GIC COOP MFI-BOD

What is Microfinance?

Microfinance is the practice of providing financial services such as microcredit, (loans), micro-savings, remittance or money transfers, micro-insurance, pension to low income people who don't have access to conventional banks services for their sustainable livelihoods.

Microfinance institution gives members the opportunity to provide for their children and family through improve household income from the following services:-

- Small loans for working capital;                                                                                                   - informal appraisal of borrowers;

- Collateral substitutes and alternatives such as group guarantee, compulsory savings;       - Access to repeat and take large loan based on repayment performance;

- Streamlined or line of credit loan disbursement and monitoring;                                             -Secured Savings.

GIC COOP-BOD Microfinance has 11 key principles summarized as follows:

1- Poor people need a variety of financial services, not just loan.

2- Microfinance is a powerful tool to fight poverty.

3- Microfinance means building financial systems that serve the poor.

4- Microfinance must pay for itself to reach large numbers of  poor people.

5- Microfinance is about building permanent local financial institutions.

6- Microfinance is not the best tool for everyone or every situation.

7- Interest rate ceiling making it harder for poor people to get credit.

8- The role of the Government is to enable financial services environment, not to provide them.

9- Donor funds should complement private capital, not compete with it.

10- The key bottleneck is the shortage of strong institutions and managers.

11- Microfinance works best when it measures and discloses its performance.