In the developing world, microfinance is often targeted at the very poor in rural areas to fund the purchase of e.g. seed or animals. It is targeted at business opportunities so that the borrower uses revenue from the business to repay the loan. In countries where as little as USD25 can be life-changing, microfinance is making huge improvements for those families that take proper advantage of available schemes.
However, in developed countries, microfinance is often a different concept. The amounts are larger, loans might be available only to those with demonstrable income. In short, they are, often, not business start up loans.
The microfinance industry has had its share of scandals, many originated by a lack of understanding of the industry, how it operates and what it does. For many uneducated borrowers, the concept of an enforceable contract is alien, as is the concept that a debt is still due even if the borrower cannot afford to pay it. This leads to criticism where those with conflicting interests argue that lenders should operate a policy of forgiveness.
MicroFinanceNewsNetwork.Com is a new division of BankingInsuranceSecurities.Com. The section will cover all aspects of microfinance from around the world.
Nigel Morris-Cotterill, Head, The Anti Money Laundering Network, ultimate owner of Vortex Centrum Ltd, publisher of BankingInsuranceSecurities.Com says "Microfinance is one of the most important developments in the financial world today. It is a very valuable tool in helping to eradicate poverty - in many ways much more successfully than charitable giving. Microfinance encourages fiscal responsibility, financial education and social responsibility. It follows the essential principle that if you give a man a fish, you feed him for a day but teach him to fish and you feed him for life. That may be a very overworked expression but, in the world of microfinance for business start-ups, especially if the lender helps set up a co-operative to trade the products that are grown or made, there are real and material gains to entire communities. I, personally, am delighted that Vortex Centrum has decided to devote a section to this topic.
"The importance of microfinance in agriculture can be seen in drugs producing areas: historically, when crops have failed and farmers become desperate, organised crime in the form of narcotics growers and traffickers have moved in, providing feed stock, working capital, technical assistance and a guaranteed market. Microfinance can operate to return drugs farmers to independence or, better still, prevent them falling into the hands of drugs producers in the first place. "
www.microfinancenewsnetwork.com is hosted at http://www.bankinginsurancesecurities.com