A handful of euros can be enough to launch a small commercial business in a developing country. But where can you find the money you need to buy a sewing machine, raw materials or cattle when you can barely afford to eat? The only solution is credit.
Traditional banks only grant credit to customers who can provide a guarantee of reimbursement and a certain number of official documents.But people living in financial uncertainty cannot provide either.Consequently,banks view such customers as too “risky” and refuse to grant them loans.As a result,millions of poor people around the world are excluded from the banking system.
The emergence of microfinance institutions–also known as MFIs–has changed the situation.These “microbanks” have provided economically marginalised households not only with access to microcredit (with loans ranging generally from 50 to 5,000 euros), but also to a whole range of financial products formerly reserved for the “rich”: savings, housing loans, health insurance, etc.Thus, these people that some used to consider as marginal have become genuine micro-entrepreneurs.
Nearly 90% of citizens living in 15 European Union member states have their own bank account. In developing countries, the rate ranges from a low of 6.4% in Tanzania to a maximum of 50% in Brazil.
