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News tagged as "over indebtedness"
November 13, 2013

The role of inclusive finance

Tags: microcredit, over indebtedness | by David Díaz de Quijano i Barbero, OikoCredit Catalunya

Why is microfinance so important and why does it works?

Anton Simanowitz, renowned British academic and specialist working with Oikocredit, gives us a great understanding of how the microfinance industry works, and the basis for it to have a positive impact in society.



In this interesting interview with Simanowitz on microcredits, he tells us that the ultimate goal of microfinance is to provide financial services to those people who are excluded from conventional financing channels. Thus, microcredits play a key role in providing the necessary resources when they are most needed, under appropriate and adapted conditions to the borrower, taking always into account the situation of uncertainty and unpredictability under which most of the target groups usually live.
 
Given the challenges presented by overindebtedness episodes, Simanowitz advocates a thoughtful and responsible use of microfinance, emphasizing the fact that its mere use doesn't erradicate poverty, but using this financial product along with a conscious choice of groups and their potential to pay back the amounts borrowed.

 

Microfinance client Valdomero Vizueto, with loan officer Marcelo Guamán, from credit cooperative COAC Fernando Daquilema, in Ecuador

Finally, Simanowitz presents the fundamental basis to stimulate the potential of microfinance: (i) extensive knowledge of the real needs of the clients, as well as (ii) a thorough screening and selection processes in place. Additionally, he emphasizes the importance of microfinance institutions being flexible, agile, tolerant and understanding towards their clientes, particularly in situations of default and higher risk cases.

 Read the whole interview to Simanowitz in Oikocredit's website
Initiative financed by: Initiative financed by AECID
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