Microfinance describes the provision of financial services to people in developing regions. Often focused on building the economic independence of individuals and their communities, micro-entrepreneurial projects are common in rural and remote areas and aim to boost the economic development of entire communities.
Microfinance organisations may focus their services on a particular region, such as South East Asia, or on a particular segment of the market such as rural women. There are various non-profit microfinance organisations which work in developing nations, with some based in Australia.
Microfinance is important because the provision of financial services allows low-income individuals and groups to invest in the growth of their communities in a sustainable way.
Microfinance is different to a hand-out in more ways than just the loan repayment – providing micro-entrepreneurs with access to financial services aids economic development and empowers the entire community.