Microfinance

$265 million*

Minimum Requirement for American Leadership

 
Microfinance provides the world’s poorest and most marginalized people with access to financial services like credit, savings, and insurance.

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Justification for Funding

  • Microfinance enables poor families to start businesses or meet health, education, or emergency needs, thus helping them lift themselves out of poverty. An estimated 2 billion people have no access to formal financial services.
  • Microfinance began as a way to finance self-employment ventures by poor people who lacked employment or income-generating opportunities, or could not obtain credit. It has since expanded to include poor households’ management of their finances through savings, credit, and insurance; these financial tools can be used for enterprise, education, housing, health care, and alleviating household shocks, such as those from macroeconomic instability or periodic droughts, and other climate-related issues.

Cost of Cuts Below $265 Million

President and Congress Budget Comparison

       Congressional Budget   

       President's Budget Request (Base + OCO)

  • Very little private foreign microfinance investment goes to the countries with the greatest need – or to the most marginalized populations in them.
  • In sub-Saharan Africa, the region with the highest percentage of people living in extreme poverty, almost two-thirds of adults do not have an account at any formal financial institution. 

 

$265 million

Opportunity to Catalyze American Leadership

 

Justification for Full Funding

67%
The percentage of microfinance institutions partnering with USAID that achieved financial sustainability in 2015.

  • By implementing pro-poor microfinance services in conjunction with health, nutrition, livelihood, and other development interventions, USAID microenterprise funding plays a critical role in expanding financial opportunities for the underserved, and ensuring safety nets are in place for the most vulnerable.
  • Strong congressional support has demonstrated U.S. leadership in microfinance and microenterprise development, recognizing these tools as a cost-effective way to reduce poverty and promote economic growth. In FY2015, U.S. microenterprise assistance helped provide approximately 5,986,845 people with access to a microfinance loan or savings account, allowing them to engage in the global economy and help them lift themselves out of poverty.
  • By implementing pro-poor microfinance services in conjunction with health, nutrition, livelihood, and other development interventions, USAID microenterprise funding plays a critical role in expanding financial opportunities for the underserved, and ensuring safety nets are in place for the most vulnerable.
  • U.S. microfinance assistance should focus on improving access to these financial services for the very poor (those living on less than $1.25 a day), and the people most marginalized by the societies in which they live. Public funding is critical for reaching this population.

*Enacted FY18 Omnibus Appropriation

For more information, please contact: Kevin Rachlin, krachlin@interaction.org

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