MICROFINANCING, AN EFFECTIVE TOOL FOR FIGHTING POVERTY

The percentage of the world population living on less than $1 a day fell from 40% to 21% during the decade spanning 1980-90. In China, the GDP per inhabitant has increased fivefold since 1981 and the percentage of people living in a state of extreme poverty has declined from 64 to 17%.

In the next ten years, the total number of inhabitants of the globe living on less than a dollar a day will drop from 1.3 billion to 913 million. 

In spite of these seemingly encouraging figures, in sub-Saharian Africa, the number of people living in extreme poverty keeps on growing and is expected to reach 400 million in 2015. If the current trend persists, 40 years from now more than half of the world’s population, or approximately 4 billion individuals, will have to survive on less than two dollars a day.

The loans to the 66.6 million microfinance clients who are among the poorest of the poor have a direct repercussion on a total of 333 million people, or the equivalent of the populations of the U.K., France, Germany, Italy, Spain, the Netherlands, Switzerland and Norway combined. 

The UN declaration of an International Year of Microcredit in 2005 as part of the Millennium Development Project for reducing poverty worldwide was a strong indication of the importance of the sector’s actions and impact. 

It has been proven that microcredit has a positive impact on the level of profits, investments and access to macroeconomic markets. On the level of households, microcredit has a positive impact on consumer spending. And on the individual level, microcredit has resulted in greater regard for spouses and children.(Study conducted by PlaNet Finance in Morocco in 2004)

Microfinance institutions are in permanent contact with their clients and have the means to facilitate the distribution of services that enhance the value of microfinance by associating them with the promotion of good practices in matters of health, education and the environment.