Global poverty is a dire, persistent problem. Proponents of microfinance institutions aim to address this problem through microlending and providing the poor with access to credit and financial services. Three of the most notable microfinance organizations are Grameen Bank, ACCION Internacional, and BRAC.
Grameen Bank
Formally founded in 1983 as a result of Professor Muhammad Yunus’ 1970s research project, Grameen Bank provides microloans to poor rural women in Bangladesh. The organization is considered the origin of the microfinance movement and was awarded the Nobel Peace Prize in 2006.
Since its founding the bank has disbursed almost $10 billion in loans, with a loan payback rate of 97%. Today 95% of the bank is owned by its borrowers, while 5% is owned by the Government of Bangladesh.
To obtain a loan, no collateral is required and no written contract is applied. However, borrowers are organized into groups of five members and if one person does not repay a loan then the other members of the group may not obtain additional funding. Loans can be obtained for housing or to generate income. Grameen Bank’s interest rates range from 0 to 20%.
ACCION Internacional
Founded in Venezuela in 1961 but moving into microfinance in the 1970s, ACCION Internacional’s goal is to alleviate poverty mainly in Latin America, but also in places like Africa, the United States, and India. ACCION partners with local organizations and banks to increase the poor’s access to credit, providing microloans to entrepreneurs as well as job training. From 1999 to 2009, ACCION disbursed $31.8 billion in microloans.
BRAC
Founded in Bangladesh in 1972 but moving into microfinance in 1979, BRAC currently operates in Bangladesh, Sri Lanka, Pakistan, Afghanistan, Sierra Leone, Liberia, Uganda, Tanzania, and southern Sudan, and aims to reduce poverty as well as empower the poor.
BRAC provides microloans, primarily to poor women, without requiring collateral and organizes borrowers into Village Organizations of 30 to 40 people as a local forum for exchanging ideas and disseminating information. Borrowers are also required to build up their savings. In addition, BRAC provides health care services for the rural poor, primary education for poor rural children, disaster relief, and job training to workers in specific sectors like poultry and fisheries.
Microfinance
Through microloans and other services to underserved communities like the rural poor, microfinance institutions like Grameen Bank, ACCION Internacional, and BRAC are working towards reducing global poverty–one person at a time.
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Sarah E. Rogers - Sarah E. Rogers is a freelance writer and translator based in Madrid, Spain. She currently writes for NileGuide as their Local Expert in ...
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