ESG Investing Access to Financial Services through Microfinance
One of the most powerful ways to help those in need is to give them the means to help themselves. Microfinance is doing just that, providing financial access to the unbanked in developing regions across the globe.
Brighter Futures – Microfinance Success Stories
In the Philippines a widow trying to support her family on her own receives a small loan from a local bank. That helps her run a small business and save enough to send her children to school. Today her daughter is the marketing manager of that same bank. In Kenya, a smallholder farmer runs a two-acre farm. He took his first lease to purchase a dairy cow to produce milk for his family and for sales. Another lease allowed him to start a poultry business which enabled him to care for basic needs of his family and the education of his children. In Africa, a microfinance institution (MFI) designs products that help struggling parents afford school fees, even during tough times. As a result they can overcome one of the major barriers to educating their children, and provide them with a brighter future.
These are just a few among a growing number of success stories attributable to microfinance. This is a revolution in development assistance based on the principle of helping people help themselves through microcredits and access to financial services. Unfortunately, it still only reaches a fraction of those who could benefit.
A Powerful Tool – How Microfinance Works
Microfinance began as the practice of providing small loans to microenterprises in developing economies. Today microfinance has expanded to cover a full range of financial services. These include savings, insurance, money transfers, and other products, all delivered in ways that are accessible to disadvantaged people in developing regions.
Microfinance has proven a very effective tool. Access to credit and financial services increases incomes, adds to social stability, and increases economic participation by providing access to basic services such as energy, health, and education. That improves standards of living, and empowers people – particularly women – to the benefit of society as a whole.
Effective, and Profitable – The Appeal of Microfinance
There are many reasons why individuals, charities, and foundations choose to engage in and support microfinance.
Effectiveness. By providing financial access, microfinance supporters and investors can address one of the fundamental causes of poverty around the world. Not only is microfinance effective, it also generally leads to clear outcomes that can be measured.
Profitability. Microfinance can be a good investment on its own. Generally taking the form of investing in the refinancing of microfinance institutions, microfinance investments have many of the characteristics of money market funds (with the exception of high liquidity), while generally delivering attractive returns.
Thanks to its success, microfinance has enjoyed double-digit growth over the past several years. A leader in the field, Credit Suisse had 3.3 billion US dollars of assets under administration in the area of impact investing at the end of 2017. We offer mutual and private equity funds that enable investors to participate directly in microenterprises and microfinance institutions, and provide microfinance investment and advisory services directly to individuals and organizations.