Microfinance: a step out of poverty

It is often assumed that poor people are poor because they have no money and that in order for them to break out of this vicious cycle of poverty they need to be given loans with which to set up small income-generating businesses.

But that is only part of the solution.

Many poor people, do have money, albeit very small amounts. The problem they often encounter is how to manage the small amounts that they wish to save because there is nowhere safe to keep their income. Without facilities to help them to save, their money will end up being used for their immediate needs or to help out friends or family.

Plan's experience in working with local communities has shown that given the chance, poor people can and will save a little bit everyday. This money could be set aside to pay for school fees, for medical emergencies, to invest in a small business or indeed to pay for a family wedding. Women who participate in 'microfinance programmes' [Microfinance, the provision of small loans and savings facilities, is an effective way for poor people to increase their economic security and  reduce poverty] generally develop a stronger ability to negotiate on behalf of themselves and their children.Plan works in partnership with local microfinance organisations to establish and support lending and saving programes that can eventually become financially self-sufficient. This in turn has a positive impact on the lives of poor children.

These programmes over the years have given women like Laila from Bangladesh, Filomena from Boliva, Sitamaya from Nepal and many other women from Ghana, Guatemala, Haiti, Kenya, Mali, Niger, Peru, Senegal, Tanzania, Togo, Uganda and China the chance to access saving and credit facilities to make a huge difference to their children's future.