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Microfinance for women driving social change around the world

By Catholic Online (NEWS CONSORTIUM)
February 29th, 2012
Catholic Online (www.catholic.org)

Microfinance can help women in developing countries by transforming gender equations in public and private spheres, according to the Fifth Global Microfinance Summit. However, not all microfinance institutions (MFIs) are in business to contribute to this outcome. Regardless, the cultural and economic impact is significant.

LOS ANGELES, CA (Catholic Online) - During last November's summit, world leaders in microfinance came together to discuss the impact of microfinance on women, in addition to addressing a series of other topics. 

Microfinance is revolutionizing third-world economies by providing money to people in developing nations which they can invest in local infrastructure and businesses, hopefully creating new opportunities for the people and driving development. 

Most of the money for microfinance comes from small investments usually made by people in wealthier nations. A typical microfinance loan can be as small as a few dollars, which can earn an investor a share in a larger loan, to an amount of several hundred dollars. Some larger loans range into the low thousands. 

These loans, while small change for most in the developed world, represent large sums to third world peoples. They permit the acquisition of critical equipment and material that is needed to start small business and build infrastructure improvements overseas. 

Some microfinance institutions are focused on development and specialize in making loans to women and disadvantaged minorities. The goal behind these loans is to spur social change. Other microfinance firms are focused on profits, and they make riskier loans at higher interest rates. 

For women, microfinance can be a way out of a life of poverty. Some microfinance institutions also provide training to entrepreneurs enabling them to make the most of their money and maximize their success - and the odds of the loan being repaid. 

Because in many countries, women spend most of their incomes on household needs and children, the loans provide a supplemental source of income that women can use to invest in entrepreneurial projects. Projects might include starting cooperatives to produce clothing, crafts, or other products that are in demand. The money from these projects can then be returned to the community enriching everyone. 

The income also makes women more self-sufficient, giving them negotiating power in the household and community. With an income, women can demand better treatment and a degree of equality, which they may not otherwise have if they are left at the mercy of their husbands who would otherwise control the household.

With women comprising 80 percent of the world's most impoverished population, no number of efforts to provide education and opportunities will be wasted. Microfinance is changing the game for many women around the world, and represents a dramatic reversal of fortune for millions. 

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