TOP Information about Microcredit What is microcredit and why is it important?
Microcredit is the provision of tiny loans (microloans) to those in poverty with the aim of developing entrepreneurial activities and spuring economic growth within small communities. The UN Millennium Project identifies microcredit as “one of the development strategies that should be implemented and supported to attain the bold ambition of reducing world poverty by half.” Conventional banking systems cannot reach millions of poor for whom small loans could make a difference and there are several reasons for this, including the fact that they live in rural areas in dispersed communities. Low levels of education and lack of assets to put up as collateral are two more obstacles to securing a loan. As a result, they may only have access to loans through local money-lenders at exorbitantly high interest rates. A key to microcredit is the recycling of loans. When re-paid, they can be re-loaned, thus multiplying the value of each dollar in defeating global poverty. With small sums of money,
