w H Y bi o
The su c c ess o f m i c r o fi n a n c i n g Private individuals and small independents in developing countries usually approach commercial banks in vain. The latter consider these customers as poor borrowers who can rarely or never give any guarantee. Microfinancing focuses on this target group.
The system proves that less fortunate people are creditworthy. Worldwide, 97% of the customers pay back their microcredit in time, which closely matches the performance of commercial banks. Microfinancing Institutions provide not only credit, but also a whole range of financial services such as savings accounts. By granting loans to their clients, they allow them to build up capital, which will be mainly spent on education, health, housing,… If the disadvantaged have a stronger financial position, they are also less dependent on exploitation for example by profiteers. They can stand more securely on their own two feet which gradually shifts social power relations. Microfinancing therefore truly activates the process of ‘empowerment’. In other words it is no coincidence that Muhammad Yunus, the founder of microcredit, was awarded the Nobel Peace Prize in 2006. The Bengalese economist and banker was praised for ”his efforts to make economic and social developments possible from the down up”. Yet microfinancing is no miracle. It does not solve everything but does create opportunities. As a result more can be done to fulfil these opportunities in the most efficient way. That is why microfinancing cannot be considered separately from other development activities. BIO has become the main Belgian investor in micro-financing institutions. BIO implements strict ethical standards when it assesses a microfinancing institution: a loan provided by these of institutions means a debt to the creditor, who must be able to reimburse that debt. BIO only invests in institutions that provide loans on the basis of the solvency of the borrower.
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