Taking a stand against poverty means empowering people to stand on their own. An anti-poverty strategy that continues to help people get on their feet is microfinancing, a source of financial services that helps people lacking income generate own funds and start their own businesses.
Consultative Group to Assist the Poor (CGAP) is taking advantage of mobile banking to innovate financial inclusion for the poor with programs such as M-PESA, the most developed mobile payment system in the world. In addition to this, CGAP has identified a new field called Digital Finance Plus, which is the use of mobile money and branchless banking to help solve big development challenges including access to energy, water, education, health and agriculture.
CGAP has already identified over 60 start-ups that are utilizing mobile services in this fashion, mostly in the agricultural and energy sectors. One business is iCow, an agricultural information service that allows farmers to track their cows, and provides useful information for increasing productivity. Another program is Mobisol, which involves a ready-to-use solar home system that clients pay for on a monthly basis using their mobile phones.
The possibilities are endless with regard to what digital financing can do for helping individuals safely secure basic needs and develop their assets. In the ever-growing tech arena, more attention should be paid to how technology improving current anti-poverty strategies. Additionally, it's important for organizations to partner with recipients in order to be sensitive to their specific needs.
Ways to Get Involved in Microfinancing
Using the lending platform Kiva, people can make a loans for as little as $25 to a borrower of their choice. Kiva’s field partners across the globe receive and allocate funds to borrowers, who then make repayments so the field partner can transfer the money owed to Kiva. To date, the Kiva community has improved the lives of more than one million borrowers.
Opportunity International provides microinsurance, technology, and rural outreach along with banking, savings and loans. The organization's Trust Groups share personal and business advice, financial training, and voting on loan-related topics for borrowers. If one member of the trust group defaults on a weekly payment, everyone else must cover the costs. Whether it’s joining a community, going on an insight trip or investing in a family, there are many ways to get involved at Opportunity.
Data on MFIs
On the other end, microfinance Institutions (MFIs) play a crucial role in having positive outcomes, ranging from nonprofit organizations to large banks. MicroRate and MixMarket establish transparency in the microfinance world. MicroRate’s services include evaluating performance and risk in MFIs and microfinance investment vehicles (MIVs), while MixMarket offers instant access to current data, analytical tools and market intelligence. Both sites offer free reports and data to get users started.
Microfinancing comes down to one word: opportunity. It is an opportunity for lenders and recipients to create and contribute value.