Sustainable finance refers to financial investments done that keep in mind ESG (Environment, Social, and Governance) factors of activities observed by Bahaa Abdul Hussein. Sustainable finance will be effective when it ensures the underprivileged get access to finance. This is where microfinance has proved to be highly useful. We look at how microfinance can empower the underprivileged.
It is always easy for the privileged to get finance when they need it. They would have assets that would convince lenders to offer them finance. The problem is for the underprivileged who do not have assets. When they need finance, they find it almost impossible to get finance. A similar case hold goods for small businesses who find it difficult to raise funds. Microfinance has proved to be a boon for the underprivileged.
Conventional financial institutions consider the underprivileged as high-risk and refuse to lend to them. Microfinance has helped in ensuring finance reaches the poor and people who stay in villages and far off areas. It has also proved to be highly beneficial for small businesses that otherwise find it difficult to raise funds.
The following describes how microfinance has helped in empowering the underprivileged:
- It helps borrowers from low-income groups to get finance. They can then use this finance to run small businesses or to run their house. It thus helps the poor to be able to get money to sustain themselves. When small businesses are funded, it helps in ensuring employment creation and poverty alleviation.
- One of the biggest benefits of microfinance has been women empowerment. Microfinance institutions make it easy for women to get finance. This money can be used to improve their livelihood and earn income.
- Apart from offering finance for businesses, microfinance has played a key role in improving access to education for women. The money they get can help them pay fees for their education.
- An important benefit of microfinance is ensuring inclusion. People who otherwise find it very difficult to get access to finance have been helped by microfinance. Those who stay in remote areas find it difficult to access finance. Microfinance institutions have helped in reaching out to them. This has helped in both poverty alleviation and creating jobs.
Microfinance has thus helped in creating economic growth. More people are now getting finance to help them earn money. All this has contributed to increased economic growth and overall development. It has helped in ensuring sustainable development.
The article has been written by Bahaa Abdul Hussein and has been published by the editorial board of www.fintekdiary.com
