Microfinance is a financial service that focuses primarily on very small loans to help people without traditional access to credit. A microloan can be as small as $20, but for people in rural or impoverished areas of the world, $20 dollars can represent a month of income. More than 1 billion people (nearly 18% of the world’s population) live on less than $1 dollar of income per day. Microfinance allows these “extreme poor” to receive income to help lift themselves out of poverty.
A major pioneer of the microfinance movement is Muhammad Yunus, a banker, economist, and Nobel Peace Prize laureate from Bangladesh. Witnessing the poor and desperate conditions of the “extreme poor” in his home country, Yunus set out to create a financial network to benefit these people. In his bestselling book, Creating a World Without Poverty, Yunus detailed his microcredit concept and development of a “social business”. Loans would be small enough for people to repay them without much trouble. Women and groups of people could receive a loan to help their family or start a business. People would meet in support groups to ensure nobody fell behind on payments.
The “social business” model of microfinance developed by Yunus has transformed opportunities for the poor. Microfinance allows people to achieve dreams of supporting a family and helping their communities. Organizations like Yunus’ Grameen Bank have given people access to not only loans, but telephones, the Internet, and nutritious foods as well. We are proud to continue Muhammad Yunus’ work here in the United States and around the world.