What is Microfinance?

Microfinance has been strategically developed as a resistance to poverty and social exclusion which is founded on principles of a 'welfare' response but is based on the efficiencies and economics of a market response.

More specifically, it is a set of tools, approaches and strategies which have grown up around addressing the financial needs of the poor; people who do not have ready access to Mainstream financial services and who are subject to the exploitative conditions of 'fringe' financial services such as pawnbrokers (Ingrid Burkett - Current Realities & Future Possibilities, 2003).

Good-Shepherd-Microfinance-250NAB-250Maria Girdler from the Macquarie Legal Centre succinctly identified the main credit and debt issues for low income earners;

  • Difficulty saving on a low income
  • Lack of access to low cost credit
  • Assessed as being high credit risk
  • Lack of education/understanding of credit
  • Touting by credit providers
  • Access to high cost credit and consequent indebtedness
  • Lack of knowledge about remedies/redress
  • Limits of government regulation/intervention