What is microfinance?
Millions of low-income individuals who
would like to set up a small business to support their families are
often excluded from doing so because banks won't grant loans
without collateral to borrow against or a credit history. World
Vision's microfinance programme seeks to address this problem by
providing small business loans (also known as microloans or
microcredit) and other financial services that give these
individuals the working capital they need to grow a business and
work their way out of poverty. Once repaid, these loans are then
recycled back into the programme to help other borrowers break the
poverty cycle, too.
Issues covered: Poverty, economic development,
lack of access to small business loans and other financial
services
Focus country: Tanzania
Why choose microfinance with World Vision?
World Vision partners with VisionFund International, a
wholly-owned subsidiary of World Vision, to distribute small loans
to hard-working entrepreneurs in impoverished areas. VisionFund
International is one of the world's largest microfinance
institutions (MFIs), with a total loan portfolio of more than
US$360 million. By partnering with VisionFund, World Vision can
combine microfinance - which can't end poverty alone - with its
other core development work (e.g. providing clean water,
healthcare, nutritious food and education), resulting in a unique
and truly integrated approach to community development.
What do microfinance and small business loans achieve?
Microfinance breaks the cycle of poverty by supporting
entrepreneurs to establish small, sustainable businesses and create
self-sustaining communities. As these businesses grow, new jobs are
created. People can save for the future, send their children to
school, pay for essential medical care and protect their children
from forms of exploitation such as child labour. The small business
loans are then repaid and the funds recycled back into the
programme to help other borrowers achieve financial independence.
This means the loans multiply many times over, helping families and
communities for generations to come.
Since 1993, World Vision and VisionFund have distributed more
than 3.1 million small business loans, totalling nearly US$1.4
billion. In 2010, every microloan, on average, created or improved
1.7 jobs and benefited 13 people's lives.
World Vision New Zealand successfully partnered with VisionFund
Mongolia from 2007 to 2011. During this time VFM realized
significant increases in the number of clients (49%) and the size
of the loan portfolio (711%). By combining a state-of-the-art loan
tracking system with high standards for client selection, the rate
of loans repayments made on time remained high at more than 98%.
With VisionFund Mongolia well on its way to covering its core
operational costs, World Vision New Zealand began transitioning its
support to VisionFund Tanzania in October
2011.
How can you get involved?
You can help hard-working entrepreneurs in Tanzania turn their
sound business ideas into a steady stream of income, breaking the
cycle of poverty.
- $40 a month for a year will help one entrepreneur turn their
fortunes around, providing access to fair-interest small business
loans and insurance
- $120 a month will help support three entrepreneurs for a
year
To make a regular contribution to World Vision microfinance,
call us on 0800 800 776.
If you can't make a regular contribution, but would still like
to support microfinance in Tanzania, you can also make a one-off
donation.
- $480 will provide a microloan to a hard-working
entrepreneur
- $4200 will fund a community bank, helping the poorest of the
poor gain access to credit.