Microfinance

Expanding Microfinance Access

Microfinance can be defined as the supply of banking services to micro-enterprises and poor households. Apart from microcredit, microfinance services includes savings, insurance and money transfers.

DanChurchAid is the Danish NGO with the highest level of microfinance activities. In 2007 we supported microfinance in 50 projects in 14 countries. Microfinance can be the core focus of an intervention, or a component in our integrated approaches to development in an area.

How we work with microfinance

DanChurchAid's partner, the Lutheran World Federation, has been establishing a total of 200 community-based village banks since 1996 providing microsavings and microloans. Watch this small film about a rice bank, where villagers can save or lend rice. Thus, the bank is both an insurance against hunger disasters, and a way of accumulating savings as a village.

Microfinance can be a powerful tool in improving the livelihoods of the poor. Access to microfinance services often has a positive impact on food security and livelihood situation for poor households. Especially savings services have shown to reduce vulnerability thereby improving food security and stability in the face of economic shocks like droughts, decease or death. Also, being part of a microfinance group or a client in microfinance institution can increase self-confidence and build up acceptance and credibility in ones community..

When we work with microfinance, we are committed to do so in a sustainable and responsible way. Microfinance is always complemented by other advocacy and empowerment initiatives and when setting up credit and saving schemes we ensure that the necessary capacity and procedures are in place to ensure repayment and monitoring. Borrowers must have the necessary repayment capacity and must be protected from excessive debt..

Read more on our approach to microfinance in our guidelines

Or get a quick overview here

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