country.

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  Example of a loan contract, using flat rate calculation, from rural Cambodia. Loan is for 400,000 riels at 4% flat (16,000 riels) interest per month.

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  These goats are being raised by Rwandan women as part of a farm cooperative funded by microfinance.

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  Women of Malawi posing with their savings box

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  A group of Indian women have assembled to make bamboo products that they intend to resell.

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  Two women talk about financial matters. The woman on the right is a loan officer for the Small Enterprise Foundation (SEF). The conversation shown is taking place in Tzaneen, South Africa in February 2010.

See also

In Spanish: Microfinanza para niños