Why Microfinance?

Microfinance is the practice of providing financial services to the poor.

What would life like with no bank account? No insurance? No savings? No student or business loans?

This is the reality that’s faced by the majority of the world’s poorest families. Without these services, individuals are more vulnerable to life’s unexpected circumstances making it nearly impossible to avoid risk and rise out of poverty.

Microfinance aims to solve this problem.

One piece of the microfinance puzzle takes the form of credit: small loans are provided to those who have no access to traditional banks. These loans allow people to invest in their own businesses and increase personal income allowing them to begin savings programs and mitigate the impact of emergency situations such as injury, sickness, or extreme changes in weather.

Microfinance has been proven to be a highly effective tool for development. Instead of charitable hand-outs, microfinance empowers poor entrepreneurs to determine what they need most to improve their lives and then work hard to re-pay the investment. This practice boosts the economic activity of struggling villages, and provides a sustainable method of improving the overall quality of life in poor communities.

While microfinance has had a huge impact on tackling global poverty, the Lumana team is committed to using it as a tool to create a larger impact. By looking at microfinance as an organizing tool for development, rather than an end all solution, we are working to organize other development agencies to build on the success of microfinance and implement programs in the areas of health, infrastructure, agriculture, energy and education. Combining the trust we have built with our cooperative groups with the power of social entrepreneurship, we seek to address a wider variety of problems for the poor and build healthier, more sustainable communities.