Microfinance: lifting families and communities out of poverty

Saraswati and Minara are two people who inspire our microfinance work

Microfinance has long been hailed as a powerful way for addressing global challenges such as poverty and prosperity.

Case studies have shown that microfinance can help boost incomes. In Bangladesh, for households that diversified out of farming into other business activities through microfinance, income growth was almost 29 per cent higher compared to those whose income remained exclusively from farming. Better access to credit was a key factor in allowing this income diversification.

The development of microfinance, I believe, holds promise for achieving the UN Sustainable Development Goals (SDGs), especially to help alleviate poverty amongst women.

Saraswati’s story

Take Saraswati, who moved to the Varanasi slums in India following her marriage at the age of 13. With three children, meagre and unpredictable income from selling artificial garlands that her abusive
husband spent on alcohol, Saraswati was trapped in a downward spiral of poverty. When her husband passed away, she had no help from either family, and without shelter, sanitation or food, she was forced to approach local money lenders who charged an exorbitant interest rate, trapping her further.

A neighbour told Saraswati about a microfinance institution (MFI) based in Uttar Pradesh that we worked with and which has since developed into a small finance bank. She received training, used a microfinance loan from the MFI to repay the money lender and invested the remainder in scaling up her garland business.

Her business is now flourishing, she has moved out of the slum and been able to educate her children. She is even learning some foreign languages to attract overseas customers to her shop. Saraswati has been able to save, and as a result has paid off her loan, whilst also increasing her financial security, confidence and happiness.

It’s for people like Saraswati that inspire our microfinance business. If people don't have access to credit, they cannot build the new enterprises that will generate additional income streams and jobs. Without savings, they cannot become financially resilient and invest in education, nutrition and better living conditions. If they cannot transfer money, they cannot take ownership of their financial health and use it effectively to support their families or businesses. As a result, people’s choices in life may be very limited.

Microfinance is vital in helping to boost income, ensure cashflow is consistent and reduce vulnerability, particularly amongst women, who experience inequality most keenly and are often dependent on
husbands or male relatives.

Minara's story 

Minara Parvin in Bangladesh grew frustrated at seeing her husband Nazrul working six days a week in a factory for little reward or security. She approached the Admjinagor branch of an NGO that we work with, that blends social enterprise with corporate philanthropy to provide microcredit products alongside quality healthcare services and various social development programs across 22 districts in Bangladesh.

With the help of the NGO and relatives, Minara and Nazrul set up Tapoe Lone Enterprise to produce laces. From small beginnings, the business quickly grew, supplying a variety of garment industries, and now hires 75 people from the local community. They have been able to house and educate their children, giving them a better start in life, and also advise unemployed young people.

Our commitment 

We want to help the underserved people like Saraswati and Minara gain access to financial services, improve their financial security, and increase their family’s life choices. By working with MFIs that work closely with local communities, and who understand their needs and aspirations, our aim is to increase outreach to the unbanked and under-banked sections of the population.

It’s why in 2016 we committed to provide USD1 billion of financing to MFIs by 2020, a target that we hit three years early. In 2018, we provided a further USD690 million to MFIs, and as part of our commitment to help support the SDGs, we are continuing our commitment to microfinance far beyond our original objectives.