Microfinance

The Government of Canada Supports Microfinance in Developing Countries

Building Sustainable Livelihoods

Zachariah Rekaby, a 14-year-old boy from Aswan, Egypt, was often bullied by older boys when he sold noodles in the street. A small loan enabled his family to set up a kiosk, giving him a safer work environment and more time to spend on his schoolwork. This loan came from a microfinance project supported by the Canadian International Development Agency (CIDA). The project, Promoting and Protecting the Interests of Children Who Work (PPIC-Work), offers loans to micro and small businesses on condition that they ensure acceptable working conditions for their young employees.

It is hard to imagine life with no bank account, no credit/debit cards, no insurance, no pension, and no access to loans for business startups, investments, unexpected expenses, or special purchases. For the majority of the world's poorest people, this is reality. When they need money, their choices are few: they can dip into their savings, if they have any; sell their possessions for whatever price they can get; or obtain a high-interest loan from the village moneylender.

Microfinance: Providing Access to Financial Services for the Poor

Microcredit refers to the provision of small loans to people who would otherwise not have access to financial services. The provision of financial services to poor and low-income individuals, known as microfinance, includes microcredit as well as savings, money transfers, insurance, and payment services, among other services. By 2005, an estimated 113 million people around the world were benefiting from microcredit and related financial services, 82 million of whom were among the world's poorest; and, of the poorest clients, 69 million were women.