Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Micro-finance alleviates poverty

27.06.2007
Micro-finance can help to fight poverty, which is a fundamental problem in the world. “Women take on the most responsibility and make the best entrepreneurs,” claims professor Torger Reve at BI Norwegian School of Management.

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
Further information:
http://www.bi.no/Content/Article____61157.aspx

More articles from Business and Finance:

nachricht Mathematical confirmation: Rewiring financial networks reduces systemic risk
22.06.2017 | International Institute for Applied Systems Analysis (IIASA)

nachricht Frugal Innovations: when less is more
19.04.2017 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Can we see monkeys from space? Emerging technologies to map biodiversity

An international team of scientists has proposed a new multi-disciplinary approach in which an array of new technologies will allow us to map biodiversity and the risks that wildlife is facing at the scale of whole landscapes. The findings are published in Nature Ecology and Evolution. This international research is led by the Kunming Institute of Zoology from China, University of East Anglia, University of Leicester and the Leibniz Institute for Zoo and Wildlife Research.

Using a combination of satellite and ground data, the team proposes that it is now possible to map biodiversity with an accuracy that has not been previously...

Im Focus: Climate satellite: Tracking methane with robust laser technology

Heatwaves in the Arctic, longer periods of vegetation in Europe, severe floods in West Africa – starting in 2021, scientists want to explore the emissions of the greenhouse gas methane with the German-French satellite MERLIN. This is made possible by a new robust laser system of the Fraunhofer Institute for Laser Technology ILT in Aachen, which achieves unprecedented measurement accuracy.

Methane is primarily the result of the decomposition of organic matter. The gas has a 25 times greater warming potential than carbon dioxide, but is not as...

Im Focus: How protons move through a fuel cell

Hydrogen is regarded as the energy source of the future: It is produced with solar power and can be used to generate heat and electricity in fuel cells. Empa researchers have now succeeded in decoding the movement of hydrogen ions in crystals – a key step towards more efficient energy conversion in the hydrogen industry of tomorrow.

As charge carriers, electrons and ions play the leading role in electrochemical energy storage devices and converters such as batteries and fuel cells. Proton...

Im Focus: A unique data centre for cosmological simulations

Scientists from the Excellence Cluster Universe at the Ludwig-Maximilians-Universität Munich have establised "Cosmowebportal", a unique data centre for cosmological simulations located at the Leibniz Supercomputing Centre (LRZ) of the Bavarian Academy of Sciences. The complete results of a series of large hydrodynamical cosmological simulations are available, with data volumes typically exceeding several hundred terabytes. Scientists worldwide can interactively explore these complex simulations via a web interface and directly access the results.

With current telescopes, scientists can observe our Universe’s galaxies and galaxy clusters and their distribution along an invisible cosmic web. From the...

Im Focus: Scientists develop molecular thermometer for contactless measurement using infrared light

Temperature measurements possible even on the smallest scale / Molecular ruby for use in material sciences, biology, and medicine

Chemists at Johannes Gutenberg University Mainz (JGU) in cooperation with researchers of the German Federal Institute for Materials Research and Testing (BAM)...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Plants are networkers

19.06.2017 | Event News

Digital Survival Training for Executives

13.06.2017 | Event News

Global Learning Council Summit 2017

13.06.2017 | Event News

 
Latest News

Touch Displays WAY-AX and WAY-DX by WayCon

27.06.2017 | Power and Electrical Engineering

Drones that drive

27.06.2017 | Information Technology

Ultra-compact phase modulators based on graphene plasmons

27.06.2017 | Physics and Astronomy

VideoLinks
B2B-VideoLinks
More VideoLinks >>>