4.3 - Microfinance Schemes

Question 1

What are microfinance schemes?

Answer 1

Schemes to improve access to finance amongst lower income + impoverished populations

Question 2

What are the typical microfinance schemes?

Answer 2

Micro-Credit
Micro-Savings
Micro-Insurance
Remittance Management

Question 3

What is micro-credit?

Answer 3

Provision of small scale loans to low income citizens

Question 4

What are micro-savings?

Answer 4

Small scale local savings
E.g., charity funded projects

Question 5

What is micro-insurance?

Answer 5

People + businesses not supported by commercial insurance businesses
Extreme poverty safety net

Question 6

What are the benefits of micro-credit?

Answer 6

Overcome savings gap
Encourages entrepreneurship
High rates of repayment

Question 7

What are the disadvantages of micro-credit?

Answer 7

High interest
Low success rate for small business
Alleged forcible debt collection
Relative effectiveness (FDI etc)