Micro-finance really came under the spotlight after Professor Mohammad Yunus and Grameen Bank in Bangladesh won the Nobel Peace Prize for their work relating to micro-finance.
Grameen Bank is far from being alone in the micro-finance arena. Today, there are around 3,000 micro-finance institutes in existence worldwide. In total, they have more than 80 million clients, impacting on more than 400 million people (including the client’s families), many of them among the world’s poorest.
“Micro-finance is a simple, interest-bearing small loan for poor people who wish to support themselves,” explains Professor Torger Reve at BI Norwegian School of Management.
Reve has for many years been following the growth of micro-finance through his position as chief consultant for the Strømme Foundation, the biggest Norwegian-based player within micro-finance.
Torger Reve, who is Professor of Strategy and International Competitiveness at the Norwegian School of Management BI, gave an introduction to the phenomenon of micro-finance to almost 200 participants at BI Norwegian School of Management’s annual conference, the Johan Throne Holst Conference 2007.
The conference presented BI’s newly established research centre Micro, a centre for development studies and micro-finance, which is led by Professor Anne Welle-Strand.
Finance turned upside down.
“Micro-finance is in many ways conventional finance turned upside down,” says Reve and provides an overview of the seven hallmarks of micro-finance:
1. Lending money to the poor (while traditional finance institutions lend to the rich)
2. Lending primarily to women (while traditional finance institutions lend mostly to men)
3. No security conditions (where traditional finance requires security)
4. Meeting the clients locally
5. Investing in the most important resources – people
6. Emphasis on credibility, opportunities and sustainability
7. Building on local entrepreneurship
According to the BI professor, micro-finance has proved to be an effective tool for creating bread-and-butter businesses that lift families out of the worst poverty.
Success with women
The biggest success is with women. “Micro-finance has proved to be most successful when it is aimed at women in the developing world. It is these people who take on the most responsibility and prove to be the best entrepreneurs,” states Reve, who however warns against viewing micro-finance as being an open sesame. Micro-finance is only the first step of the ladder for business development, which requires at least three steps: micro-finance, talent finance, and market finance.
1) Micro-finance is a small loan combined with training based on life experience. This creates a large number of small bread-and-butter businesses.
2) Talent finance is a more long-term loan combined with training in management school subjects and practical skills, along with an offer of venture capital. Talent finance helps to develop the most promising micro-finance entrepreneurs into viable small businesses providing several jobs.
3) Market finance is a joint long-term loan for the development of a co-operative organisation on the market side. Market finance helps to develop market channels that bring the products to profitable markets.
This article is based on Torger Reve’s lecture “Micro-finance as a tool for development” at the BI Norwegian School of Management’s annual conference, the Johan Throne Holst Conference 2007, held on 14 June 2007.
Audun Farbrot | alfa
Microtechnology industry is hiring – positive developments of past years continue
09.04.2018 | IVAM Fachverband für Mikrotechnik
RWI/ISL-Container Throughput Index with minor decline on a high overall level
20.03.2018 | RWI – Leibniz-Institut für Wirtschaftsforschung
The more electronics steer, accelerate and brake cars, the more important it is to protect them against cyber-attacks. That is why 15 partners from industry and academia will work together over the next three years on new approaches to IT security in self-driving cars. The joint project goes by the name Security For Connected, Autonomous Cars (SecForCARs) and has funding of €7.2 million from the German Federal Ministry of Education and Research. Infineon is leading the project.
Vehicles already offer diverse communication interfaces and more and more automated functions, such as distance and lane-keeping assist systems. At the same...
A research team led by physicists at the Technical University of Munich (TUM) has developed molecular nanoswitches that can be toggled between two structurally different states using an applied voltage. They can serve as the basis for a pioneering class of devices that could replace silicon-based components with organic molecules.
The development of new electronic technologies drives the incessant reduction of functional component sizes. In the context of an international collaborative...
At the LASYS 2018, from June 5th to 7th, the Laser Zentrum Hannover e.V. (LZH) will be showcasing processes for the laser material processing of tomorrow in hall 4 at stand 4E75. With blown bomb shells the LZH will present first results of a research project on civil security.
At this year's LASYS, the LZH will exhibit light-based processes such as cutting, welding, ablation and structuring as well as additive manufacturing for...
There are videos on the internet that can make one marvel at technology. For example, a smartphone is casually bent around the arm or a thin-film display is rolled in all directions and with almost every diameter. From the user's point of view, this looks fantastic. From a professional point of view, however, the question arises: Is that already possible?
At Display Week 2018, scientists from the Fraunhofer Institute for Applied Polymer Research IAP will be demonstrating today’s technological possibilities and...
So-called quantum many-body scars allow quantum systems to stay out of equilibrium much longer, explaining experiment | Study published in Nature Physics
Recently, researchers from Harvard and MIT succeeded in trapping a record 53 atoms and individually controlling their quantum state, realizing what is called a...
25.05.2018 | Event News
02.05.2018 | Event News
13.04.2018 | Event News
25.05.2018 | Event News
25.05.2018 | Machine Engineering
25.05.2018 | Life Sciences