MICROFINANCE 101

Microfinance is pretty simple, really. Give someone a loan, and let them start or grow a business. Simple finance. But what makes it micro? The loan amounts. Most microloans are for around $200 to $400, and are paid back over the course of 10 months to a year.

That’s the important part. Microfinance requires the loans to be paid back, with interest. This means that the working poor who receive these loans must find a smart way to use the loan to make enough money to pay it back. And, to make it worth their while, they must find a way to make enough money to cover the interest and take some home along the way. And, what is most cool about microfinance is that it is working! It is changing lives around the world.

In 1976, Muhammad Yunus invented the idea of microfinance when he lent 42 villagers a total of US$26 in Jobra Bangladesh. That’s just under 62 cents per person. With the money from these loans, the villagers were able to buy a little more each time they visited their suppliers; more baskets, more beads, more wicker. Since they were able to buy more each time they went to the supplier, it meant they didn’t have to visit them as often. So, they were able to spend more time at the market selling their goods. And therefore make more money.

Accelerating Microfinance

At Chaka, we say that we ‘accelerate microfinance.’ We do so the same way that Yunus set out, by helping artisans find more and better ways to sell their goods.

Fast forward from 1976 to today. Micro-artisans all over the developing world are now taking out microloans to help them make more of what they make, and to make it better. But, the problem that they find is that they have limited options to sell. Local markets are often flooded with similar goods, and despite the quality and beauty of the product, the buyers are few.

So, as we see it, the solution is simple: give these artisans a presence in the global marketplace, showcase their beautiful goods, and grow alongside them! The Chaka MarketBridge helps artisans to get more from their microloans, by boosting and smoothing sales. So that micro-artisans are able to see a quicker return on their investment, gain higher sales to better pay back their loans, and bring home more money to support their families.

For a complete description of how Chaka MarketBridge Accelerates Microfinance, check out our mini-blog series called “Accelerating Microfinance”

  1. It Takes Time: Accelerating Microfinance – Part I
  2. Including Micro-Artisans: Accelerating Microfinance – Part 2
  3. Closing the Loop: Accelerating Microfinance – Part 3

 

 

Barrio Fund

As we work to grow communities, through local markets, we come to love the people and the communities themselves. So, we want to go the extra step to make life a little better. That’s why we’ve created the Barrio Fund.

read more on barrio >

 

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