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The
poor in the developing world are on the margins of their national
economies. They often operate on a cash-only basis, so their
transactions go unrecorded by governments.
Their economic activities are classified as
"informal"; they have no collateral, no official business
history, and no bankable worth.
Therefore, they are barred from financial resources which
could enable them to expand and diversify their sources of income,
while granting them the opportunity to join the economic and social
mainstream of society.
Credit
and savings services to the self-employed poor offers them
opportunities to start-up or expand small income generating
activities. More importantly, it enables them to make choices, plan
for the future, and create a more secure financial base for their
families. However, demand for institutional microfinance worldwide
is too high to be met by donor or government funds. It is often
argued that it can only be met if licensed commercial institutions
are able to mobilize local savings and leverage commercial
investment as necessary.
If
Microfinance Institutions (MFI’s) are to make a lasting impact,
they cannot remain dependent on donor funding. They must become
self-sufficient viable financial institutions, or they will collapse
and their impact will end as soon as donor support is no longer
available.
Alcons,
TFA assists MFI’s in exploring this new "frontier" in
microfinance, helping them to bring financial services, on a
sustainable basis, to remote areas that hitherto lacked credit and
savings opportunities, by providing specialized services.
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