What Is Connection Between Microfinance and Poverty Reduction?

Microcredit is a credit service for poor, low-income, or micro-enterprises (family businesses), known internationally as microcredit; its main feature is the absence of mortgages and flexible guarantee policies. Microfinance is a financial service for the poor, low-income population and microenterprises. It includes financial services such as microcredit, savings, remittances, and microinsurance. It is internationally known as microfinance.

Microfinance, microfinance and inclusive finance

Right!

Microcredit is a credit service for poor, low-income, or micro-enterprises (family businesses), known internationally as microcredit; its main feature is the absence of mortgages and flexible guarantee policies. Microfinance is a financial service for the poor, low-income population and microenterprises, including microfinance,

2009 Central Document No. 1

What is microfinance?

Judging from the development process and business development, the main business in microfinance is still microfinance and savings. Other businesses are often developed on the basis of microfinance business and customer base, and are developed in conjunction with microfinance business.

The term microfinance was first promoted globally by the World Bank, and the "Poverty Alleviation Advisory Committee" (CGAP), which was initiated by it, is the most authoritative microfinance research and promotion institution in the world.

Typical customers of microfinance:

The low-income groups who do not have access to formal financial institutions are mainly the poor and some economically vulnerable non-poor people. They generally have continuous, regular income and better solvency.

In rural areas, it usually refers to small farmers and people engaged in small, low-income labor. For example, they grow crops, raise livestock, perform food processing and small businesses.

In cities, the types of customers are more diverse, including retailers, service providers, street vendors, and more.

However, the extremely poor and the poor who have no source of income and the homeless are not covered by microfinance services. They rely mainly on the relief of the national poverty reduction project to obtain the most basic living security.

The salient features of microfinance:

Single transaction amount is very small, generally below average per capita GDP

What is inclusive finance?

"Inclusive financial system" is a new concept advocated by the United Nations system during the 2005 International Year of Microfinance, and the English name is Inclusive Financial Sectors. Its purpose is to achieve the Millennium Development Goals (MDG). It advocates the provision of universal financial services to all individuals and businesses with financial service needs, with special emphasis on the development of microfinance and microfinance and their integration into the entire financial system. . The United Nations calls on governments to formulate policies and corresponding regulatory measures to promote the development of an inclusive financial system. China's microfinance development and promotion network first cited this concept as the development vision of the network.