Micro-credit campaigns have emerged as a meaningful means to expand financial access, providing individuals in underserved communities access to money that was previously unattainable. Micro-credit campaigns make small loans available for individuals who would not otherwise have had access to banking resources. This allows individuals to start or expand a business, improve their financial status and ultimately contribute to the local and global economy.
Understanding Micro-Credit
Micro-credit simply conveys that small amounts of short-term money are lent to individuals that do not otherwise qualify a loan through a traditional financial institution, such as a bank, due to the absence of collateral or the lack of credit history. Micro-credit is designed to assist in breaking financial barriers to achieve economic self-sufficiency, especially in underdeveloped countries built on a system of credit.
Grameen Bank’s initiative in Bangladesh, created by Nobel Prize-winning Muhammad Yunus, illustrates the effect of transformative micro-credit. Since 1983, Grameen Bank has helped expand millions of small loans to clients, particularly females, to start or expand small businesses. The Grameen Bank model has been replicated all over the world with different organizations’ initiatives and micro-lending platforms to meet the finance needs of clients that are often underserved.
The Role of Campaigns in Financial Inclusion
Micro-credit campaigns play a critical role in raising awareness and extending the financial services outreach to underserved communities. Campaigns typically are led by NGOs, fintechs, and local partners working together to have the micro-credit reach the clients and people in need. Campaigns can be a variety of different things, from personal interaction programs to online marketing that is made specifically to reach communities of different economic levels.
Just to illustrate, one of the main ways that M-Pesa in Kenya has been able to help financial inclusion is through the use of its mobile money platform. M-Pesa has gone the way of targeted educational campaigns through which it has made it possible for millions of Kenyans to have access to financial services, even in the most rural and remote areas, where there is a shortage of formal banks. M-Pesa has built on this service over the years and offers users micro-loans where users can access small amounts of credit via their mobile phones. This has promoted financial inclusion because it provides an easy and accessible format to provide financial services.
Digital Microcredit Platforms: Lowering Barriers
The emergence of digital microcredit platforms is a further catalyst for the financial inclusion movement. Using mobile technology, big data, and artificial intelligence, digital microcredit platforms evaluate creditworthiness through alternative data sources, such as mobile phones and social behavior, opening access to credit even for individuals without a traditional credit file.
For instance, Kiva is a service that allows citizens to lend just $25 to an entrepreneur in the developing world, while also extending the micro-lending ecology to a wider global community.. Crowd-lending is another way of democratizing financial access and sharing opportunity and growth.
Economic Empowerment and Social Impact
Micro-credit not only provides financing, it creates avenues for economic empowerment as well. Many communities, especially those in developing countries, exclude women from formal financial systems to a greater degree. Campaigns aimed at women entrepreneurs are closing this gap in access to financial resources and support to run women operated businesses, investing in household income and stimulating local economy development.
About The Author:
Abbhinav R Jain, Co-founder & CFO at AdCounty Media, is an accurate analyst at heart. He combines a passion for numbers with a sharp business acumen. With a strong foundation in business operations, he plays a pivotal role in shaping AdCounty Media’s financial strategy and operational excellence.
