What Do We Know about the Impact of Microfinance?

Created with Sketch.

In September 2000, the member states of the United Nations unanimously adopted the Millennium Development Goals (MDGs), a set of eight, specific, measurable, time-bound targets that challenge countries to improve the welfare of the world’s poorest people. There is mounting evidence to show that the availability of financial services for poor households – microfinance – can help achieve the MDGs.

Eradicate extreme poverty and hunger
Empirical evidence shows that, among the poor, those participating in microfinance programs who had access to financial services were able to improve their well-being both at the individual and household level much more than those who did not have access to financial services.

• Bangladesh Rural Advancement Committee (BRAC) clients increased household expenditures by 28% and assets by 112%.
• After more than eight years of borrowing, 57.5% of Grameen borrower households were “no longer poor” as compared to 18% of non-borrower households
• In Lombok, Indonesia, the average income of Bank Rakyat Indonesia (BRI) borrowers increased by 112%, and 90% of households graduated out of poverty.
• In Vietnam, Save the Children clients reduced food deficits from three months to one month.
• At Kafo Jiginew in Mali, clients who has been with program for as little as one year were significantly less likely to have experienced a period of acute food insecurity; and those that had, had experienced a shorter period.