Micro-finance: three amazing facts

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Micro-finance / Trends

It may not be as in vogue as it was a few years ago, however I still find Micro-finance fascinating.  For those versed in the subject, this will not come as a surprise.  For those new to micro-finance:

  • Average repayment rates typically exceed 98%.  Meaning the vast majority of loans are repaid.  This is achieved often by leading to a group of people or to women – often to both.
  • Interest rates on those loans typically range between 20-30%.  This is amazing considering of the repayment rate (above) and just high-lights the need and desire for such loans.
  • 3B people in the world live on 2 USD a day.  Humbling – and underscores the need for such solutions.  Though whether micro-finance is the right – or even a good – solution is another debate.

Given the above, the major trends in mobile and the internet as well as with the rise of BRIC et al countries, one should expect to see more technology lead start-ups like Kiva and Microplace offering micro-finance solutions.  In my opinion, that would be a great thing.

The Author

Early stage investor at Index Ventures

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