Microfinance

What is microfinance?

Microfinance is the provision of financial services to the poor.

Essentially microfinance is about providing the poor with the same services that we in developed countries take for granted. Microfinance services include:

• loans (micro credit)
• savings
• micro insurance
• money transfers

Like most Australians, the poor don’t want handouts. All they usually want is a fair go. Microfinance provides the poor with access to credit, enabling them to help themselves by building assets and increasing their incomes.

Microfinance in action

Access to appropriate financial services is both a basic human right and a means to progressing forward in life. Good Return focuses on partnerships with local microfinance institutions to ensure the provision of sustainable financial services for disadvantaged, low income clients and communities.

All of our local partners undergo a thorough due diligence process, and are committed to providing appropriate and sustainable services to the poor.

The interest-free loans that you provide enable our microfinance partners to reach poorer clients. We also provide training and advice to staff so that they can adjust their operations to meet the needs of the poor in an efficient, effective and sustainable way.

Importantly, Good Return facilitates links between microfinance services and business development services and literacy and numeracy training. This ensures that borrowers are able to make effective use of loans and maximise the benefits for their families.

Does microfinance really make a difference?

Many claims have been made about the ability of microfinance to contribute to poverty reduction, but is there any evidence of real impacts?

A review of more than 100 microfinance programs points to evidence that microfinance programs can indeed increase incomes and lift families out of poverty. The review found that access to microfinance empowers women, improves the health and nutrition of the whole family and increases the likelihood of children going to school (Nathanael Goldberg, 2005).

• The Microfinance Gateway - www.microfinancegateway.org

• The Consultative Group to Assist the Poor (CGAP) - www.microfinancegateway.org

• The Microfinance Information Exchange (MIX) - www.themix.org

• The SEEP Network - www.seepnetwork.org

• Microcredit Summit Campaign - www.microcreditsummit.org

• Australian Development Gateway - www.developmentgateway.com.au

A central database of information on international development in the Australian context, providing details of organisations, consultants, work opportunities, discussion forums and information by sector.