2.2: DEFINITION OF THE CONCEPT MICRO FINANCE
According toBarr,Michael (2005; 278). Microfinance is a form
of financial development that has primarily focused on alleviatingpoverty
through providing financial services to the poor. Most people think
ofmicrofinance, if at all, as being about micro-credit i.e. lending small
amounts of money tothe poor. Microfinance is not only this, but it also has a
broader perspective which alsoincludes insurance, transactional services, and
importantly, savings.
According to James Roth, «Microfinance is a bit of a
catch all-term. Very broadly, itrefers to the provision of financial products
targeted at low-income groups. Thesefinancial services include credit, savings
and insurance products. A series of neologismshas emerged from the provision of
these services, name micro-credit, micro-savings and micro-insurance»
The Canadian International Development Agency (CIDA) defines
microfinance as, «theprovision of a broad range of financial services to
poor, low income households andmicro-enterprises usually lacking access to
formal financial institutions»
For (Arelis,2000;9)» Micro finance» means» all
loans granted to a borrower, a person, entity or group of borrowers and
solidarity guarantee, for financing activities of production, commercialization
whose principle source of payment comes from sales and profits generated by
such activities, once adequately verified»
According to Marguerite,(2002;5) defines microfinance as»
small scale financial services- primarily credit and savings provided to people
who farm, or fish or herd; who operates small enterprises or micro enterprises
where goods are produced, repaired or sold, provide services, who work for
wages or commission, who gain income from renting out small amounts of land,
vehicles, machinery or tools; and to other individuals and groups at the local
levels of developing countries, both rural and urban»
Here, one may say that micro-finance is the way in which
savings and credit services can be availed to a variety of saving club,
rotating saving and credit associations, and mutual insurance societies. Thus
May microfinance may define as the granting of financial services to persons
developing a socio-economic activity, having no access to commercial
institutions. These are poor people without fixed income, who do not offer any
required collateral to commercial institutions.
According to the RMF (Rwanda Microfinance Forum) (2002;6) is
defined as development instrument by which populations excluded from the
standard banking systems access decentralized financial services.
Therefore, microfinance programs generally target poor people
who do not have access to classic banking and financial services to help them
improve their financial situations. It enables poor people to meet them need
for financial services and improve their standards of living. Financial
services for the poor are the powerful instrument poverty reduction that
enables the poor to build assets, increase incomes and reduce their
vulnerability to economic stress.
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