More definitions. Microfinance is "one of the most promising and cost-effective tools in the fight against global poverty," according to Jonathan Morduch, chair of the UN Expert Group on Poverty Statistics.
The most common microfinance mechanism in use today is "group-based lending." Small groups of (typically) women mutually guarantee one another's loans, which are used to start small-scale businesses. They meet regularly to make loan repayments and hold each other accountable for paying back the loans. The interest charged is typically lower that other credit sources, such as moneylenders.
Today, according to the Microcredit Summit Campaign, there are more than 3,100 institutions offering microfinance services to more than 92 million clients, over 80 percent of whom are women. (More on the reasons why later...)
Microfinance mechanisms are among the range of tools being used by social entrepreneurs in developing countries. I'm curious about whether microfinancal products have potential applications for helping the poor adapt to climate change impacts and protecting ecosystem services or natural capital.
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