A tour of our MFI offerings on four continents
Written by Lynn Hamerlinck on 28 July 2021
In 2006, pioneer Muhammad Yunus won the Nobel Peace Prize for providing capital to entrepreneurs who are often starved of finance. He showed that with necessary means, even poor entrepreneurs could start a business and work toward financial independence. This concept is now known as microfinance.
Through our crowdfunding platform, Lendahand contributes to guiding small and medium entrepreneurs in emerging markets towards local microfinance institutions. These MFIs can give them an affordable loan, helping them become formal entrepreneurs and leaving the informal economy behind. For many people working in the informal economy, work involves risks and challenges since these jobs and economic activities are not regulated or protected by the state. One way to do so is by providing access to finance, for example, through microfinance.
MFIs offer a safe and affordable solution to access finance, preventing many poor people from looking to family, friends, and even loan sharks (who often charge exorbitant interest rates) for help. These microloans are significant because they don’t require collateral. However, the interest rates are often high due to the risk of default. Recently, our CEO Koen wrote a blog article where he explains the difference between interest rates here versus in developing countries.
MFIs you can support through Lendahand
Entrepreneurship is the fundamental basis of the microfinance approach to poverty alleviation. That's where it matches so well with the mission of Lendahand. Our crowdfunding platform enables you to invest in a diverse range of established companies in the clean energy and agricultural sector and MFIs who offer loans to local entrepreneurs.
Here's an overview of the local financial institutions in our portfolio that finance small and medium entrepreneurs in emerging markets.
Covering a considerable part of the South Asian region is Funding Societies, which is currently lending in Singapore, Indonesia, and Malaysia. They provide short-term credit to SMEs through their digital financing platform. We had the opportunity to interview founder Kelvin Teo on the story behind the company, their biggest challenges, and the people they serve. You can read the email interview here.
Milaap is one the biggest crowdfunding platforms in India, turning around the lives of many financially marginalized entrepreneurs and making an impact for people in rural areas through their network of field partners.
The majority of microfinancing operations occur in developing nations, such as Uganda. And that’s where all three African MFIs in the Lendahand portfolio are based. While EFC supports the growth of associations in various sectors, fromtaxi drivers to poultry farmers, Opportunity Bank and FACTS focus on financially excluded SME entrepreneurs in rural areas. Their goal is to transform rural livelihoods by offering financial solutions and training.
Other Africa-based companies in our portfolio pave the way to access finance through technology. You can learn more about their work here.
While some financial institutions focus on providing services and account for the general public, others are more likely to serve specific customers with more specialized offerings. MFIs can match their products to meet the needs of agri-businesses or rural women, for example. Portfolio company KORI offers group loans to Peruvian women who are mainly active in the informal sector to grow their businesses.
In Nicaragua, MiCrédito is literally going the extra mile by visiting rural communities by motorcycle to offer loans and financial assistance to small entrepreneurs’ doorstep.
Even on the European continent, Lendahand supports a capital provider who enables funding to SMEs. Mikro Kapital provides loans to SMEs in urban and rural areas in Moldova, where development has been either stuck or regressed.
By investing in MFIs through the Lendahand platform, you can support entrepreneurs who have the skills, ideas, and will to start businesses. Head to our projects page to see if there’s a project of your interest available.
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