Micro-finance

In developed and developing countries, micro-enterprises, self employment activities and household enterprises are all considered as essential actors for achieving social and economic development. Therefore, microfinance has become very fashionable and is attracting increased attention.

At CORCAH, our objective is to be a one stop microfinance information hub, providing a forum for non-governmental organizations, donors, and leaders. Most of the world's poor people lack access to basic financial services that would help them manage their assets and generate income. This is especially true for the 900 million extremely poor people who live in rural areas of developing countries. In North Africa and Near East, about 66 per cent of poor people live in rural areas.

What characterizes most poor people is not only their small income but also the irregularity of this income. Basic financial services can help stabilize the financial situation of poor people and can contribute to fighting poverty in rural areas. However, with little secure income or collateral, poor people are seldom able to obtain financial services from banks and other formal financial institutions. Through microfinance institutions such as credit unions, financial non-governmental organizations and even commercial banks, poor people can and do obtain small loans, receive money from relatives working abroad and safeguard their savings.

“We want to explode the myth that we don't know how to end extreme poverty," says Anne Hastings, Fonkoze's director. "Microfinance is a way out of poverty for those ready to participate," says Hastings. "But those in extreme poverty are not yet ready. Getting them ready is our challenge."

A large body of evidence shows that financial sector development is important for growth and poverty reduction. Without it, economic development may be constrained even if other conditions are met. But there are large gaps in the provision of financial services to the poor. While microfinance has been seen as a solution, experience shows that it cannot fill this gap by itself. A widening of financial services provision by private institutions – such as banks - in the formal financial sector is necessary to tackle this problem on an adequate scale.

By performing our functions, we empower people to learn the know-how to increase savings and investment, encourage cash inflows, and ensure finance is allocated to the best projects. Our goal is to boost long-run growth by increasing the amount of capital in the economy. 

Our approach can also reduce poverty through its positive impact on growth.  Access to financial services allows the poor to benefit from the same financial sector functions that stimulate overall growth.

The poor in developing countries often do not have access to ongoing, formal financial services, and are forced to rely instead on a narrow range of expensive and often risky informal services. This constrains their ability to participate fully in markets, to increase their incomes and to contribute to economic growth.  

CORCAH's goal is to provide the self-employed poor with access to reliable financial services. We are ready to provide technical support to those partners who are committed to the goal of becoming specialized microfinance institutions.